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Tailored Protection for Retailers: Navigating the World of Retail Insurance Coverage

Tailored Protection for Retailers: Navigating the World of Retail Insurance Coverage

Are you a business owner? Do you own a clothing store, a small “Mom & Pop" shop, or a grocery store? No matter what you sell, retail stores face a variety of risks in day-to-day business. Retail business insurance can protect you if something unexpected happens. Which small businesses should consider getting a retail insurance policy? What types of coverage should you get? How much does retail insurance cost? Keep reading for all of the need-to-know details.

Please note that this article is for informational purposes only. We always recommend speaking with a professional to make an informed decision for your company.

Who Needs Retail Business Insurance?

Here are just a few examples of stores that should get retail insurance: 

If you sell products or services to a customer to earn a profit, you should consider getting the proper insurance to protect your retail store.

Insurance Coverage For Retail Businesses

Just what insurance coverages should a small business invest in? Here are a few common types of business insurance coverage options that we recommend:

Commercial Property Insurance

Commercial property insurance covers the assets of your retail business including the loss of the building, furniture, equipment, and your inventory if property damage occurs due to a covered event such as fire, wind/storms, hail, vandalism, and theft. The policy can either be replacement cost or actual cash value.

Be sure to keep an inventory and account for any item your business owns that would be replaced if severely damaged or destroyed. The costs to repair damage to a building can often be astronomical, which is why every business owner should obtain this coverage to help protect their business property.

General Liability Insurance

General Liability Insurance is often referred to as “Slip & Fall” coverage. Why? If a customer slips and falls on a wet floor in your store, your insurance company will cover their medical bills. So what all does it cover?

  • Third-Party Bodily Injury: If a customer or vendor is injured on your premises, you are often liable for the cost of their injury. But if you have general liability coverage, it can cover their medical expenses and the costs associated with a lawsuit or settlement. 
  • Third-Party Property Damage: If one of your customers claims their vehicle is damaged by an employee operating a cart machine, this policy can pay to repair the damage. 
  • Advertising Injury: This includes things such as defamation or copyright infringement. If someone claims you used their work or image in your advertising without the proper permission, they can sue you. 

Some commercial general liability policies may include product liability insurance. This protects your business if a product you sell is faulty and injures a customer (or causes them to become sick). If it’s not included in your policy we recommend purchasing it separately to safeguard your business. Don't skimp on the proper liability protection.

Business Owners' Policy

Some retail businesses may qualify for a special policy offered by an insurance company called a business owners' policy (BOP). A BOP is bundled coverage that typically includes general liability, commercial property, and business interruption (or business income & extra expense).

A business interruption insurance policy can help cover lost profits/income, payroll, taxes, and even a temporary location for your retail business to operate if your property suffers damage. A BOP is often offered at a more affordable price than purchasing each policy separately. 

Commercial Auto Insurance

Does your small business offer home delivery for customers? If so, you must make sure your delivery vehicles are properly covered with commercial auto insurance. Even if you or your employees are using personal vehicles, you should get this coverage. Why? If an accident were to occur and your personal auto insurance found out you were working, they might deny coverage for your claim. Likewise, even paying for auto parts if your vehicle is damaged can be overwhelming.

Inland Marine Insurance

Inland marine insurance covers your products while they're in transit or a customer’s property that’s in your temporary care. If a shipment of goods is in a car accident and they are destroyed, this policy will cover the replacement cost (NOTE: Products being transported are usually not covered by the insurance company under commercial auto, which is why inland marine or cargo insurance is necessary).

Workers' Compensation Insurance

You have to buy workers' compensation insurance if you hire one or more employees—in almost every state. Workers' compensation insurance covers retail businesses in the case of lawsuits if any of your employees is injured while working.

Workers' compensation will also reimburse lost wages to any workers who are hurt—or become ill—on the job. It will also cover medical costs for the employee. If the employee dies, the insurance company can pay funeral expenses and support payments to the spouse or children of the employee.

Employee injuries can be expensive and costly to your business if you don't have workers' compensation insurance. The right coverage can go a long way!

Cyber Liability Insurance

If you store customer information on your computer or in a POS system and your data is breached, you could be held liable if a customer’s information is compromised. Cyber liability insurance can help notify customers of a data breach, pay for credit monitoring, and in some instances pay for a ransom demand. If you sell both in a brick-and-mortar location as well as online, you can't skip out on this coverage.

Additional Insurance for retailers to Consider

Here are some other insurance policies retailers can consider including in their business insurance package:

  • Equipment Breakdown Coverage: Do you use expensive equipment in your retail store? Do you have an HVAC system or furnace? If this expensive equipment breaks down to an electrical surge or mechanical malfunction, this insurance can repair the equipment. 
  • Spoilage Coverage: If you suffer a mechanical breakdown of your refrigerated systems or you temporarily lose power, do you have spoilage coverage included in your policy? If your retail business sells refrigerated products, make sure you don’t skimp on this coverage. 
  • Employment Practices Liability Insurance (EPLI): This policy protects small business owners, management, etc. from claims of discrimination, wrongful termination, harassment, etc. It covers the cost of a lawsuit or settlement.

Retail Store Insurance Cost

How much does retailer business insurance cost? An insurance company considers these factors:

  • Number of employees
  • Annual revenue/income of the business
  • The coverage limits you want
  • The value of your inventory
  • Where your store is located
  • The retail industry you’re in
  • The services that you provide
  • Type of stored customer data

General liability insurance can cost retail businesses anywhere from $450 to $2,000 a year whereas a business owners' policy may range from $700 to $3,500. It’s best to speak with a knowledgeable agent about the coverage you need. They can help you choose the insurance company that offers the right protection for your business.

Get a Free Quote for Retail Insurance

Our goal at Tivly is to help you protect your business as efficiently as possible. We want the process of getting a competitive insurance quote to be fast and easy. You can complete the form at the top of the page and one of our specialists will contact you soon. If you want a quote now, you can connect with us by giving us a call at 877-907-5267.

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Reviewed By: Andrea McKinney, MBA, Licensed Agent