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.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MOVIE THEATER
Example 1: A patron slips on the stairs on the way up to his seat, falling forward and sustaining injuries to his knee and wrist. Your general liability insurance policy will cover the cost of treating the guest’s injuries, up to your policy limits.
Example 2: An employee forgets to put out a “Wet Floor” sign in the bathroom after mopping. A guest slips and falls on the wet tile, sustains injuries, and decides to file a lawsuit against your theater. A general liability insurance policy will pay for the cost of defending yourself from the lawsuit. It will also pay the cost of settling with the injured party if necessary.
Example 3: An employee at the concession stand fails to hear a customer mention a food allergy. The employee serves the customer food containing the allergen. The customer has a severe reaction that requires medical attention and subsequently files a claim against your business for damages. Your general liability insurance will cover your legal costs, up to your policy limits.
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 movie theater in America spends between $500-$1,100 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 MOVIE THEATERS 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 movie theaters should obtain:
Commercial Property Insurance
In the event of a fire or another unexpected disaster, the products and equipment in your movie theater—such as the concessions you offer and movie projectors—could be lost. Paying for the replacement of all these products, along with any real estate damage, would be costly. A commercial property insurance policy would provide coverage for your commercial property.
Workers’ Compensation Insurance
Your employees can be injured on the job in a variety of ways, from tripping on the theater stairs to developing repetitive motion injuries from running the register. When a work-related injury occurs, it is important to be able to cover the cost of medical care and lost wages for employees. Workers’ compensation is legally required coverage that ensures that you do not have to bear the burden of paying for such medical care or lost wages.
TYPES OF COVERAGE SOME MOVIE THEATERS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your movie theater 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.
Commercial Umbrella Insurance
A general liability insurance policy serves as a good foundation for insuring your business, but it does have limits. If you find yourself in a situation where your general liability limits are exceeded, such as losing a big lawsuit, the remaining costs will have to be borne by your business—unless you have a commercial umbrella policy. With an umbrella policy, once your general liability limits are reached, the umbrella policy takes over.
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.