The US economy has an important dependence on retail business, and the entire country realized this fact over the last few months. As retail establishments started slowly emerging from lockdowns, retail sales experienced a growth of 1.2%, as per a report by The Balance. This growth is welcome and more than a little encouraging, given than about 630,000 retail stores, including 200 shopping malls that didn’t sell essential goods were completely closed in states that implemented lockdowns and shelter in place orders. Even as the various sectors of the economy look to kick start again, retail stores are witnessing a slow but steady rise in sales.
According to the National Retail Federation, there are about 1 million retail outlets in the country that provide jobs to about 52 million workers. Being directly connected to product sales and consumer spending, it also impacts directly or indirectly, 70% of economic growth in the country.
When you look at it in that light, insuring the retail stores properly becomes a key responsibility of store owners to protect themselves as well as the economy.
But is all coverage suitable for every kind of retail store? Let’s try to present a clear idea of retail store insurance and its benefits.
What should be considered while buying retail coverage?
First of all, one should be aware of the potential risks of running a retail business in a specific location. If it’s a theft-prone area, the business owner may need appropriate protection against burglaries or damages caused by such events. S/he should also have commercial property insurance to protect the building where the store is located. Then again, if the store is in an area susceptible to environmental conditions like wildfires or storm damage, the insurance policy should include these risks under the property damage section. Last but not least, one should always consider the worker’s compensation insurance to create a safe and healthy environment for the employees.
If you’re a retail store owner or manager, you should try to build a list of such potential threats before buying a suitable insurance product. Once you have the list, you can discuss the details with the insurer, who’ll help you create a customized coverage for the same.
All retail businesses are not the same, and their financial and other risks also vary considerably. While some coverage aspects may be the same across businesses, like that of protecting your inventory, stocks, and the employees, others will be different based on the type of business, the shop’s location, the physical condition of the building, and the weather of the region.
For example, the insurance coverage for a grocery store will usually include general liability expenses, property damage, and business interruption insurance, thefts, fire damage, storm, worker’s compensation, and medical expenses for anyone, who gets injured in the premises. But, the insurance for a restaurant outlet must include additional expenses, like equipment breakdown coverage, flood insurance, and more. The insurer should be able to identify specific risks to the retail store in question before suggesting a suitable package and you, as the owner/manager, can help solidify the list.
What is the Business Owner’s Policy (BOP)?
Many insurance providers will offer this effective policy for retail business owners, as a form of umbrella protection for all kinds of risks. It includes the three general insurance covers that all businesses must opt for – the commercial property insurance, general liability, and business income insurance. While the commercial property insurance will cover the expenses arising from damage to the property, the general liability insurance will protect you from lawsuits, in case anyone gets injured on the shop premises. Commercial property insurance will also be extended to your business assets, including computers, cash registers, shelves, etc. Lastly, the business income insurance will cover the losses your business incurs while undergoing repairs to the property for damages covered in the policy.
Do you need additional coverage?
Besides the BOP, retail store owners will need additional coverage, like worker’s compensation, flood and earthquake insurance, and others depending on the type of business, location, and circumstances of the region, as mentioned earlier. Some retail businesses may also require cybersecurity protection to protect against cybercrimes and data thefts, which are quite prevalent these days. If you have advanced equipment at your store or precious materials, you may also need insurance for the same to prevent huge losses, in case of thefts or disasters.
One of the common issues that many retail stores face in this digital era is personal and advertising injuries, where your competitors may hold you responsible for stealing or copying their intellectual materials, like advertisement copy, logo, and graphics, banner ads, slogans, etc. and even file a lawsuit for the same. The personal and advertising injury coverage will protect you in such cases and pay for the legal expense if you need it. You may also face legal issues, regarding any product/service failure. If the issue involves loss of life or property, fighting the legal battle could be a business-killer. However, if you have products and operation completion insurance in place, such expenses could be addressed.
While shortlisting your options for insurance, you should keep these factors in mind to enhance security and lower the chances of financial loss. In some ways, picking the right insurance cover may come down to choosing the right insurance provider, who will be ready to go the extra mile to customize the options to your specific requirements.