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 ROCK CLIMBING GYM
Example 1: A member of your rock climbing gym is using a climbing wall when he slips and falls. He hits the ground hard enough to get a concussion and break his arm. While your gym may eventually be exonerated since the member assumed certain risks by using the climbing wall, there is still the possibility that he could file a lawsuit against your business. Your general liability insurance policy would pay for your legal fees, including the cost of a settlement if necessary.
Example 2: A visitor to the gym is taking a tour with one of your employees and accidentally slips and hits her elbow on the tile floor. She sustains a fracture and requires medical care. The general liability insurance policy you carry will likely cover her medical expenses.
Example 3: The new marketing material you have been circulating upsets one of your competitors, who claims that you are damaging her business. She decides to file a lawsuit against your business. The general liability insurance policy you have will pay for your legal fees as well as any settlements should you wind up settling the case outside of court.
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.
The average rock climbing gym in America spends between $400-$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.
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 rock climbing gyms should obtain:
Commercial Property Insurance
The equipment you have in your gym, including your climbing equipment, safety equipment, and climbing walls, took a considerable investment to acquire. Should a major disaster strike your business, like a big fire, you could lose all of this equipment, and replacing it would be costly. A commercial property insurance policy helps pay for the replacement of your commercial property as long as it was damaged by a covered event.
Workers’ Compensation Insurance
A workers’ compensation insurance policy pays for medical treatment for work-related injuries. It also helps to cover lost wages when injured employees are unable to work. Most states require employers to carry workers’ comp insurance.
In addition to the policies outlined above, there are a few other types of coverage your rock climbing gym 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
There is always the possibility that you will run into a situation where your general liability insurance policy limits are exceeded—like if you were to lose a big lawsuit. If this happens, an umbrella policy would pick up when the general liability insurance leaves off, so you are much less likely to need to cover damages out of your own pocket.
Product Liability Insurance
If your climbing gym sells any products, like climbing equipment, it can be useful to have product liability insurance to protect your business. Should a customer decide that one of the products you sold caused him or her injury—like if a piece of equipment failed while being used—and that customer filed a lawsuit, your product liability insurance would cover your legal costs to defend your business. It would also cover a settlement payment if necessary.
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.
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.