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 PRIVATE DETECTIVES
Example 1: A potential client is meeting you at your office when she slips and falls on ice outside your entryway and breaks her wrist. Your general liability policy will likely cover the cost of treating her injuries.
Example 2: You are visiting the home of a client to discuss the details of a case. He is cooking in the kitchen as you ask him questions. You accidentally bump into him as he is carrying a pot of boiling water, and the water spills and burns him. He sues you for his injuries. Your general liability policy would pay for your legal defense and for a settlement if one is required.
Example 3: A competing private detective has accused you of speaking badly about him and his business to multiple potential clients and is suing you for slander. Although you are certain that this is untrue, you still need to defend yourself legally. Your general liability policy will pay for your legal defense.
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 private detective in America spends between $400-$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 PRIVATE DETECTIVES 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 private detectives should obtain:
Professional Liability Insurance
A professional liability insurance policy designed for your private detective business will help shield you against liability related to your work. It will cover negligence claims due to mistakes or failure to perform. If you are sued for either, your policy will cover your legal costs and the cost of a settlement if necessary.
Commercial Auto Insurance
Any automobile you use primarily for business should be covered by commercial auto insurance. Your policy will ensure that you meet the legal requirements of your state. If you are found to be at fault in an accident, it will help pay to repair or replace your vehicle and any other vehicles involved, as well as any related medical expenses.
TYPES OF COVERAGE SOME PRIVATE DETECTIVES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your private detective 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.
Commercial Umbrella Insurance
An umbrella policy will pick up where a general liability policy leaves off. For example, if you were to lose a major lawsuit and the damages you were required to pay exceeded your general liability limits, then the umbrella policy would cover the remaining costs until its limits were reached.
Home-Based Business Insurance
If your business is run out of your home, there is a chance that your homeowner’s policy won’t cover you for accidents resulting from your business activities. A home-based business insurance policy would cover such accidents so you are not left paying for them out of pocket.
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.