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 REPAIR BUSINESS
Example 1: A customer is visiting your store. She leans on one of your display cases and the glass breaks, cutting her hand and her arm. She demands that your business pay for her medical treatment. Your general liability insurance would likely cover the cost of her medical care for her injuries.
Example 2: One of your customers is walking in from your parking lot when she slips on some ice and breaks her arm. She decides that you are responsible for her injuries and sues your business. The general liability insurance you carry will pay for your legal defense costs in such a situation as well as any payouts or settlements if you need to settle the case out of court.
Example 3: A customer leaves a collection of valuable watches with you for cleaning and repair. You ask an employee to bring the box of watches to your other store. He is loading the car when he sets the box down behind the vehicle. Another car drives by and runs over the box, smashing the box and its contents. Your general liability insurance would likely pay to replace the watches.
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, watch repair businesses 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.
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 repair businesses should obtain:
Commercial Property Insurance
You have probably invested a significant amount of capital in your watch repair business. It would be costly to have to replace your equipment, supplies, inventory, and other commercial property if it was damaged in an event like a fire. But if you have commercial property insurance, you do not have to pay for all the replacement costs yourself. As long as the damage was caused by a covered event, you can file a claim and get financial assistance to repair or replace your property.
Professional Liability Insurance
While you do your best to serve your customers, there is always the possibility that one of them could claim that your professional services caused them harm. If a customer was to sue your business due to a mistake you made, your professional liability insurance would pay for your legal defense costs. It would pay for not only an attorney but also for a settlement if you needed to settle the case out of court.
In addition to the policies outlined above, there are a few other types of coverage your watch repair 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.
Workers’ Compensation Insurance
Most states require employers to carry workers’ compensation insurance. The policy will pay for medical treatment for your employees if they are injured performing work-related duties. It will also pay for some of the lost wages employees miss while recovering from their injuries.
Commercial Umbrella Insurance
A commercial umbrella policy is designed to take over where your general liability insurance policy leaves off. For example, if your business was to lose a major lawsuit and the damages you had to pay exceeded your general liability limits, your umbrella policy would pay the remaining damages up to its own limits.
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.