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 PARKING LOT BUSINESS
Example 1: During winter, a customer slips on the ice in your parking lot before it can be plowed. The fall results in a concussion and fractured arm. General liability insurance would likely cover the injuries.
Example 2: Someone leaves debris in your parking garage’s stairwell, and a customer trips over the debris while hurrying down the stairs. General liability insurance would probably cover any medical treatment they need.
Example 3: A long-time customer notices an old sign on your property that states rates are substantially below what you charge now. They file a false advertising lawsuit, claiming they should’ve only paid the old rate because it’s posted and seeking compensation for their many overpayments. Other customers join and form a class action lawsuit. General liability insurance would likely cover the lawsuit.
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 parking lot business in America spends between $450-$1,000 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 PARKING LOT BUSINESSES 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 parking lot businesses should obtain:
Commercial Property Insurance
Commercial Property insurance is often used to insure buildings, but it can insure other structures as well. Coverage can be adapted for a parking lot or garage.
When purchasing property insurance, make sure all of your parking lot’s structures are covered. In addition to the pavement itself, you may need protection for lighting fixtures, a booth, a gate, an elevator, a garage, or other items.
Property insurance is commonly available through a business owner’s policy (BOP).
Data Breach Insurance
Assuming your parking lot accepts credit and debit card payments, data breach insurance is an appropriate coverage to get. It may protect against lawsuits arising from stolen card numbers.
This is particularly important coverage if your parking lot has self-serve payment terminals. Criminals can place skimmers on terminals that are unattended, and skimmers sometimes collect many card numbers before anyone detects the equipment. Data breach insurance might help your parking lot compensate customers who had their card numbers stolen this way.
Data breach insurance is available as a standalone policy and through package policies.
TYPES OF COVERAGE SOME PARKING LOT BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your parking lot business 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 you employ workers to monitor your parking lot, they’ll need to be covered by workers’ compensation insurance. This protects against illnesses and injuries that happen at work, and it’s a required coverage for employers in most states.
Commercial Umbrella Insurance
Commercial umbrella insurance is a supplemental form of liability coverage that effectively extends the limits of underlying policies. Many businesses purchase this as an affordable way to get additional protection.
For parking lots, commercial umbrella insurance can be especially important. Even minor car-pedestrian accidents can result in significant injuries and drawn-out lawsuits. If such an accident occurs on your parking lot, there’s a chance that one (or several) of the parties involved will sue your business. Supplemental insurance would help you cover the costs of a potentially expensive covered lawsuit.
Commercial umbrella insurance is frequently bundled with other insurance coverages in 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.