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 A WATCH COMPANY
Example 1: A customer comes into your store and accidentally trips over some cables running across the floor. As a result, the customer breaks an arm and hits their head on the floor. General liability insurance would cover the customer’s medical costs and any other damages in the event of a lawsuit.
Example 2: As a supplier unloads merchandise onto your back dock, the overhead door malfunctions and hits the supplier’s vehicle. The impact not only damages your incoming merchandise but also crushes the rear door of the delivery vehicle. General liability insurance would cover the vehicle repair costs as well as your damaged merchandise.
Example 3: An employee moves some heavy tools from your off-site storage to your store. To get the tools inside, the employee must drive a pallet jack through the parking lot. As the employee maneuvers the pallet jack into the side door, they lose control and the pallet slams into a customer’s car. The accident smashes the customer’s car window and leaves the door inoperable. Your general liability insurance would pay for damages to the customer’s vehicle.
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, watch companies in America spend between $350 - $750 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 Watch Companies 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 watch companies should obtain:
Product Liability Insurance
If one of your watches or other products somehow causes a customer to become injured and they sue, you could be held liable for damages. Product liability insurance would cover your legal defense costs and any settlements awarded to your customer as a result of the lawsuit.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. If one of your employees becomes injured at work or falls ill after a work-related accident, workers’ compensation insurance will cover their medical costs and, if appropriate, any disability benefits.
Types of Coverage Some Watch Companies May Need
In addition to the policies outlined above, there are a few other types of coverage your watch company 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 Insurance
While you've planned to protect your business from the most common workplace incidents, certain situations could lead to a lawsuit that may exhaust your primary insurance limits. Commercial umbrella insurance provides coverage beyond your current policy limits, in the event of an expensive accident or lawsuit.
Business Interruption Insurance
Disaster can strike anytime, forcing you to close down while you make repairs. If you must temporarily close after a fire, robbery, or weather-related accident, business interruption insurance can cover some of your financial losses. In many cases, you may purchase this type of coverage as part of a comprehensive business owner’s policy or BOP.
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.