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 TILE BUSINESS
Example 1: A customer is visiting your store to pick out tile for a bathroom renovation. While she is rounding a corner, one of your employees runs into her, dropping a box of tile on her foot and breaking it. She asks that your business cover her medical treatment for the broken foot. Your general liability insurance policy will likely cover this expense.
Example 2: One of your employees is bringing a dolly stacked with boxes of tile to the car of a customer when he trips and falls. The dolly falls over, spilling the tiles all over the car of the customer. The damage is extensive, and the customer files a lawsuit against your business. The general liability insurance you carry will pay for your legal fees, including the cost of a settlement if necessary.
Example 3: A visitor to your store begins to rant incoherently and knock over boxes of tile, scaring both customers and employees. You call the police, and they take the man away. Later, you are notified that the man is suing your business over the incident. Your general liability insurance will pay for your legal costs related to the lawsuit. It will also pay for any payouts or settlements if you need to settle the case out of 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 tile business in America spends between $500-$1,500 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 TILE BUSINESSES 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 tile businesses should obtain:
Commercial Property Insurance
Your stock of tile, along with your other inventory, took a considerable investment to acquire. Losing all of your inventory, or even a large portion of it, would put a great financial burden on your business. But if you have commercial property insurance and you lose your property due to a covered event—like a fire—then you can get compensation to help buy new inventory. With the financial help provided by your insurance policy, you can get new tile and other supplies as soon as possible so you can get back to doing business.
Workers’ Compensation Insurance
Workers’ compensation insurance will ensure that medical treatment for employees’ work-related injuries is paid for. It will also cover some of the wages they lose while recovering. Most states require employers to carry workers’ comp.
TYPES OF COVERAGE SOME TILE BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your tile 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.
Commercial Auto Insurance
If you have one or more vehicles that you use primarily for your tile business, you need commercial auto insurance. Your state requires auto insurance for commercial vehicles. Having commercial auto coverage will ensure that you can get your vehicle repaired or replaced in the event of an accident. It will also pay for medical care if anyone is injured.
Commercial Umbrella Insurance
The general liability insurance policy you have is excellent for most circumstances, but it is possible to exceed your policy limits—like if you lose a major lawsuit. With just a general liability insurance policy, when the limits of your policy are exceeded, you are left needing to pay the damages that are left over. But if you have a commercial umbrella policy, it will pick up where the general liability insurance leaves off so you don’t have to pay the rest out of pocket.
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.