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 PERSONAL STYLING BUSINESS
Example 1: While entering your office, a client trips over a rug, falls, and breaks her wrist. Your general liability policy may cover the costs of treating the injury. If a lawsuit arises from the injury, it may also cover the costs of the lawsuit.
Example 2: One winter morning, your area experiences unforecast snow and ice. Before you can shovel your sidewalks and apply ice-melt, your early morning client arrives. Upon stepping onto the stairs leading to your front door, the client slips and falls, landing hard on his backside. The intense pain sends him to the nearest urgent care center where he receives medical attention. Your general liability insurance policy should cover the costs of the medical care needed for the fall.
Example 3: When placing an ad online for your services, you accidentally forget a zero, making your introductory personal styling offer much cheaper than you intended. You don’t realize the mistake until a potential client calls to inquire about your services and the advertised price. Upon telling the client that you made a mistake in the ad and telling them your actual sale price, they sue you for false advertising. Your general liability insurance policy may cover the costs associated with 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 personal styling business 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 PERSONAL STYLING 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 personal styling businesses should obtain:
Home-Based Business Insurance
If you operate your personal styling business out of your home, you’ll want to consider purchasing a home-based business insurance policy. These policies help financially protect you in the event your business equipment is damaged or destroyed due to a covered event.
Professional Liability Insurance
Professional liability insurance protects you against lawsuits that arise due to your advice accidentally harming a client or not leading to the desired results.
TYPES OF COVERAGE SOME PERSONAL STYLING BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your personal styling 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.
Data Breach Insurance
Data breach insurance is also known as cyber liability insurance. It helps protect you against lawsuits from clients if information is stolen from your computer systems.
Commercial Property Insurance
If you own an office or commercial space where you meet with clients, you’ll want to acquire a commercial property insurance policy. This helps financially protect you in the event that your building or the property stored inside the building is damaged or destroyed due to a covered event.
Workers’ Compensation Insurance
If your personal styling business employs other workers, like front desk personnel and assistant stylists, you’ll want to purchase workers’ compensation insurance, which may help pay for any on-the-job injuries that you employees experience. Most states legally require businesses to carry this if they have any part-time or full-time employees.
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.