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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A PET BAKERY
Example 1: You’ve recently started putting out a water dish for visiting dogs to use while their owners are busy browsing your shelves. After a particularly messy dog uses the water dish, his owner slips and falls on the way out the door. He is seriously injured and upset that no caution sign was set up near the doggy dish. Your general liability policy will likely pay for their medical bills and any of your legal fees if there is a lawsuit.
Example 2: Your marketing team has come up with a great new commercial that is a hit with your customers. Unfortunately, one of your local competitors feels like you’ve libeled their company in the commercial and threatens legal action. Your general liability policy would likely pay for your legal fees and any damages awarded to the other company in a lawsuit.
Example 3: As your regular delivery driver goes to back into your loading dock, your overhead door malfunctions and crushes the back-end of his van. Not only is the vehicle inoperable, but your merchandise is damaged as well. General liability insurance will likely pay for the vehicle repairs and cover your lost inventory as well.
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
On average, pet bakeries in America spend between $300 - $700 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 pet bakeries 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 pet bakeries should obtain:
Product Liability Insurance
If one of the products you make causes harm to a pet or their owners, you could be held legally responsible. Product liability insurance is designed to help protect your business in the event that you produce a defective or harmful product.
Workers’ Compensation Insurance
To protect your employees following a work-related accident or illness, workers’ compensation insurance can cover the cost of their medical bills, disability benefits, and, in extreme cases, death benefits as well. This insurance coverage is typically required by state law for any business with part-time and/or full-time employees.
Types of Coverage Some pet bakeries May Need
In addition to the policies outlined above, there are a few other types of coverage your pet bakery 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 Property Insurance
Creating your special pet food items requires a lot of equipment and inventory. If these items were damaged in a fire or other common accident, you could be left to pick up the pieces on your own without proper insurance protection. Commercial property insurance will cover the cost of repairing or replacing these items.
Commercial Umbrella Insurance
There is always the possibility that a lawsuit settlement or accident at your bakery could end up exhausting your primary policy limits. If this happens, you could be left to pay out-of-pocket for any leftover costs without proper backup. Commercial umbrella insurance works to cover expenses above and beyond your primary policy limits in these situations.
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.