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 TOY STORE
Example 1: A customer comes into your store close to closing when employees are mopping. The customer slips on the wet floor and hits their head. General liability insurance would likely cover the cost of treating the injuries sustained.
Example 2: A child left unattended begins to climb your store’s shelves. They make it several shelves up before turning and falling when their parent calls them. General liability insurance would likely cover any injuries suffered in the fall.
Example 3: On Black Friday, a doorbuster draws a crowd to your store before the posted opening time. The customers stampede when doors open, and one customer is injured by others in the mayhem. The customer’s injuries would probably be covered by general liability insurance.
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 toy store in America spends between $300-$800 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 TOY 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 toy stores should obtain:
Commercial Property Insurance
Stores that own the space they’re in will need property insurance. And in addition to covering buildings and other commercial spaces, property insurance can also protect equipment and inventory.
Make sure the commercial property policy you select fully covers your store’s toy inventory. In addition to having limits that are at least equal to the value of your store’s inventory, the policy should also cover both electronic and non-electronic toys.
Commercial property insurance can be purchased through a business owner’s policy (BOP).
Product Liability Insurance
Businesses that sell products might be held responsible for damage or injuries that these products cause. Product liability insurance coverage helps protect against product-related risks.
Product liability insurance is especially important for toy stores. Even if all necessary warnings and precautions are in place, parents may sue a retailer if their child is injured by a toy. Regardless of the outcome of a lawsuit, the legal fees alone can cost a lot.
TYPES OF COVERAGE SOME TOY STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your toy 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.
Workers’ Compensation Insurance
If your store has employees, most states will legally require you to have workers’ compensation insurance. This protects employers in the event of an on-the-job injury.
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.