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 VAPE SHOP
Example 1: In an effort to reach a product in your store, a customer presses down on a glass display case and shatters it. He sustains deep lacerations that require medical attention. When he demands that you pay for the medical care costs, you can contact your insurer to get the bills covered by your general liability insurance policy.
Example 2: While marketing your company, you put out an advertisement claiming that your vape shop has superior e-cig supplies than the competitors in your area. One of these competitors decides that you have damaged the reputation of his business and takes legal action. Your general liability insurance policy will cover the cost of your legal fees, including the cost of your legal defense and the cost of any settlement.
Example 3: The parent of a customer has determined that your store is responsible for the excessive e-cig use of his son and files a lawsuit against your business. Your legal fees are covered by your general liability insurance, so you don’t have to pay for an attorney to defend your business.
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 vape shop 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 VAPE SHOPS 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 vape shops should obtain:
Commercial Property Insurance
With all of the e-cig juice and vaping equipment you carry in your shop, it is important that you carry commercial property insurance. The commercial property insurance policy you purchase will ensure that you can get financial assistance should you sustain a significant loss of inventory in an event like a fire or storm. That way, you can get more inventory as quickly as possible and get back to selling your products.
Product Liability Insurance
You sell a wide variety of products. If one of your customers sustains an injury that he or she blames on your products—like a vape pen or a certain type of e-cig liquid—that customer may sue your shop. Your legal defense costs would be covered by your product liability insurance policy. Should you need to settle out of court, your policy would cover those costs as well.
TYPES OF COVERAGE SOME VAPE SHOPS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your vape shop 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 you have employees in your vape shop, you need workers’ compensation insurance to protect them in the event of a work-related injury. Workers’ comp pays for medical treatment for work-related injuries and work-related illnesses, as well as lost wages, should the employee be unable to work for a period of time. Most states mandate that employers carry workers’ comp coverage, although the exact details of when the insurance is required and what coverage limits are required vary by state.
Commercial Umbrella Insurance
A commercial umbrella policy is designed to pick up extra expenses when the limits of your general liability insurance policy are reached. There are certain situations where this can occur, such as if your business loses a big lawsuit. Instead of needing to pay the extra costs from your own funds, you can rely on the commercial umbrella insurance coverage to take care of them.
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.