Retail Insurance: Types of Retail Business Insurance

10 min read

Life can be unpredictable. No matter how careful you may be, accidents can happen anytime. That’s why having access to quality insurance is so important. Anyone who has a retail business knows that it’s impossible to control every possible situation. Retail insurance is an essential tool for any business, big or small.

What is Retail Insurance?

You may be wondering, “What is retail insurance?” Retail insurance is designed to offer protection to businesses in the event that something unexpected happens on their property. Such unexpected events include:

Damage or theft to business products, equipment, or tools
Cyber crimes or data breaches
Income lost due to damage done to the retail property
Accidents to customers that cause physical injury on the retail property
Accidents to employees that cause physical injury on the retail property
Natural disasters that damage retail property
Employees contracting an illness on the job

Retail insurance essentially offers financial support and can protect you from potential lawsuits. In many cases, proof of insurance may be expected by the landlord of the retail property before you are allowed to occupy the space. Clothing stores, jewelry stores, grocery stores, and even ecommerce businesses all rely on insurance to protect them in case of emergencies.

It is common for business owners to have general liability and commercial property insurance. While this may be enough for some businesses, it may not be enough for others. Depending on your particular business, added coverage such as business interruption insurance or commercial auto insurance may be necessary.

Types of Retail Business Insurance

In most cases, landlords will not allow you to conduct business on their property without basic retail business insurance. The most basic coverage starts with general liability insurance. General liability retail store insurance consists of the following:

General liability insurance

Protection against bodily injury. If a customer claims they were physically injured while interacting with your business, you may be responsible for legal or medical costs. This may include slips, falls, broken bones, and more. With general liability insurance, any legal, medical, or settlement costs will be covered by the insurer.
Protection against personal and advertising injury. This means that you are protected if someone sues you due to something an employee does or says. For instance, if an employee makes false claims about a competitor, causing the competitor to sue you. General liability will cover settlement costs.
Protection from property damage costs. If a customer or third party claims that you or your business has damaged their property, you will be covered by liability insurance. If you have an electronics business, this may include spilling coffee on your laptop or accidentally dropping and shattering your phone.

Commercial property insurance for retail

Commercial property insurance for retail businesses is also very common. The purpose of commercial property insurance is to protect your physical assets. This may include business documentation, inventory technology, computers, work equipment, furniture, outdoor or indoor signs, and damage to the building itself.

Commercial property policies will cover the following situations:

Vandalism
Lightning strikes
Unintentional fires
Explosions
Hail storms
Falling objects
Windstorms

In most cases, retail insurance companies will not cover earthquake or flood damage. Many insurers can offer additional coverage for such events.

Workers’ compensation insurance

This form of coverage is meant to cover work-related injuries or illnesses. Workers’ compensation is especially important for more physically strenuous jobs. For instance, if an employee is injured while lifting a heavy package, your insurance coverage will cover the medical bills.

Business interruption insurance

When accidents occur that put your business on hold, business interruption insurance is a valuable asset. For example, if a fire occurs on your property, causing you to shut down for several months, you will be covered for the income lost. This type of insurance may be helpful for businesses in locations where natural disasters frequently occur.

Commercial auto insurance

Businesses that rely on transporting goods often require commercial auto insurance. If any sort of accident, injury, or property damage occurs while on the road, you and your employee are covered.

Cybersecurity insurance

In recent years, cyber crimes have become increasingly problematic for businesses. This is especially true for online retailers. A very important form of business insurance for online retailers is cybersecurity insurance.

If your business gets hacked, you, your employees, and your customers may be at risk. This form of insurance will cover investigation and monitoring costs.

Business crime insurance

Do retail stores have insurance for theft? Thankfully, business crime insurance is available for businesses that experience fraud or theft. While commercial property insurance protects against damage and vandalism, it does not protect against those who steal from the store. Business crime insurance fills in the gaps that commercial property insurance leaves behind.

Product liability insurance

With product liability insurance, you are covered for any damage or injury caused by a defective product. This may be due to an electrical error, burns, lacerations, or more. Essentially, any injury costs caused by your product will be covered by this insurance policy.

Inland marine insurance

This form of insurance covers damage and theft while at a third-party location. For example, if your inventory is stolen from a warehouse holding your product, you will be covered for your losses. Weather events, vandalism, certain hazards, and theft are all covered with inland marine insurance.

Retail health insurance

What is retail health insurance? Essentially, retail health insurance is a policy that offers health coverage to employees (individuals and families). Depending on the plan, retail health insurance may offer coverage for emergency ambulance expenses, ICU and room rent, hospitalization, nursing expenses, and more.

Equipment breakdown coverage

This type of coverage will help with the costs of broken or damaged equipment caused by operator error, mechanical issues, motor burnout, or power surges. Equipment breakdown coverage will pay to either fix or replace any damages.

Employee dishonesty coverage

If an employee steals company property or money, you will be covered with employee dishonesty coverage. It is possible to combine this coverage with a larger commercial crime policy.

Retail life insurance

What is retail life insurance? Retail life insurance offers quality life insurance policies to individuals within your company. This form of life insurance can be tailored to the employee’s needs.

How Much Does Retail Insurance Cost?

Many new business owners ask, “How much does retail store insurance cost?” A wide range of factors play a role in the cost of business insurance. Generally speaking, the more forms of coverage you require, the more expensive the cost.

Businesses that have a physical retail store may require worker’s compensation, liability insurance, commercial property insurance, business crime insurance, and more. While home-based businesses likely will not need as many forms of coverage.

The key factors that determine the cost of insurance include:

The location of the business
The number of employees
The number of policies required
The types of coverage and limitations of the policies
Business assets
The type of business you have
The industry you’re in
Insurance claims history

The price of coverage also depends on the retail value within the insurance market. What is retail value in insurance? The retail value is usually higher than what a plan is actually worth. This is to ensure the insurance company makes a profit. With this in mind, the cost of an insurance plan will also depend on its retail value.

Before selecting retail insurance that may offer expensive and unnecessary coverage, follow these steps:

Get clear about the risks associated with your business
Learn about what specific types of insurance will cover those risks
Decide whether or not you need additional support from an insurance broker
Learn about different providers and choose one that you believe is trustworthy
Purchase your coverage
Stay on top of insurance payments, and remember to review and renew your coverage each year.

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Apr 30, 2023

About the author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.