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 AN ONLINE PHARMACY
Example 1: While meeting with a distributor in your office, he trips over a box and falls down the stairs, breaking some bones in his arm. General liability insurance would likely cover some of what your business owes in damages or some of any settlement reached.
Example 2: Your new copywriter posts some negative comments about another pharmaceutical company on your business’s Facebook page. The other business attempts to sue for slander. If held liable, your business would probably have some coverage under a general liability insurance policy for damages incurred or a settlement reached outside of court.
Example 3: You are interviewing for a digital assistant position. After his interview, a candidate backs his car into someone walking through your parking lot. The person suffers broken hip bones and pursues legal action against your business. If you were found liable, general liability insurance would probably help cover some of the damages or any settlement reached between your business and the injured party.
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 online pharmacy 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:
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 ONLINE PHARMACIES 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 online pharmacies should obtain:
Professional Liability Insurance
Businesses that advise customers or perform skilled services can be held liable for damages resulting from these actions. Professional liability insurance is a key policy for any online pharmacy, as it can literally be a matter of life and death as you perform your daily duties.
If a customer receives the wrong medication or is given the wrong instructions for the consumption of his or her pills, you can potentially be found liable. Keep your online pharmacy covered for serious claims with professional liability insurance.
Product Liability Insurance
Online pharmacies sell medications to customers on a daily basis. If a customer suffers serious medical damages from something he acquired through your business, you can be held liable. A product liability policy can help to cover your pharmacy in the event that a product you sell seriously harms a customer. This can be a useful policy for many businesses, but it is absolutely essential for online pharmacies dealing in medications that can impact the body in unpredictable ways.
Commercial Property Insurance
If a fire or violent weather causes significant damage to your supply of medications and/or other equipment, this policy can be a business saver. Inventory and various other commercial tools are covered under this commercial property insurance. This policy also covers damage to any owned real estate.
Data Breach Insurance
Online pharmacies are no less bound by medical confidentiality laws because they are digital businesses. If there is a data breach and your business is hacked by an external party, this policy exists to cover damages incurred by stolen user data. Moreover, this data is particularly sensitive in light of its medical content. A data breach could be devastating for an online pharmacy. It is essential that your business is covered for such disasters.
TYPES OF COVERAGE SOME ONLINE PHARMACIES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your online pharmacy 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
In most states, businesses with full-time or part-time workers must carry some sort of workers’ compensation policy as a matter of law. Costs related to on-the-job injuries are covered through this insurance. It will also cover disability and death benefits for employees injured in the line of work.
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.