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 MODELING AGENCY
Example 1: During a photoshoot, a freelance photographer trips on a set and injures himself. Because his injuries leave him unable to work for several months, he sues for damages to cover his medical bills as well as pain and suffering. General liability insurance would pay for your legal fees and the damages awarded by a court.
Example 2: At an event held by your modeling agency, one of your models knocks over a vase valued at $7,000. The venue sues, asking for a replacement vase. Your general liability policy would cover the replacement cost of the vase.
Example 3: Your designer accidentally uses a photo under copyright protection as part of your website rebuild, and the photo’s owner sues for copyright infringement. General liability insurance would cover your legal fees and the resulting payout.
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
On average, modeling agencies in America spend 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:
Several factors will determine the price of your policy. These include your:
- 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 modeling agencies 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 modeling agencies should obtain:
Content and Equipment Insurance
If you don’t own the warehouse in which your agency operates, but you store business property there, content and equipment insurance extends coverage to those items in the event of a fire, burglary, or natural disaster.
If your agency conducts both on-site and off-site photo shoots, be sure to discuss policy limitations with your insurance provider because you may need portable equipment insurance when working off-premises.
You can typically purchase content and equipment insurance as part of a business owners’ policy (BOP).
Professional Liability Insurance
Your job requires you to be creative and take risks, but these ideas may not always work out as expected. If a client decides your work caused them harm, they could hold you liable. Professional liability insurance provides protection if you face a lawsuit from your professional advice or services.
Workers’ Compensation Insurance
As a modeling agency, you employ a team of professionals whose health and well-being is critical to the business’ success. To ensure coverage for on-the-job injuries and illnesses, state law requires you to purchase workers’ compensation coverage for both your part-time and full-time employees.
While your state may allow exemptions for business owners, consider including yourself in your workers’ compensation policy if you engage in the daily operation of the business.
You can typically purchase workers’ compensation insurance as a standalone policy.
Types of Coverage Some modeling agencies May Need
In addition to the policies outlined above, there are a few other types of coverage your modeling agency 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
If a fire or other major event forces you to temporarily close, business interruption insurance would help pay for a move to a temporary location as well as help cover your bills and financial losses until you can reopen.
You can typically purchase business interruption insurance as part of a business owner policy (BOP).
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.