If Your Landlord Is Requiring Your Business To Obtain Commercial General Liability Insurance (CGL), Read This Guide:
From the bustling kitchen of a small restaurant to the clang of tools in an automotive repair shop — every business is unique and yet, a common thread ties all businesses together: The liabilities or risks businesses face when operating. Most business owners first learn about general liability insurance when they rent their first commercial property. Any risk-averse commercial property owner will require their business tenants to maintain an insurance policy in good standing as a requirement of the lease. Realicore, a commercial property management company, will break down the process and explain the importance of obtaining general liability insurance in this guide.
Disclaimer: Realicore is not an insurance provider. This guide is for informational purposes only and you should not take action based on the information in this guide without first consulting a licensed insurance agent who is familiar with the type of insurance you are looking to purchase.
Identify Your Potential Risks
The first step to choosing the proper general liability insurance product (Also known as commercial general liability insurance or CGL) is to educate yourself about the risks your business may face on a day-to-day basis. Consider the diverse challenges your specific business may face such as property damage, theft, employee accidents, and the always looming threat of lawsuits. If liability exists, there is most likely an insurance product to help protect you and your business against financial loss.
Start to tailor your risk assessment by answering some critical questions:
How do you interact with clients?
Do you operate from a physical location that requires protection?
Do you operate online?
Do you own business vehicles?
Do your employees operate any equipment?
How do you handle significant monetary transactions?
Your answers will unveil specific risks that require precise coverage to protect against.
Master the Language of Insurance
Diving into the world of general liability insurance requires more than a cursory glance; it demands fluency in the language of insurance. Terms like deductible, premium, and coverage options should be more than legal jargon; they should be your guiding stars. Before stepping into the insurance marketplace, equip yourself with the knowledge that empowers sound decision-making. Understanding these intricacies will not only help to safeguard your business venture, but also ensure you get the level of coverage you truly need. Here’s some common commercial insurance terms and their definitions.
Deductible: The amount you pay for covered services before your insurance plan starts to pay.
Premium: The amount you pay each month (or year) to keep your insurance policy active.
Limits of Liability: The amount of loss your insurance company will cover.
Additional Insured: The inclusion of an “Additional Insured” clause within a general liability insurance policy broadens the coverage scope to include additional people or companies beyond the initial policy holder.
Decide What Type You Need
There is a myriad of insurance companies out there, who all offer different policies. Before shopping, you should familiarize yourself with the varying types of insurance that are available. General liability insurance, akin to a basic starter kit, typically covers claims of bodily injury or property damage arising from your business operations. If you're aiming for a more comprehensive package, a business owners policy (BOP) might be your insurance of choice. It bundles general liability with property and business interruption coverage, offering a broader shield to your operations. Workers’ compensation is also usually required for businesses with employees, ensuring coverage for workplace injuries. If your enterprise wheels around on vehicles, don't forget commercial auto insurance. Finally, most businesses who operate using equipment can even get insurance that covers the maintenance or replacement of equipment that breaks down unexpectedly.
Research Coverage and Limits
Now that you've identified the types of general liability insurance, it's time to explore the coverage details and limits. Consider the following—does the insurance cover employee theft or cash-handling risks? What about fixtures within your property? Understanding how replacements are handled is paramount; is it a straightforward replacement cost coverage or a more nuanced actual cash value coverage? The devil, as they say, is in the details, and a comprehensive understanding of your coverage will save you from unpleasant surprises in times of need. Dive deep into the specifics, leaving no nook or cranny of your commercial property unprotected. Never lie to your insurance provider about what your needs are as you may find yourself without coverage in the middle of an unfortunate circumstance.
Research Pricing
Cast a wide net and explore multiple quotes—don't hastily settle for the first offer that lands on your desk. Pricing can vary, and understanding the nuances of each quote is essential. Consider the potential advantages of bundling different coverages. Sometimes, a comprehensive package can be more cost-effective than a piecemeal approach. If you are okay with a larger deductible, you can typically save on the cost of your insurance premium, but you may have to shell more money out of your pocket in the case of a claim before insurance kicks in and pays for the rest of the damage.
Choose a Reputable Company
Research your potential insurance policy provider to ensure they are a reputable and trustworthy company that you can count on when you need it most. Reviews are important, allowing you to delve into the experiences of others. A reputable company not only provides robust coverage but also a responsive and understanding team. Your insurance agent should be your trusted ally, navigating you through the intricacies of plans and understanding the unique needs of your business operations.
Review and Update Your Plan Periodically
Regularly reviewing and updating your commercial property insurance plan is essential. Your insurance needs are dynamic, influenced by the changing landscape of your business. These periodic reviews act as crucial checkpoints, ensuring your coverage remains relevant and effective. Whether your business expands or diversifies, revisiting and adjusting your plan proactively addresses evolving risks, offering the flexibility needed to navigate the shifting landscape of your business. At a minimum you should be reviewing your current insurance policies once per year.
Final Step: Confirm with the Landlord of the Commercial Property You Are Leasing
Before finalizing your insurance policy, you may want to check with your landlord to ensure the terms and conditions of the policy meet their requirements. You may be in breach of your lease if you do not carry the proper insurance.
Navigate with Confidence
As we wrap up this insightful guide, our hope is that it proves to be a valuable tool on your journey to secure commercial general liability insurance. Navigating the intricate landscape of insurance can be a complex task, and we believe that understanding the key steps outlined here will empower you to make informed decisions for your unique business venture.
At Realicore Property Management, we don't just offer guidance on insurance matters to your tenants; we bring The Realicore Difference to every aspect of property management. If you require professional, reliable property management services for your commercial properties, we invite you to reach out to us at (909) 810-2108. Our dedicated commercial property team is ready to assist you, ensuring that your property management experience is not just seamless but also tailored to meet the specific needs of your investment properties.
