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 VIRTUAL TOUR BUSINESS
Example 1: During an editing session, a client’s film is destroyed after a staff member permanently deletes the file. The client has a stringent deadline and sues for loss of income. General liability insurance would cover the costs associated with a lawsuit or formal compensation claim.
Example 2: During an editing session, a client’s film is destroyed after a staff member permanently deletes the file. The client has a stringent deadline and sues for loss of income. General liability insurance would cover the costs associated with a lawsuit or formal compensation claim.
Example 3: The name of your virtual tour business is similar to that of another tour company in the area. The other company sues for trademark infringement and lost revenue due to consumer confusion. General liability insurance would cover the costs to fight the lawsuit or pay 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.
On average, virtual tour businesses in America spend between $500 - $1,100 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 virtual tour businesses should obtain:
Commercial Property Insurance
If you own your virtual tour office, this insurance covers the grounds, structure, and any equipment you own. Your editing equipment is a major investment for your company, and this insurance protects it in events such as natural disasters, theft, and fires.
Workers’ Compensation Insurance
Workers’ compensation insurance covers all employees in your organization, whether they work four hours or forty hours per week. It applies to staff who work in formal office space as well as employees who work from home. This insurance covers sudden accidents, such as a broken leg, or injuries that develop over time, such as chronic shoulder pain from hunching over an editing table.
Professional Liability Insurance
This insurance can help protect your company if your staff gives professional advice to clients. For example, a virtual tour business may inform owners to showcase their business in a certain light or they advise clients on how to disclose certain facts about an establishment. If the client feels they were misled or lost business due to these suggestions, professional liability is available to protect against a lawsuit.
In addition to the policies outlined above, there are a few other types of coverage your virtual tour 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
Umbrella insurance is only available in the event a general liability policy reaches its maximum payout for a claim. It’s a policy that can keep your business alive if you have to face a particularly difficult and costly liability lawsuit.
Data Breach Insurance
Because so much of a virtual tour business is online, this insurance is available in case your files are hacked or your client’s sensitive details are stolen. It can protect you from financial loss if your clients sue you for a breach of their data or if your editing files are ransomed.
Business Interruption Insurance
If your equipment is out of commission due to a covered event (e.g., natural disaster, fire, etc.), you’ll likely need to shut down until you can get everything repaired or replaced. If you need to close for an extended period of time, business interruption insurance provides an income based on past revenue.
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.