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 SKYDIVING COMPANY
Example 1: One of your clients has just landed after a successful jump. Suddenly a gust of wind catches her parachute and pulls her off her feet, skipping her along the ground for fifty yards. Her arm is broken in the process. She sues your business over her injuries. While your company may be exonerated eventually, since she assumed certain risks when participating, you still need to hire an attorney to protect your business. The general liability insurance you carry would pay for your legal fees.
Example 2: A client slips and falls in the restroom, breaking his wrist. He asks that you pay for his medical treatment. Your general liability insurance would likely cover this cost.
Example 3: One of your competitors has just sent you an email informing you that he is suing your business. He claims that your latest marketing campaign has libeled his business. The general liability insurance policy you have will cover the cost of an attorney and the cost of 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.
On average, skydiving companies in America spend 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 skydiving companies should obtain:
Workers’ Compensation Insurance
Your state probably requires your company to carry workers’ compensation insurance if you have employees. The workers’ comp policy you have will pay for medical treatment for employees injured performing job-related duties, as well as cover some of the wages they might lose while recovering.
Professional Liability Insurance
A professional liability insurance policy is designed with your specific business needs in mind. It protects you and your employees from liability. For instance, if a client claims a mistake during a jump caused him or her injury and sues you, your policy would pay for your legal defense costs. It would also pay for the cost of a settlement if you need to settle the case out of court.
In addition to the policies outlined above, there are a few other types of coverage your skydiving company 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 Auto Insurance
If you have a vehicle that you use primarily for business purposes, you need commercial auto insurance. The policy you have for your vehicle will pay for damages to your vehicle and to other vehicles caused by you or your employees while driving. It will also pay for medical treatment for anyone injured in an accident if your company’s vehicle was is determined to be at fault.
Commercial Umbrella Insurance
There is always the possibility that you could find yourself in a situation where your general liability insurance policy limits are exceeded—like if you lose a major lawsuit. If you have a commercial umbrella insurance policy, it will kick in once the limits of your general liability insurance are exceeded. The umbrella policy prevents you from having to pay the remaining damages out of pocket.
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.