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 MUSHROOM FARM
Example 1: While touring a farm, a visitor trips over-irrigation equipment and bumps their head in the fall. General liability insurance would probably cover the cost of treating any resulting injuries.
Example 2: An employee makes a false claim about a mushroom’s healing powers on social media, and a follower files a false advertising lawsuit. General liability insurance would probably cover the cost of the suit.
Example 3: While delivering mushrooms to a gourmet grocery store, an employee accidentally knocks over a large display cooler of truffles. The glass window on the cooler is shattered, and the truffles are rendered inedible. General liability insurance would likely cover the cost of the property damage incurred.
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 mushroom farm in America spends between $350-$900 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.
OTHER TYPES OF COVERAGE MUSHROOM FARMS 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 mushroom farms should obtain:
Commercial Property Insurance
Mushroom farms typically need commercial property insurance for their buildings and equipment. Property insurance can also cover supplies and product inventory.
When selecting a commercial property policy for your mushroom farm, make sure the policy covers your farm’s buildings as well as any growing equipment and supplies you have. A robust policy should also cover grown mushrooms since they’re considered inventory.
Commercial property insurance is widely available through a business owner’s policies (BOPs).
Product Liability Insurance
Businesses can sometimes be held financially responsible for any injuries that their products cause. Product liability insurance helps protect businesses from product-related lawsuits in the event that their products cause harm.
Since mushrooms are products, mushroom farms can get product liability insurance for them. Should a mushroom ever cause someone to choke or a batch of mushrooms make multiple people sick, having this coverage could help protect your farm from the financial fallout.
Product liability insurance is normally purchased by itself or within a package policy.
TYPES OF COVERAGE SOME MUSHROOM FARMS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your mushroom farm 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.
Workers’ Compensation Insurance
If your mushroom farm has employees, the business needs to carry workers’ compensation insurance. This insurance covers job-related illnesses and injuries, and most states require employers to carry it.
Commercial Auto Insurance
Commercial auto insurance is used to insure vehicles that are used for business purposes. Your mushroom farm needs this coverage if the business owns a delivery truck or van, and you might still need this coverage if you use a personal vehicle to make deliveries. Personal auto insurance policies generally won’t cover business driving.
Commercial auto insurance may be purchased by itself or as part of a package policy.
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.