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 RAGE ROOM
Example 1: Despite using the proper safety gear, a customer is injured by flying debris during their session. General liability insurance would likely cover any medical care that the injury requires.
Example 2: An employee fails to thoroughly clean a room after a session, and the next customer cuts their arm on some glass. The cut is deep and requires stitches. General liability insurance would cover injuries that occurred if the customer filed a lawsuit or claim.
Example 3: A customer trips over an object during a session and fractures their arm in the fall. While your rage room might be ultimately exonerated because the customer assumed certain risks by participating, the customers could still file a suit that requires expensive legal representation. General liability insurance would cover the legal fees (and any settlement).
Example 4: While gathering valueless supplies at an estate sale for destruction, an employee loses control of the supplies and drops them on an expensive television and computer that are worth thousands. General liability insurance would cover the damage caused to the television and computer.
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 Rage Room in America spends between $500-$1,100 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 RAGE ROOMS 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 rage rooms should obtain:
Commercial Property Insurance
If your rage room business owns the space that it uses, you’ll likely want property insurance for the building. Property insurance policies normally insure commercial buildings and the equipment kept inside them.
When selecting property insurance limits, make sure your rage room’s equipment is properly covered. There’s little reason to consider items that get destroyed since they often have little or no fair-market value. You will, however, want to consider the value of computers, permanent furniture, and safety gear that your business has.
This coverage is widely available through a business owner’s policy (BOP).
TYPES OF COVERAGE SOME RAGE ROOMS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your rage room 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.
Worker’s Compensation Insurance
If your rage room has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.
Read more about workers’ compensation insurance.
Business Interruption Insurance
Natural disasters and other incidents can leave your business unable to open and bring in revenue. Business interruption insurance may provide supplemental revenue during times like these.
If your rage room doesn’t have a cash reserve, you may want business interruption insurance to help with lease, mortgage, and other payments following a covered disaster.
Business interruption insurance is often available through a BOP.
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.