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 SEA SALT BUSINESS
Example 1: One of the heavy motor vehicles at your processing center runs over a visitor’s foot and breaks several bones. General liability insurance would likely cover what your business owes in damages and any settlement reached.
Example 2: While visiting your facility, a retail representative slips on some water brought in with the sea salt, falling down and breaking his arm. If found liable, your business would probably be covered for some of the resulting damages or any settlement reached between you and the customer.
Example 3: An employee is driving too fast in your parking lot and hits a pedestrian. The pedestrian is badly injured and files a lawsuit against your business. If found liable, your company would probably be covered under a general liability insurance policy for damages incurred or a settlement reached 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.
On average, sea salt businesses in America spend between $500 - $1,200 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 sea salt businesses should obtain:
Commercial Property Insurance
Commercial property insurance is a must-have for any company that relies on expensive tools, equipment, machinery, inventory, and other assets. In the event of a storm or the outbreak of a fire, your business can suffer a major setback in the form of damaged or destroyed materials. This policy will typically also cover any owned real estate.
Workers’ Compensation Insurance
Most states require that businesses cover part-time and full-time employees with workers’ compensation policies. These help to cover the cost of injuries sustained in the workplace, and they can protect your business in the event of an injured worker’s lawsuit. A workers’ compensation policy will also cover disability and death benefits.
Commercial Auto Insurance
If your business will be hauling equipment or delivering goods, you’ll obviously need vehicles. A commercial auto insurance policy provides coverage for all of your company vehicles while driving on the road. Car accidents are very common, and they can be incredibly expensive without proper insurance coverage.
In addition to the policies outlined above, there are a few other types of coverage your sea salt 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.
Business Interruption Insurance
Damages to commercial property from fires, tornadoes, and certain other destructive forces can leave your business out of commission for a while. If this happens to your sea salt business, the downtime can be financially devastating. Business interruption insurance provides coverage for estimated profit losses during periods of temporary inactivity due to events like the aforementioned disasters. This policy can also provide coverage for temporary relocation costs, helping your business to get back on track quickly.
Product Liability Insurance
Businesses that sell products may be wise to pick up product liability policies. In the event that a customer suffers some kind of injury or sickness from your sea salt product, you don’t want to be left empty-handed by a lawsuit targeting your business. A product liability policy can keep your business covered for product-based incidents.
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.