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 WATERPARK
Example 1: While climbing the stairs for a waterslide, a guest slips and falls down several steps. General liability insurance would likely cover any injuries they sustained during the incident.
Example 2: A ride malfunction results in severe injuries for several guests who were on the ride. Even if responsibility is ultimately attributed to the ride manufacturer, your waterpark may be named in a liability lawsuit. General liability insurance would likely cover the legal costs.
Example 3: An advertising campaign claims that your waterpark has more rides than are operational for the summer. Several guests who came partly because of the number of rides file a joint false advertising lawsuit. The suit would probably be covered by general liability insurance.
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 waterpark in America spends between $350-$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 WATERPARKS 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 waterparks should obtain:
Commercial Property Insurance
Waterparks need commercial property insurance for their buildings, rides, games, and other attractions. Property insurance can protect multiple types of physical assets, including buildings, equipment, inventory, and supplies.
Most water parks need robust commercial property insurance because they have many expensive features to protect. Make sure your policy’s limits at least meet the rebuilding cost of all your park’s buildings, rides, and attractions.
Commercial property insurance is generally included in a business owner’s policy (BOP).
Workers’ Compensation Insurance
Businesses that have employees typically need to protect them with workers’ compensation insurance. The coverage protects against both work-related injuries and illnesses, and it’s usually required by state law if your business has employees.
Commercial Umbrella Insurance
There is an upper limit to the amount of liability protection that primary insurance policies offer. Commercial umbrella insurance provides additional liability coverage, often in the millions of dollars.
Commercial umbrella insurance is especially important for waterparks because a single incident could result in one or more extremely expensive lawsuits. If someone drowns or multiple people are injured at once, the resulting liability costs could easily exceed a primary policy’s limits.
Commercial umbrella insurance is included in certain package policies and is also available on its own.
TYPES OF COVERAGE SOME WATERPARKS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your waterpark 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.
Business Interruption Insurance
Recovering from a disaster can take a lot of time when you need to rebuild attractions, and bills don’t necessarily stop coming due during that time. Business interruption insurance can provide supplemental revenue while your business recovers from a disaster.
Without ticket sales providing revenue following a disaster, the supplemental payments from business interruption insurance could potentially save your waterpark from bankruptcy. For many businesses that need to rebuild, this insurance is the difference between closing permanently and eventually reopening.
Business interruption insurance is included in BOPs.
Commercial property insurance generally protects against third-party theft, but it often excludes stealing by employees. If you'd like protection against employee theft, consider getting crime insurance. The insurance offers coverage for a wide array of illegal and dishonest employee actions.
Many water parks decide to get crime insurance because multiple temporary and part-time employees handle money, which gives them opportunities to steal. Even a single employee can steal a significant amount if they have the right opportunity.
Crime insurance is included in certain package policies and is also available on its own.
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.