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 SMOOTHIE COMPANIES
Example 1: An employee spills a smoothie on the floor in front of the counter and quickly mops up the mess. He forgets to leave a notice that the floor is slippery due to mopping, and an elderly customer slips on the wet floor. The customer’s ankle is broken, and your company is found liable. General liability insurance could likely help in covering payments ordered by the court or any settlement reached regarding medical expenses.
Example 2: An employee is in a hurry, hauling a large box of newly arrived store equipment through the customer waiting area instead of the back door. He loses his grip, dropping the heavy box on a customer’s foot. The customer suffers a bone fracture and requires a cast and a wheelchair for several months. If found liable in court, your business would probably be covered by general liability insurance for the cost of a settlement or ongoing medical payments.
Example 3: An employee at one of your locations decides to begin making and selling an imitation smoothie sold by a competing smoothie store. She advertises this product on a chalkboard sign outside, and word gets around to the competing business. They sue your company for copyright infringement. Your business would likely obtain coverage from general liability insurance in the event of a settlement or a payment ordered by the 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 smoothie store in America spends 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.
OTHER TYPES OF COVERAGE SMOOTHIE STORES 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 smoothie stores should obtain:
Product Liability Insurance
This is a key policy for all businesses that sell food products. Between choking hazards, allergies, or other food-related damages, a company can find itself in hot water without a policy to cover serious product lawsuits. It is necessary to keep your smoothie business safe with a product liability policy in case a customer suffers unexpected health consequences that are linked to your beverages. This insurance covers a variety of damages caused by the products you sell, and it can be custom-tailored to your business for maximum effectiveness.
Commercial Property Insurance
A given smoothie store location will contain not only ingredients and supplies but also expensive machinery used in custom-crafting its advertised smoothie beverages. Commercial property insurance is essential for business owners looking to protect their inventory, equipment, and owned real estate investments from threats like fire and weather. Avoid costly replacement losses from unpredictable disasters with a commercial property policy.
TYPES OF COVERAGE SOME SMOOTHIE STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your smoothie store 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.
Workers’ Compensation Insurance
Your business may begin as a smoothie stand, but if you make sound business choices, with a bit of luck, you can begin expanding. Expansions often include a need for employees who will be working under you. If you hire part-time or full-time workers to help run your business, you will be legally required to purchase workers’ compensation policies. This insurance keeps your employees covered in the event of on-site accidents and provides disability and death benefits for any damages that they may suffer while in the workplace.
Business Interruption Insurance
A successful business is an active business. But what happens when unexpected events cause your business to shut down temporarily? It can be disastrous for a business to go dormant, not only because of the loss of revenue during a shutdown but also the potential discouragement or confusion of customers who decide not to return. Business interruption insurance can provide coverage when your company's storefronts or other facilities need to undergo repairs, relocations, or even wait out nearby major construction that prohibits access to your location. Some causes of a temporary shutdown include fire, tornadoes, and similar destructive forces.
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.