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 SURFING SCHOOL BUSINESS
Example 1: While trying to catch a wave, your student falls and is hit in the head by the fin of their board. Despite having signed a waiver assuming certain risks, she’s named the school in a lawsuit. While you might ultimately be exonerated, you will need legal representation. General liability insurance would cover the legal fees and any payout awarded by the courts for injury.
Example 2: Several of your students store their surfboards at the school on off days. An employee fails to properly secure the property before leaving for the evening and thieves steal everything of value. General liability insurance would cover the cost to replace your students’ boards.
Example 3: Unbeknownst to you, your website designer uses a photo on the school’s new site that is copyright protected. The photo owner is suing both you and the designer for copyright infringement. A general liability policy would cover your legal representation and damages the court orders the school to pay.
Example 4: The application to participate in a local outdoor festival requires evidence of at least $1 million in liability. General liability insurance would help fulfill that requirement.
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, surfing schools in America spend between $350 - $650 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 surfing schools should obtain:
Professional Liability Insurance
Your students rely on your professional expertise to ensure they meet their surfing goals. If a client claims they are wronged or harmed due to your professional negligence, they have a right to sue you for damages. Professional liability insurance, also known as Errors and Omissions (E & O) insurance, covers associated legal costs and court-awarded damages.
Commercial Property Insurance
Commercial property insurance provides coverage for owned buildings and their contents, should a covered loss such as a natural disaster, fire, or theft occur. Business owners should discuss their business model and financial responsibilities with an insurance agent to properly protect their business investments.
Commercial Auto Insurance
Vehicles used for business purposes are specifically excluded on personal auto policies. If you use your vehicle for business purposes, you must obtain commercial auto insurance to fill any gaps in coverage. This policy covers the cost to repair or replace third-party property, the company’s damaged vehicle, and any equipment damaged in an accident. Purchasing the state-mandated minimum coverage leaves many entrepreneurs underinsured. Therefore, we encourage you to discuss policy coverages at length with your insurance professional.
Inland Marine Insurance
If you and your team frequently take business-owned tools and equipment offsite, an inland marine policy may be necessary. Commercial property insurance covers against a loss at the insured location, but limits the coverage while in transit or at another property. Inland Marine Insurance fills this coverage gap.
In addition to the policies outlined above, there are a few other types of coverage your surfing school 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.
Workers’ Compensation Insurance
Once your business has grown enough to hire a team, your state will require a workers’ compensation policy. This covers medical bills associated with an on-the-job injury, employee lost wages, and legal representation for the business owner if a lawsuit is filed.
Business Interruption insurance
If you experience a commercial property loss, your business could face a serious financial setback. Business interruption insurance provides loss of income and fixed expense coverage, and assists in moving the insured to a temporary location while their claim is being settled.
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.