Business Insurance for Medicinal Herb Shops

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Business insurance is designed to protect a business owner’s financial assets and is an essential investment for a medicinal herb shop.

 

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MEDICINAL HERB SHOP

Example 1: A customer visits your shop looking for a gift and opens a sample bottle to get an idea of the scent. Upon inhaling the scent, they tip the bottle too close to their face and begin choking on the fumes, falling backward into your glass display shelves. General liability insurance will likely cover medical expenses, repair costs, and other damages in a lawsuit.

Example 2: New investors are touring your shop to get an idea of how your daily operations work. The tour takes place after hours during clean-up, and one of the investors trips over a vacuum cord, breaking their arm in the fall. General liability coverage will likely pay for any damages associated with the accident.

Example 3: As you are unloading a delivery in the shop, you accidentally drop the pallet onto a guest vendor’s display stand, breaking the stand and damaging thousands of dollars worth of product. General liability insurance will likely cover the damage to their property.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

COST OF GENERAL LIABILITY INSURANCE

The average medicinal herb shop in America spends between $350-$750 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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OTHER TYPES OF COVERAGE MEDICINAL HERB SHOPS NEED

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all medicinal herb shops should obtain:

Workers’ Compensation Insurance

If you have one or more employees, you will likely be required to carry workers’ compensation insurance by state law. This important insurance coverage is designed to pay for medical expenses if any employees become injured or ill in a work-related incident.

Product Liability Insurance

This type of insurance is important for businesses that create their own line of medicinal herbs to sell to the general public or sell other suppliers’ products. If a customer becomes ill or sustains an injury related to the products you sell, product liability insurance will cover damages.

TYPES OF COVERAGE SOME MEDICINAL HERB SHOPS MAY NEED

In addition to the policies outlined above, there are a few other types of coverage your medicinal herb shop may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Business Interruption Insurance

This type of insurance coverage works to protect your business if have to close your doors for an extended period of time due to an accident involving fire, tornado, vandalism, or certain other events. Your policy can help to cover some of the losses in reduced revenue and ensure that you can reopen your doors once again.

Commercial Property Insurance

If you own the building that your shop operates out of, you should invest in commercial property insurance. This type of coverage helps to protect not only your actual building in the event of a fire or natural disaster but all of the business items and inventory inside as well.

ADDITIONAL STEPS TO PROTECT YOUR BUSINESS

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

FREQUENTLY ASKED QUESTIONS

What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

What is the difference between business insurance and general liability insurance?

“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.