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 SPICE STORE
Example 1: A customer goes to smell a jar of cayenne pepper with too much enthusiasm and burns her eyes and nose. If the injuries are serious, it may be necessary for her to seek medical care to treat them. A general liability policy would cover expenses related to the accident.
Example 2: A visitor to your store is so focused on looking at the spice jars that he fails to see the boxes stacked on the floor at his feet. He trips, falls, and requires medical attention. A general liability policy would pay for expenses related to the accident, including the cost of medical care for the customer.
Example 3: An employee is loading a pallet of your special spice blend into the back of a customer’s car and accidentally drops the pallet on the foot of the customer. The customer decides to take legal action against your business. Your general liability coverage would cover expenses related to the accident and would pay any settlement costs if the customer filed a complaint against your business.
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 spice 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.
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OTHER TYPES OF COVERAGE SPICE 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 spice stores should obtain:
Product Liability Insurance
You always take the time to stress to customers that some of your spices need to be used carefully, particularly those that contain capsicum. Unfortunately, some customers may not follow your instructions and wind up causing themselves injury using your products. If they take legal action against your business, product liability insurance will likely help you to pay for legal costs and damages if necessary.
Workers' Compensation Insurance
As soon as you decide to get help with your spice store and hire employees, you will need to get a workers’ compensation policy. State law on workers’ compensation varies, but your state likely requires that you carry this coverage if you have one or more employees. Having workers’ compensation coverage is quite beneficial when an employee is injured or becomes too ill to work. Instead of you having to cover the costs of treatment yourself, your insurance policy will likely cover them.
TYPES OF COVERAGE SOME SPICE STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your spice 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.
Business Interruption Insurance
As careful as you are to keep your spice store running consistently, sometimes things are out of your control. Events like natural disasters and other covered interruptions can require you to shut down for an extended period of time. These disruptions are expensive and can make it difficult to keep up with the costs of maintaining your business and your own personal costs. A business interruption insurance policy is designed to help you cover these and other costs during such interruptions.
Data Breach Insurance
If you are like most retailers, you have instituted a customer loyalty program that helps attract and retain regular customers. You probably collect basic contact information from customers that want to participate, including names, phone numbers, and emails. Unfortunately, with the rise of cyber-attacks, there is always the risk of your customers’ data becoming compromised. Data breach insurance will help to cover the costs of any legal action customers take against your business in relation to a data breach.
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.