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 A VINTAGE TOY STORE
Example 1: A customer is visiting your shop to ask about a certain vintage toy he has been unable to find elsewhere. After discussing the toy with you, he turns around to leave and trips over a display. He falls and suffers an injury to his arm which requires medical care. He asks that you pay for the treatment. Your general liability insurance would cover the costs for treatment if you file a claim.
Example 2: A competing toy company has taken issue with your logo and has filed legal action against your business. General liability insurance would pay for the legal fees to defend your business and a settlement if one is necessary.
Example 3: You are carrying a box of toys out to a customer’s car when you trip and drop the box on her foot, breaking her toe. She decides to sue your business for her injuries and the lost wages that result. Your general liability policy would pay for the cost of your legal defense, including hiring an attorney. It would also pay for a settlement if one is required to end the lawsuit and protect your company.
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.
On average, vintage toy stores in America spend 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.
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 vintage toy stores should obtain:
Product Liability Insurance
If you sell a toy to a customer and they claim the item caused them harm, they may file a lawsuit and try to collect damages against your business. Your product liability policy can be tailored to your business to protect you against this type of liability. If you are sued, your insurer will cover the cost of your legal defense and any settlement that’s required.
Commercial Property Insurance
Commercial property insurance protects your products and any other covered business property. If you were to lose much or all of your property due to fire, theft, or natural disaster, your commercial property policy would help you replace your valuable vintage items. This can be the difference between keeping your business afloat or closing up shop.
In addition to the policies outlined above, there are a few other types of coverage your vintage 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
Your state likely requires you to carry workers’ compensation insurance if you have any employees, full-time or part-time. The policy you purchase will pay for medical treatment and lost wages if an employee is hurt performing work-related duties. With workers’ comp, your business and your employees are protected in the event of an injury.
Commercial Umbrella Insurance
In most cases, you can expect your general liability insurance to cover your business from potential liabilities related to doing business. However, there are times when the limits of a general liability policy can be exceeded. For instance, if you were to lose a major lawsuit the damages may go beyond your general liability policy. If you have commercial umbrella insurance, it will pick up where the general liability policy leaves off.
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.
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.