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 POOL SERVICE COMPANY
Example 1: An employee is smoking during work and accidentally lights a client’s pool shed on fire, destroying a large amount of pool equipment and machinery. If found liable, your business could probably rely on general liability insurance to help cover damages owed as mandated by the court or any settlement reached with the client.
Example 2: A new employee is alone on a maintenance job and encounters a pool pump that he doesn't fully understand. He fiddles with it and causes a leak, which later results in the client slipping and falling. If the client were seriously injured, general liability insurance could probably help your business cover the resulting damages, assuming you were found liable.
Example 3: Your employees accidentally cause a pool to overflow, leading to a sizeable flood that leaks into the neighbor’s yard and ruins his extensive garden and backyard with oversaturation and chlorine content. If found liable, your company could probably expect coverage through a general liability insurance policy for damages owed to the neighbor.
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 pool service company 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.
OTHER TYPES OF COVERAGE POOL SERVICE COMPANIES 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 pool service companies should obtain:
Commercial Auto Insurance
This is a business that will without a doubt require vehicles to transport its equipment and personnel to client locations. All vehicles intended for use on public roads must be insured, either personally or commercially. Get your vehicles covered with commercial auto insurance to help cover damages sustained in the event of a car accident. Depending on the success of your business, your vehicles may see quite a bit of use, making this a policy you simply should not leave home without.
Professional Liability Insurance
This policy helps to cover businesses that provide professional services with potentially significant consequences. It also covers businesses that give advice or otherwise inform clients in a professional capacity. If your pool service company fails to perform to the client’s standards or provides pool maintenance advice that is ultimately damaging to the pool in a serious way, this policy can cover your losses and minimize the damage of lawsuits.
TYPES OF COVERAGE SOME POOL SERVICE COMPANIES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your pool service company 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
Unless you prefer to service client pools solo, your company will employ workers, which will legally require you to have workers’ compensation insurance. So unless you’re working exclusively with independent contractors, this policy is a must-have. Compensation policies cover your employees in the event that they are injured on the job. Medical expenses, as well as disability and death benefits, are provided through this insurance.
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.