Retail Insurance: What Kind of Insurance Does My Business Need?

Fran
Fran Majidi
September 13, 2019

Retail business insurance is something every shop owner needs to have. Even online retailers need business insurance, which is called product liability insurance for online retailers (a mouthful but it’s cheaper than retail store insurance). Each type of shop has specific exposures and needs.

In a brick-and-mortar shop, customers are prone to accidents, like twisting an ankle or having a slip-and-fall accident. In a storefront, there is foot traffic, employees and equipment and you never know when there will be an unexpected mishap. Accidents aren’t the only part of this picture. Your business may be held responsible for property damage. Your inventory may get lost, damaged or stolen. On top of it all, you have to protect yourself and your employees, were they to get injured or sick while on the job. The answer is to buy the right retail store insurance.

With the right retail store business insurance package, you’ll be protected in most if not all situations that may arise. If you compare business insurance quotes, you won’t be paying too much for commercial insurance, either. Whether you are a business owner with a clothing boutique, a smoke shop, a pet store, or a flower shop you need protection. We’re here to make it easy to get the right retail insurance.

What Kind of Insurance Do I Need for a Retail Store?

Retail space insurance is usually a mix and match of different products. General liability insurance for a retail store will cover lawsuits that may result from customer injury. Workers’ compensation insurance is what will cover you if your employees get injured or ill while on the job. A business owners policy (BOP) would protect your storefront and other commercial property and personal property. Depending on your transportation needs, you may also need commercial auto insurance. If you have a delivery van or truck, you’ll definitely need to have a commercial policy for that vehicle.

Retail Insurance Products

Below, we mention all the ways your business is exposed to financial risk. You can pick and choose the different products you want a la carte or simply buy a BOP policy as described below, which bundles the essential coverages and is what many retailers buy for cost effectiveness.

General Liability for Retail Insurance Businesses

General liability coverage for retail businesses is the most important layer of insurance. This protection is what will help you fight a liability claim for injuries (often called bodily harm), property damage and breaches of contract with vendors. It also covers copyright infringement, defamation and other forms of advertising injury. Retail liability insurance is the same thing as general liability insurance.

The general liability portion of a retail store business insurance will cover you if the shelving unit in your shop falls apart and a customer sustains an injury. If you’re a florist and someone slips on the water-spill in your shop, you’re covered. If someone gets bit by the dog that’s up for adoption in your petstore, you’re covered too. There’s really no such thing as retail liability insurance; a general liability policy is the closest thing to it. This type of coverage is included in a BOP policy and is more expensive to buy as a standalone policy.

Commercial Retail Property Insurance

Commercial Property Insurance for a retail store is important too. This is the part of your policy package that would cover the building, equipment and inventory. Retail inventory insurance is really called commercial retail property insurance.

Imagine that a bad storm damaged the roof and allowed rain to pour into your shop. If you don’t have the right protection, you’d be at a loss with whatever inventory and merchandise you had on the premises. You may lose expensive equipment in the process too, depending on what you keep at the shop.

Other perils that are covered in a commercial retail property policy include fire, lightning, windstorm damage, hail damage and vandalism.

Business Interruption Coverage

What happens if my business comes to a halt? This is a good question to ask yourself when you’re shopping for business insurance. If you cannot conduct business due to a covered peril, such as vandalism, a covered storm or a fire, business interruption insurance will help you cover expenses and at least part of the lost revenue.

Business interruption coverage in a retail liability insurance package is very important and can be less expensive if bought as part of a BOP policy.

Workers’ Compensation in a Retail Insurance Package

If you have a shop, you may have employees, who may one day get injured on the job or get sick resulting from the job. Workers’ compensation covers medical costs and a portion of lost wages.

Some states have stricter workers’ compensation requirements but a knowledgeable agent should be knowledgeable about what you need to buy at minimum.

A Business Owners Policy (BOP)

Business owners insurance, or BOP, combines all of the coverages listed above, except workers’ compensation and is less expensive than buying the coverages separately. BOP includes liability insurance, property insurance and business interruption insurance into one package, which is widely sold by many insurance agents who handle commercial sales. For convenience and savings, it’s a popular one-stop insurance option for many small businesses and some mid-size businesses. A majority of retail stores have BOP insurance. In fact, the terms retail space insurance and BOP insurance are used interchangeably.

Sometimes, a BOP includes crime insurance, auto insurance, flood insurance and some other elective coverages. Make sure that all the areas you want covered are included in the BOP policy you are buying. Never assume something is covered until it’s too late.

Other Coverages You May Need

Commercial Auto Insurance: If you have a business vehicle or use your car for work trips, you’ll need commercial auto insurance because. If you’re in an accident doing a work-related activity and only have a personal line of auto insurance, you may not be covered, especially if you’re using the vehicle for deliveries of any sort.

Commercial Umbrella Insurance: This type of policy extends the coverage of your liability coverage, which otherwise has limits that may not cover you. Let’s say someone fekkon your premises, broke a leg and needed surgery on their hip. If you liability limits are $200,000 and the medical costs total $300,000, you’d be responsible for the remaining $100,000 if you don’t have a commercial umbrella insurance.

Spoilage & Temperature Change Coverage: This endorsement covers the cost of replacing perishable stock when it’s stored on the premises specified on the property. Some policies will also cover lost income associated with the perishable gods. This coverage also applies to temperature or humidity caused by a power outage or interruption. Florists and grocers, cigar shops and pharmacists need this type of coverage.

Inland Marine Insurance or Jeweler’s Block Insurance: This type of property insurance covers goods in transit. If you ship goods to customers, this is a type of coverage you will need. It also comes in handy if your customers’ property is in your care (let’s say you own a gallery and a purchased painting gets damaged after it’s purchased and before it’s shipped out).

Errors & Omission Insurance: E&O insurance covers you if you’re found to be negligent. It will pay for legal fees, including judgements or settlements. This is a common coverage for retailers to have, especially if you do any work in repairs, like a handyman, or computer technician who destroys the computer they are repairing. You will need this if you need to have specialized knowledge in your profession, like a hairstylist who burns a client’s hair or a pharmacist who mistakes one generic medication for another.

Flood Insurance: Commercial property insurance will only cover burst pipes, gradual leaks and sewer issues. If you live in an area that witnesses storm surges or overflows, you should consider buying commercial flood insurance.

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