What Insurance Do Retail Businesses Need?
As a retailer, you deal daily with customers, employees, and suppliers. Do you have the right business insurance to protect your retail business?
Your insurance needs to protect your retail business financially from potential lawsuits, accidents, and mishaps.
What is retail insurance?
Retailer insurance protects retail owners against risks that are associated with selling, distributing, and producing goods. Your retail policy can be customized to shopping in-store and shopping online.
Here are the top 5 insurance coverages for retail businesses
You’ll need these top 5 insurance coverages for your retail business to help prevent, control, and reduce risks:
1. Commercial property insurance
Commercial property insurance is also called business contents insurance. This type of insurance protects the building and also provides coverage for your inventory and stock, equipment, furniture, computers, and other electronics if damaged or destroyed by fire, severe weather such as hail and wind, vandalism, or theft.
Theft causes Canadian retailers billions in losses every year. How does commercial property insurance cover theft? Theft of stock is generally covered under the coverage for stock section in a commercial property insurance policy, protecting your retail business from financial loss due to theft of inventory.
What’s not included:
- Equipment wear-and-tear
- An unexplained loss
- Deliberate damage to your business
- Cash/securities
2. Commercial general liability (CGL) insurance
Commercial general liability insurance protects your retail business against claims of third-party bodily injury or property damage occurring on your premises or as a result of your business operations. CGL covers incidents such as slips and falls and food poisoning.
Without CGL insurance, you will be responsible for paying all the costs related to third-party (customers, suppliers, members of the public injuries) or damage to their property.
If you were sued, CGL insurance would help cover the legal costs to defend the claim against your retail business in court, as well as costs to cover damages to compensate third parties whether you win or lose your case.
What does commercial general liability insurance help cover?
- Injury to a third party who is not your employee
- Damage to someone’s property
- Damage to rented property
- Medical bills if someone is injured
- Legal costs and settlement costs of liability lawsuits filed against you
- Liability lawsuits related to slander and libel
3. Product liability insurance
Product liability insurance is recommended for any retailer who sells, manufactures, or distributes a product, including food products. It provides protection against claims alleging third-party property damage or bodily injury caused by a product you sell, distribute, or make.
Product liability insurance covers:
- Design defects: There’s something wrong with the product’s design.
- Manufacturing defects: Something went wrong during manufacturing.
- Marketing missteps: A mistake in marketing materials, such as improper labels.
- Insufficient warnings: The product doesn’t include sufficient warning/information about potential harm.
4. Cyber liability insurance
Cyber liability insurance is an important business insurance coverage for retailers, given the popularity of credit, debit, and online payments. Cyber liability insurance will help protect your retail store financially in case of a cyber-attack.
Depending on the size of the data breach and the information that was taken, the customers who are affected can hold you liable and sue you for damages. That’s when cyber insurance can protect you financially.
5. Crime insurance
Shoppers and staff have the opportunity to steal from your retail business. Crime insurance helps protect you against certain types of losses that are not covered by a standard commercial property policy, such as: employee theft, credit, debit or automated teller, counterfeit money, or loss of money at your store.
Business insurance add-ons that your retail store needs to consider:
Overland flood insurance
Overland flood insurance provides protection for loss or damage related to water entering a property from a sudden accumulation of water. This usually results from heavy rain, spring run-off, or overflow from lakes or rivers. If you don’t have this add-on, you may not be covered.
Sewer backup coverage
Sewer backup coverage helps protect your retail store against water damage from sewer backups. Note that sewer backup insurance does not cover every type of water damage insurance claim.
In Canada, most standard commercial property insurance policies do not automatically cover sewer backup and overland flooding.
Business interruption insurance
Business interruption insurance helps support your retail business when it can’t operate due to a covered loss. You’ll be responsible for bills such as repairs, rent, and payroll even if your business is forced to close temporarily.
Some examples of losses that can force your business to shut down:
- Your business is damaged by fire or vandalism
- A disruption in your supply change
- Damage to a neighboring business prevents your business from operating
Business interruption insurance can help with expenses such as payroll, rent, utilities, property taxes and relocation of your business.
Business interruption insurance is typically purchased as an add-on or endorsement to a standard commercial property insurance policy, rather than a standalone policy.
To sum it all up
Retail insurance for your retail business is important because it protects you financially if you have a lawsuit against your business. It also protects you should you have repairs that need to be done due to a covered loss, such as a fire, vandalism, or weather damage.
Finally, it gives you peace of mind that your retail store is protected while you are busy running your business.