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 RESTAURANT SUPPLY BUSINESS
Example 1: A customer is looking through your inventory to find a particular product when she slips and falls, breaking her arm. She asks that your business pay for her medical treatment. Your general liability insurance will likely cover this cost.
Example 2: A visitor trips and falls on a damaged area of the pavement outside of your restaurant supply business and decides to sue you, claiming you should have kept the area in good repair. Your general liability insurance will pay for legal fees, including the cost of a settlement if one is necessary.
Example 3: Another restaurant supply business in the area claims that your new logo is too similar to their own and decides to sue your business. The general liability insurance you carry will pay for your legal defense, including hiring an attorney and paying a settlement if one is required.
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, restaurant supply businesses in America spend 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 restaurant supply 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 restaurant supply businesses should obtain:
Commercial Property Insurance
You have invested a significant amount of capital in your restaurant supply inventory. If you were to lose most or all of your inventory in an unexpected event, like a fire, you may struggle financially to replace everything. But with a commercial property policy, you can file a claim with your insurer, and as long as the event that caused the damage is covered, you should be able to get financial help.
Product Liability Insurance
The products that you sell to restaurants are safe if used correctly, but that does not mean that a customer will not be hurt or claim to have been hurt by something you sold. Product liability insurance is designed to protect your business if you are sued over a product. It will pay for your legal defense, including a settlement if necessary.
Types of Coverage Some restaurant supply businesses May Need
In addition to the policies outlined above, there are a few other types of coverage your restaurant supply 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.
Workers’ Compensation Insurance
If you have employees, your state most likely requires you to carry workers’ compensation insurance. Your policy will provide coverage for employees who are injured performing job-related duties. They can get medical treatment through the policy, as well as help covering lost wages while they recover from their injuries.
Commercial Umbrella Insurance
An umbrella policy provides extra protection beyond a general liability insurance policy. If you are in a situation where your general liability insurance limits are exceeded, like if you lose a major lawsuit, the umbrella policy will kick it.
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.