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 TRANSLATION BUSINESS
Example 1: You are visiting a client’s office to discuss the translation of some legal documents. You fail to see an extension cord running to a desk and catch it with your foot—pulling down a tower of expensive-looking equipment. Your general liability policy would cover the cost of replacing their equipment if they demand that you cover the bill.
Example 2: In your marketing efforts, you accidentally reproduce similar marketing material from a competitor, and the competitor sues you for copyright infringement. With a general liability policy, you will have financial coverage to pay for your legal costs. If you wind up settling out of court, your policy will pay the settlement, up to your policy limits.
Example 3: One of your employees accidentally spills coffee on an old text she is translating. The damage to the text is considerable. Your general liability insurance covers damage to the property of customers on behalf of you and your employees, so your coverage should help cover the costs of replacement or repair.
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 translation business in America spends between $400-$700 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 TRANSLATION 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 translation businesses should obtain:
Commercial Property Insurance
The computers and other equipment you use in the translation process are expensive, which means they will require a big financial outlay if they are destroyed due to an unexpected event like a fire. With commercial property insurance, you have coverage to help you pay for the replacement of your commercial property so you do not have to pay the cost out of pocket.
Professional Liability Insurance
Translation is as much an art as a science, with room for interpretation based on a variety of factors. Some of your clients may be depending on your translations for serious issues like legal concerns or financial concerns. Should you make a mistake, they could take legal action against your business. Professional liability insurance covers claims of negligence due to mistakes and is tailored to your individual business.
TYPES OF COVERAGE SOME TRANSLATION BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your translation 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 are used primarily for business, commercial auto insurance will provide coverage to ensure that you meet legal requirements determined by your state. With commercial auto insurance, you and your employees have financial support in the case of an accident—to help cover vehicle repair/replacement, medical bills, and other related costs.
Home-Based Business Insurance
For business owners who run their translation businesses out of their homes, it is important to understand that homeowners insurance likely does not cover all the liabilities related to business operation. A home-based business insurance policy can help to cover accidents resulting from business activities—such as if a client visits your home for translation services and is injured during the visit.
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.