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 TEA SHOP
Example 1: A customer walking into the shop trips on a cord that’s been misplaced by an employee. The customer suffers a head injury. General liability insurance may help cover the costs associated with the customer’s medical bills and other losses, including expenses related to a settlement filed against the company. It would also provide an attorney to defend against any lawsuit.
Example 2: The company’s marketing campaign uses a phrase that a competitor has copyrighted. This creates a claim from the competitor of copyright infringement. General liability insurance may help cover the settlement or lawsuit associated with the competitor’s claim.
Example 3: The tea shop leases space within a retail center that requires tenants to maintain a general liability insurance policy. Having a policy ensures that the company meets the requirements of the property owner.
Example 4: An employee is offering passerby a cup of tea to try to encourage them to walk into the shop. The tray of hot tea spills, causing significant burns to an individual. General liability insurance is likely to help cover the losses including medical bills, any lawsuit filed against the company due to the incident, and any settlement paid to the party as a result of the incident.
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 tea shop 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 TEA SHOPS 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 tea shops should obtain:
Commercial Property Insurance
Some tea shops own their own buildings. Protecting the value of the property as well as any contents and equipment within it is vital to the operation of your company. In a tea shop, a fire, storm, or vandalism event could cause damage. Commercial property insurance helps cover all of the equipment, inventory, and the building itself in such an event. This type of business insurance is typically a part of a business owner’s policy (BOP).
Workers' Compensation Insurance
Tea shops tend to employ several people. Depending on the number of employees and state law, it may be a requirement to maintain workers’ compensation insurance. Even if not required, it can help cover any type of worker injury or illness that occurs on the job. In tea shops, burns could be a key concern for employees. Even if the tea shop just sells products without any preparation, there is still the risk of a fall or injury, making this business insurance essential.
TYPES OF COVERAGE SOME TEA SHOPS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your tea shop 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.
Product Liability Insurance
Some tea shops blend their own varieties of tea. Others sell products from their own manufacturing or third-parties. If a business sells products to the general public, especially items they’ve created themselves, there is the risk of a product failure claim. A consumer could become ill or suffer burns using the equipment and file a claim against your business. Product liability insurance helps to cover these types of losses.
Data Breach Insurance
Tea shops gather the personal data of their customers to process payments. If there is an instance in which a thief hacks their computer files, it could expose the customers’ information, creating a data breach concern. Typically, a standard general liability insurance policy will not cover this type of loss, but a data breach insurance policy may help cover claims, notifications to the customers, as well as ongoing credit monitoring services.
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.