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 ORCHARD
Example 1: You hire a web designer to put together your orchard’s new website. One of the images he uses was protected under copyright. The photographer who claims ownership of the photo sues the business for copyright infringement. General liability insurance should cover your legal fees and any resulting payout.
Example 2: It is discovered that one batch of the orchard’s products distributed throughout the state has been linked to an E. coli breakout. Two of the customers that fell ill were hospitalized, accumulating over $200,000 in medical bills, and are suing the orchard. Your general liability coverage should pay for legal representation as well as the payout awarded by the courts for medical and personal damages.
Example 3: You are hosting a tasting party at the orchard, and one of the customers breaks a glass and cuts their finger. Their trip to the emergency room for stitches cost over $5,000. General liability insurance should cover their medical bills and any aftercare costs stemming from this injury.
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 orchard in America spends between $400-$1,500 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 ORCHARDS 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 orchards should obtain:
Commercial Auto Insurance
If your business offers delivery services, or you use a vehicle for other work-related purposes, you will need to carry the state-mandated levels of commercial auto insurance on each of the vehicles in your fleet. A commercial auto insurance policy covers business-owned automobiles that are driven on public roadways.
Commercial auto insurance is often purchased as part of a business owner’s policy (BOP).
Commercial Property Insurance
If you own the building and business property used by the orchard, it is important that you properly cover yourself against a potential loss. Agricultural businesses require a lot of expensive, specialized equipment. Before taking out an insurance policy, carefully consider the cost to replace all business property as well as what it would cost to rebuild in the event of a total loss.
This coverage is often available as part of a BOP.
Workers’ Compensation Insurance
Orchards require a lot of hands-on work, so you likely have a team of employees. If this is the case, the state likely requires you to carry workers’ compensation insurance on all full- and part-time employees.
Workers’ compensation covers employees for on-the-job accidents and injuries. While most states allow business owners to exempt themselves from coverage, owners who contribute directly to the day-to-day operations of the business typically choose to include themselves on their workers’ compensation policy.
Workers’ compensation is generally purchased as a standalone policy.
TYPES OF COVERAGE SOME ORCHARDS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your orchards 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
Since some liability risks can exceed primary policy limits, a commercial umbrella liability policy should be considered. It offers an extra layer of protection in the event that a large covered lawsuit occurs.
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.