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 WINE SHOP
Example 1: If you host special events at your wine shop, like corporate events, weddings, and large social gatherings, the clients may request proof of general liability insurance (GLI) before they schedule the event and sign any documents. This is because they want to know that if an injury or accident happens on the property, the insurance company will pay the costs related to the accident or incident, including court costs, settlements, and/or attorney fees.
Example 2: If you rent your retail space and surrounding property from a landlord, they may require proof of GLI before accepting you as a tenant and allowing you to sign the lease. The primary reason for this is because you are financially responsible for any injuries that happen to customers while they are inside your leased space and any damage that may happen to their property due to negligence on the part of you or your employees.
Example 3: Due to negligence or an accident, a wine bottle could fall off a shelf or get dropped by one of your employees. If a customer slips and falls due to the spill and becomes injured, your general liability insurance covers the resulting claim and/or any fees associated with a lawsuit.
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 wine shop in America spends between $500-$1,200 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.
OTHER TYPES OF COVERAGE WINE SHOPS 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 wine shops should obtain:
Commercial Property Insurance
Commercial property insurance covers damage to your building and the contents inside the building and on the property that your wine shop owns. Common covered damage types often include fire, theft, vandalism, and some weather events.
Commercial Liability Umbrella Insurance
Sometimes your commercial insurance policies won’t cover the entire cost of the claim submitted by the injured customer or the property damage they incurred. If this happens, you’ll need commercial liability umbrella insurance, which pays for claim overages. Without it, you could be responsible for all the incurred costs over your policy’s payout limitations.
Liquor Liability Insurance
Liquor liability insurance protects you in the event that a customer gets drunk on your property from the wine you serve and gets into a car accident on the way home or injures another person while drunk.
Workers’ Compensation Insurance
Workers compensation pays for employee injuries that occur while they are on the clock or performing professional duties.
TYPES OF COVERAGE SOME WINE SHOPS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your wine shop 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 Auto Insurance
If your wine shop uses vehicles, like cars and vans, for business purposes, you will need commercial auto insurance in order to protect you against financial loss if your vehicle is in a car accident.
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.