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 USED TIRE STORE
Example 1: While retrieving a tire from a tall stack, one of your employees drops it down the ladder. It rolls out of the garage and into traffic, causing a car wreck in which two people are injured. If found liable in court, your company would probably be covered for some of the ordered payments and/or settlements related to car repair and medical fees.
Example 2: An employee drives a customer vehicle into your business's garage. Unfamiliar with the car, he accidentally rams it into the side of a steel insert, badly denting and scuffing the front fender of the customer's car. General liability insurance would probably be able to cover your business in the event it is found liable for this damage.
Example 3: A customer prefers to stand nearby and watch as your employees replace the tires on his old car. The parking brake is worn down and the vehicle rolls backward onto the customer's foot, breaking several of his toes. If your business is found liable, general liability insurance would probably provide coverage for court-ordered payments or a settlement.
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 used tire store in America spends between $450 - $1,000 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 USED TIRE 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 used tire stores should obtain:
Product Liability Insurance
As a used tire business, you will be selling products that customers depend on to get around at high speeds. If a tire pops or a vehicle slips on an icy road, you could be found liable for any resulting damages to involved people and vehicles. Product liability insurance is designed to cover damages resulting from any products your company sells.
Commercial Property Insurance
This policy protects companies from serious losses in the event that their owned real estate, equipment, tools, or products are damaged or destroyed by factors like fire and extreme weather. Particularly since tires are flammable, this is a must-have policy for a used tire business that houses large quantities of their chief product. Commercial property insurance is also invaluable for providing coverage for related equipment and tools for tire changing and similar automotive fixes.
TYPES OF COVERAGE SOME USED TIRE STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your used tire 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.
Business Interruption Insurance
If your business does suffer losses due to fires or various similarly destructive forces, this policy is a major plus in the effort to restore interrupted services. Business interruption insurance can help cover estimated losses in revenue during a temporary shutdown. If your used tire store is forced to go dormant for a little while, this policy can also cover rebuilding, relocation, and training costs for new workers learning to operate professional machinery. Protect your company during unexpected interruptions with business interruption insurance.
Commercial Auto Insurance
Tire shops may offer mobile automotive repairs or use commercial vehicles to pick up parts from a local vendor. If this is the case, a tire shop would be well advised to obtain commercial auto insurance. Any vehicle must be insured so long as it drives on public roads. With this policy, your commercial vehicles and any incurred medical expenses can be covered in the event of auto accidents.
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.