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As a retail store owner, you greet customers with a friendly face and connect them with the perfect product for their needs. You’re all about creating a welcoming atmosphere and providing great customer service. But just like any other small business owner, you take on risks while interacting with customers and bystanders.
That’s why most retailers take out retail store insurance. But what specific policies do you need to safeguard your long-term success? In this short guide, we’ll break the retail business insurance choices down so you can choose the best business insurance for your store.
Why retailers need insurance
As a retail store owner, your livelihood depends on your profit margins. You have fixed costs including your lease and utilities, and may be hesitant to add monthly insurance coverage to your overhead. But there are several reasons why most retailers need insurance.
They include but are not limited to:
Some landlords may require retail store owners to take out general liability coverage before granting a lease. In fact, the landlord will often require it to be added as an additional insured to the liability insurance. This protects the landlord as well as the store owner and is a part of a business owner’s policy (BOP).
There are many circumstances that could lead a customer to sue you. Someone doesn’t have to have a good case to take you to court. If that happens, expensive attorney’s fees could significantly damage your ability to keep your small business up and running. And that’s before considering the cost of any potential settlements
If your own equipment is damaged, it could interrupt your business. Likewise, if your business ever closes due to flooding or a natural disaster, the lost profit could be the difference between your success and failure.
So, what kind of coverage can help?
General liability insurance
Is there one thing in your store that just about every customer could benefit from? When it comes to insurance, it’s general liability insurance.
This kind of insurance is designed to provide coverage, investigation and legal defense in the face of non-employee third-party claims for the following:
- Bodily injury – No matter how carefully you’ve designed your store, there’s always a chance of a customer tripping on your carpeting or knocking a display over onto themself or another customer. Should they sue you for bodily injury, you could be held liable for the costs incurred.
- Property damage – If a customer does fall victim to an accident due to alleged negligence on your premises, they could also break their cell phone or other of their personal property. In that case, they could potentially sue you for property damage.
- Personal and advertising injury – You try all sorts of advertising tactics, from riffing on other entrepreneurs’ successful campaigns to comparing yourself to the competition. But should another company sue you for libel or plagiarism, you could be held responsible for their financial losses.
Keep in mind that general liability insurance only covers non-employee third-party claims. That means it does not cover employee injury or damage to your property. You will need additional insurance coverage for your business to protect against employee injury or damage to your own property.
Next, we’ll go over the other helpful policies that can help cover your liability.
Workers’ compensation insurance
What happens if your employee gets injured on the job? Most states require businesses that have employees to take out worker’s compensation insurance. This insurance is designed to protect your business from the costs accrued in situations like the following:
- Employee injury – Your employee helps process inventory, which means lifting heavy shipments. Should they hurt their back, workers’ comp covers the cost of their recovery and lost wages.
- Employee illness – Your employee uses industrial cleaners to make sure your store is squeaky-clean. Should they become ill as a result of their exposure, workers’ comp covers their treatment and lost wages.
- Employee disability – If a work-related injury or illness becomes chronic, workers’ comp kicks in to cover lost wages.
If you don’t take out workers’ comp and your employee sues you for the cost of their care, You could be responsible for paying those costs out of pocket. You could also end up paying steep fines for failure to carry the proper coverage (depending on the state you’re operating in).
There are some state-level workers’ comp exemptions for businesses with just one or two employees or for having employees of certain classifications. Check your state’s laws to understand your legal obligation.
Coverage for your property
We already explained that general liability coverage does not extend to your own property. For that coverage, you have a few options:
Commercial property insurance
If you’re renting your storefront, the building owner will probably carry insurance on the building itself, but will not cover your property. You will want to cover your inventory and the equipment inside your premises. Some commercial property policies may also cover business interruptions due to damage to your property.
Business owner’s policy (BOP)
Some insurers combine commercial property insurance with general liability coverage. It usually includes additional coverage extensions for both of these in a single package.
While these policies can help to cover your operations at your business location, keep in mind that they will not cover the operation of your business vehicle.
Auto liability insurance
If you drive a car, you need auto insurance. Almost every state requires that drivers take out minimum coverage. The most common requirements are:
- Bodily injury liability – When you’re at-fault, this insurance can help cover the cost of the other driver’s injuries (as well as those of their passengers)
- Property damage liability – This can help cover damage to a third party’s property, including other vehicles in an at-fault accident
However, keep in mind that you may be hit by an uninsured driver who could not cover your bodily injury or property damage. Likewise, your car could be crushed by a falling tree. That’s why some states require, and some motorists opt for, the following coverages:
Uninsured motorist coverage Personal injury coverage Collision coverage Comprehensive coverage
Make sure that you meet your state’s minimum requirements and take out any other coverage that could help ensure your long-term financial health.
Additionally, if your vehicle is integral to your business’s functionality, then you might not be covered under your personal auto insurance policy. For instance, if you use your vehicle to deliver your merchandise, then there’s a chance you’ll need a commercial auto insurance policy. Or if your business owns a vehicle, it will almost always need to be covered under a commercial auto insurance. Always talk with your auto policy provider to make sure you’ve got the right coverage.
Customize your shopping cart
As a retailer, you know that the needs of your customers vary. The same is true when it comes to buying insurance. The first step is assessing your risk. Consider which of the following policies you’ll need:
- General liability insurance
- Workers’ compensation insurance
- Commercial property insurance
- Auto liability insurance
As getting customers into your store is critical to your business, one of the first things you’ll need is to protect your retail business against claims of third-party bodily injury and property damage with general liability insurance. For that, you’re in the right place. Just click “Get a Quote” or download the Thimble mobile app to get started. From there, customizing and purchasing your general liability policy takes less than 60 seconds. Best of all your policy and Certifications of Insurance (COI) will be in your inbox instantly!
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.