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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A TORTILLERIA
Example 1: As a display of customer appreciation, you throw an annual holiday party. The icy conditions cause one guest to slip and fall in the venue’s parking lot. They decide to sue both you and the venue owner for medical bill reimbursement. Your general liability insurance would help with legal expenses and any damages your business is ordered to pay by the court.
Example 2: As part of the lease agreement for your new workspace, you are required to show evidence of liability insurance for at least $1 million. Your general liability policy should help fulfill that obligation.
Example 3: During an interview for a local paper, you are critical of another tortilleria. They have named you in a lawsuit, citing defamation. Your general liability policy would cover your legal fees and court-awarded damages.
Example 4: A customer returns a package of tortillas, claiming they found a foreign object in the packaging. After naming your business in a lawsuit, your general liability insurance would cover your legal costs and any damages awarded 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
On average, torillerias in America spend 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 torillerias 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 torillerias should obtain:
Commercial Property Insurance
This policy covers business-owned real estate and business property in named perils, such as fire or natural disaster. The policy can be tailored to meet your specific business insurance needs, whether you are a renter or building owner. Business owners are encouraged to carefully consider the replacement cost of all covered items before purchasing a policy.
Product Liability Insurance
Without product liability insurance, claims that arise from the manufacturing, distribution, and sale of your tortillas will not be covered. For example, if your tortillas make people sick, customers who claim negligence on your part, regardless of merit, can sue you in a court of law. This coverage provides legal representation and pays damages awarded by the court.
Workers Compensation Insurance
The state mandates that all businesses with employees must carry workers compensation insurance. If a worker is injured or becomes ill while doing work-related activities, the policy would cover their medical bills and a percentage of wages lost while out of work. Additionally, it protects the employer against lawsuits, offering legal representation if an employee sues.
Types of Coverage Some torillerias May Need
In addition to the policies outlined above, there are a few other types of coverage your tortilleria 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 Umbrella Liability Insurance
As a business owner in the food industry, you are exposed to a number of liability risks out of your control. Your general liability policy is the first line of defense in a liability claim. Once the limits of that policy have been exhausted, you could be held responsible financially. With a commercial umbrella policy in place, you have an added layer of protection, as this policy picks up where a general liability policy leaves off.
Commercial Auto Insurance
If your business model includes delivery, your personal auto policy will specifically exclude business-related accidents. To ensure there are no gaps in coverage, vehicles should be covered under a commercial auto insurance policy. The policy would cover the cost to repair your damaged vehicle, third-party liability claims, and lost equipment in the event of an accident. While the state mandates the minimum amount of coverage you must carry, entrepreneurs should consider protecting their assets by purchasing more than the minimum requirement.
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.