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 AN UPHOLSTERY BUSINESS
Example 1: When you’re upholstering a custom chair, a termite burrows itself into the stuffing and begins attacking the wood of the chair. General liability insurance would cover the costs to repair the chair.
Example 2: Your upholstery company’s name has a logo that is similar to another furniture store in an adjacent town. The store decides to sue your company for lost business due to customer confusion. General liability insurance would cover the costs of the lawsuit or settlement.
Example 3: During a demonstration to a client, some of your furniture oil spills on the ground. The customer slips on the oil and hits their head on your workbench. General liability insurance would cover the costs of their medical bills.
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, upholstery businesses in America spend between $400 - $1500 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 upholstery 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 upholstery businesses should obtain:
Commercial Property Insurance
If you own the space where you work, you’ll need commercial property insurance to cover your equipment, inventory, and structure if it’s damaged or destroyed. From strong storms to opportunistic criminals, this insurance will compensate business owners for a variety of events.
Professional Liability Insurance
If you give your clients advice about how to best care for their furniture, professional liability insurance is there to cover you in case you make a mistake. If you omit an important detail or give incorrect directions, a client could claim that your advice ruined their investment. This is likely only needed if you work with especially valuable furniture, such as in-demand commercial antiques or museum pieces.
Workers Compensation Insurance
Upholstery businesses can use dangerous tools or chemicals to treat their furniture. This insurance ensures employees get the funds they need to cover either sudden accidents or injuries caused by repetitive motions.
Product Liability Insurance
This insurance provides extra protection in case a customer is injured due to your furniture. For example, if the sharp wooden edge of an armrest wasn’t properly covered, this insurance will help cover any medical expenses that result from the defective product or workmanship.
Commercial Auto Insurance
If you transport any of your materials in a vehicle, this insurance policy is there to cover both the inventory and tools you use for your business. A personal insurance policy will only cover standard bodily injury and property damage, not your commercial property.
Types of Coverage Some upholstery businesses May Need
In addition to the policies outlined above, there are a few other types of coverage your upholstery 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 Umbrella Liability Insurance
This insurance is available to upholstery business owners for major liability claims. It provides protection above and beyond a general liability policy. If your business faces a particularly long or costly lawsuit, this insurance will protect you even when your general liability limits have been met.
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.