According to a study, the global commercial insurance market will reach a market value of $1.22 trillion by 2028, growing at a CAGR of 8% during the forecast period. Government regulations and increasing theft and associated risks, etc., have made retail store insurance necessary for businesses. To tackle market competition and, at the same time, safeguard the business, retail store owners need to manage their insurance policies quite carefully.
Let’s examine the reasons why retail stores need insurance and the variables that affect insurance costs.
Insurance Needs of Retail Stores
Due to unforeseen claims and litigation that could be detrimental to operations and finances, retail store owners are endeavoring to safeguard their businesses. Here are a few elements that can have an impact on retail stores’ insurance requirements.
The National Association for Shoplifting Prevention (NASP) has outlined that goods worth more than $13 billion are stolen from US-based retail stores each year. According to the 2022 National Retail Security Survey (NRSS), 88% of retail store owners believe that their businesses were more vulnerable to risks post-pandemic, citing a 26% increase in crime in 2021. These alarming figures show how theft has invariably impacted retail business owners and how new problems are emerging. Due to all of this, retail store owners are relying more and more on business insurance for protection.
For quite some time, the labor shortage in US retail stores has been a constant issue. The pay increase for retail workers has been around 22% since 2018, but the shortage still exists. So how does all this influence the insurance industry? Less staff can lead to increased theft and cases of pilferage, which could lead to an increase in insurance premiums. Additionally, a retail store with insufficient staff becomes challenging to manage, and there is a chance of neglect and noncompliance, which increases risk and raises insurance costs.
Damage Due to Natural Disasters
Retail stores have been severely impacted by natural disasters – Hurricane Ian in Florida and the COVID-19 pandemic are recent examples of the same. Natural disasters cause them to slow down or even stop operating altogether – albeit temporarily. The building may sustain physical harm due to these damages, which can also disrupt supply and demand. In light of all these incidents, having insurance is more crucial than ever, and businesses in disaster-prone areas need to be more cautious.
Customer claims have recently become a significant subset of insurance requirements – presumably owing to an increase in the variety of available goods and services or a change in the laws and regulations. Customers now have the ability to submit contactless claims, which are simpler to pursue and, as a result, have led to the addition of new insurance clauses.
Types of Insurance for Retail Businesses to Address These Issues
General Liability Insurance
This kind of insurance can protect your company from any kind of harm, including reputational, psychological, and physical damage. The insurance premium for general liability insurance is influenced by a number of variables, including the nature of the business, the level of risk, etc. This category can include customer complaints, property damage claims, and legal actions brought against a retailer for running an offensive or hurtful advertisement, etc. For better coverage, general liability insurance can be combined with other policies, like an umbrella policy.
Worker’s compensation is a legally required practice for all employers in the majority of American states. This insurance enables the employer to compensate workers who are injured at work in any way – whether due to using ladders for stocking or using a dangerous machine or component for routine tasks.
Commercial Property Insurance
Commercial property insurance is necessary for retail store owners to protect their assets from theft, vandalism, floods, fires, and other risks. The appropriate commercial property insurance is in place to protect all physical assets on the property. Therefore, commercial property insurance can aid in covering the loss during an earthquake, for example, where the entire property is damaged and the valuables are destroyed.
Retail store owners can choose to purchase additional coverage, which may include the following:
- Commercial Auto Insurance
- Cybersecurity Insurance
- Product Liability Insurance
- Business Interruption Insurance
- Equipment Breakdown Coverage
Only a professional can accurately value your retail store after performing a risk assessment and a portfolio analysis. A business owner’s policy may include several insurance policies, depending on the circumstances. The location, type, and other characteristics of the business, as well as its product offerings, all influence the insurance premium.
Gonzalez Insurance can assist you in assessing the insurance needs of your retail store business in order to determine the proper premium and offer excellent guidance for all-around coverage. Get in touch with us for a quote tailored to the needs of your business.