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 SENSORY DEPRIVATION BUSINESS
Example 1: A customer is in the middle of a session when she begins to have a panic attack. Your employee fails to notice her distress, and she remains in the tank longer than she wants. Her mental and emotional distress are significant and she blames your business for what happened. She takes legal action, suing your business for damages. Your general liability insurance policy will pay for your legal fees and also pay for the cost of a settlement if the case is settled out of court.
Example 2: A visitor to your facility is walking with you on a tour when he fails to notice a spill on the floor and slips. He falls, catching himself and breaking his wrist in the process. He asks that your business pay for his medical treatment. Your general liability insurance policy will likely cover the cost of treating his injuries.
Example 3: A competing sensory deprivation business determines that you have libeled them during your last advertising campaign and files a lawsuit against you. Because you have a general liability insurance policy, your legal defense fees will be paid for by your insurer. Your policy will also pay for the cost of payouts or settlements if you settle the case out 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.
COST OF GENERAL LIABILITY INSURANCE
The average sensory deprivation business in America spends between $350-$750 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 SENSORY DEPRIVATION BUSINESS 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 sensory deprivation businesses should obtain:
Commercial Property Insurance
It took a considerable investment on your part to obtain all the equipment and supplies necessary to operate your sensory deprivation business. In the event that your commercial property was damaged or destroyed by, for example, a fire, then it would likely be a financial struggle to obtain new equipment and get your business going again. With commercial property insurance, you can look to your insurer for assistance with the replacement of your equipment when it is damaged by a covered event.
Workers’ Compensation Insurance
The laws in your state most likely require your business to carry workers’ compensation insurance if you have employees. There are several benefits that come with a workers’ comp policy beyond meeting your legal requirements. Should one of your employees be injured performing a job-related task, your workers’ comp policy would pay for his or her medical treatment. The policy would also help pay for wages the employee lost while being unable to work.
TYPES OF COVERAGE SOME SENSORY DEPRIVATION BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your sensory deprivation 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.
Commercial Umbrella Insurance
It is possible to find yourself in a situation where your general liability insurance policy limits are exceeded, such as if you lose a major lawsuit and are required to pay damages. When the limits of your general liability insurance policy are exceeded, you are left having to cover whatever damages remain—unless you have commercial umbrella insurance. With an umbrella policy, you can rely on your extra coverage to kick in once the general liability policy limits are exceeded.
Data Breach Insurance
Also known as cyber attack insurance, data breach insurance protects your business from damages caused by a cyber attack. For example, if a cybercriminal hacks into your system and steals the payment information of your customers, your data breach insurance would help cover the cost of damages. General liability insurance will not cover this loss, so it is important to have data breach insurance if you think your business faces such a risk.
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.