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 PARTY SUPPLY STORE
Example 1: A customer is walking over a slick section of tile floor in your storefront. There is no indication that it is wet, and the customer slips, falling and breaking his wrist. 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 2: One of your cashiers knocks over a customer’s extremely hot coffee, seriously burning the customer’s hand. General liability insurance would likely cover some of what your business owed in damages or some of any settlement reached.
Example 3: A stocking ladder is left standing while an employee briefly heads to the restroom. A small child climbs up the ladder when his parent is not watching and falls seven feet onto the hard concrete floor. If found liable, your business would probably be covered for some of the resulting damages.
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 party supply store in America spends between $500-$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 Party Supply Stores 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 party supply stores should obtain:
Product Liability Insurance
This policy is designed for businesses that rely on the sales of products for profit. As a party supply business, nearly all of your revenue would come from sales of your inventory. If a customer suffers some kind of injury from a product you sell, a product liability policy can keep your business covered.
Commercial Property Insurance
A commercial property policy will help cover the cost of replacing or repairing property damaged by events like a fire or storm. This includes owned real estate, inventory, and equipment.
Types Of Coverage Some Party Supply Stores May Need
In addition to the policies outlined above, there are a few other types of coverage your party supply store 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 have full-time or part-time employees, you will be legally required in most states to offer workers’ compensation insurance. These policies offer coverage for employee injuries sustained on the job. If your workers are hurt while helping you to run your business, you want to be sure you are covered for anything that leads to significant medical expenses. Workers’ compensation insurance will also cover disability and death benefits.
Business Interruption Insurance
This policy is designed to help businesses recover from disasters that temporarily disable operations. Business interruption policies anticipate catastrophes like fires, tornadoes, and certain other destructive forces that may reach your storefront. During your business’s downtime, this policy will help to cover estimated profit losses. Sometimes, it even helps to cover the costs associated with temporary relocations. Business interruption insurance and commercial property insurance can combine to make your company extremely resilient.
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.