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 SELF STORAGE COMPANY
Example 1: The arm to the gate at the front of your property malfunctions, closing as the customer is still driving through. General liability insurance should cover the damage done to the customer’s vehicle.
Example 2: As part of the extra goods and services offered, your facility sells padlocks to customers. One of the models sold is proven to be defective, causing several of your customers’ storage contents to be stolen. Your general liability insurance will cover the loss of those items, as well as any legal defense fees associated with this loss.
Example 3: A customer slips and falls in a puddle of water near their storage unit, causing a back injury. General liability insurance will cover their medical treatment bills, as well as any required follow-up rehabilitation care associated with the injury.
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 self storage company 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.
OTHER TYPES OF COVERAGE SELF STORAGE COMPANIES 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 self-storage companies should obtain:
Workers’ Compensation Insurance
Your state will likely require you to carry workers’ compensation insurance for each full and part-time employee. This policy covers the cost of treating injuries sustained while on the job and also lost wages if an employee is unable to work for a period of time because of the injury.
Workers’ compensation insurance is typically purchased as a standalone policy.
Commercial Property Insurance
To run a self-storage company, you will need to own a building with expensive specialized build-outs. Commercial property insurance will cover the repair or replacement of the building in the event of something like a fire or severe storm. It will also cover the cost of repairing or replacing any business property located on the premises.
This coverage is frequently purchased as part of a business owner’s policy (BOP).
TYPES OF COVERAGE SOME SELF STORAGE COMPANIES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your self-storage companies 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 Liability Insurance
As a self-storage company, hundreds of visitors will frequent the facility each week, significantly increasing your liability exposure. A commercial umbrella liability policy offers additional liability protection, above and beyond what the standard policy covers.
Business Interruption Insurance
If a major destructive event, such as a fire, occurs on the premises, it could take months to get the business back up and running again. Business interruption insurance will help replace some of the revenue lost while your business is out of commission.
Business interruption insurance is generally available as part of 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.