Getting Started with Retail Insurance
You’ve dreamt of opening your own floral shop, or high-end boutique or local, organic honey shop since you were eight. All your fantasies about owning a retail business are variations on a theme: you have loyal customers that adore your product, and you. Sometimes you curl up on fuzzy rug behind your counter for a cat nap in the middle of the day. When you’re not making sales or resting in the sun, you’re flitting around your shop admiring your hard work. You’ve dreamed about this for so long. Have you ever dreamed about retail insurance for your small business?
If you’ve ever opened a retail business, or are in the process of opening your first retail business, it’s likely the less glamorous aspects of becoming a small business owner have presented themselves. As a small business owner, you want to be prepared for all the realities of owning a small retail business, even the worst ones. Even the ones that include fire damage, theft, or natural disaster. Retail insurance can be a large investment for your small business in the beginning, but as a business owner you’ve experienced what it’s like to take financial risks before making your first sale.
Without retail insurance, a lawsuit, earthquake or an employee injured on the job have the potential to cause great financial harm to your retail business. And worst case scenario, your labor of love doesn’t survive.
Here’s what you need to know about retail insurance:
Every business is different
You are in the best position to assess your retail business’ needs; as a small business owner you know the ins and outs of your business. You’ve lived it. Even though all businesses are different, every small business should consider what small business insurance means. Retail insurance options help protect your investment by reducing the financial risks of owning a small business.
Property insurance covers damage or loss for a wide variety of reasons
Property insurance covers damage or loss to everything from your storefront to your displays, laptops and important documents. Damage or loss can result from natural disasters or theft. Regardless, property insurance policies cover these risks to your property. Property insurance can also cover more specific risks, for example if you live in an area with a high likelihood of experiencing a certain type of disaster, such as a flood or earthquake. With the right plan, property insurance will also cover inventory, tools and machinery if your business manufactures physical goods.
Business interruption coverage protects you if a covered incident shuts you down
Business interruption coverage protects you in case a natural disaster or another covered incident shuts you down. Commercial property insurance can also include protections for business interruption. This policy would help replace any income you lost while your retail business was closed. For retail businesses that are home-based, keep in mind that homeowner’s insurance may not cover any losses to your business assets. If you operate your business out of your home, check your current policy to see what types of losses it covers.
Your personal auto insurance policy may not cover your business vehicle
Commercial vehicle insurance plans typically have higher liability limits and may also cover vehicles you don’t own, such as rental cars or employees’ cars, when they are driven for your business.
The cost of someone else buying your business can devastate your bottom line
If one of your retail business partners dies, the unexpected cost for one of their family members to buy out the deceased partner’s share could devastate your bottom line. Key person life insurance covers the individuals who are critical to the success of your retail business, such as founders, partners or experts. In the tragic event that one of those key person dies, your retail business would receive proceeds from the policy to cover the financial aspects of the loss.
Liability insurance protects in the event of legal action
As a small business owner, general liability, product liability or professional liability insurance will protect your investment in the event of legal action. General liability policies typically cover injuries, property damage, medical expenses and the cost of lawsuits. If your retail business manufactures a product, product liability policies cover lawsuits related to any damage that occurs due to a product’s malfunction.Professional liability policies cover retail business owners who provide a service to consumers in case of errors or malpractice.
Workers’ compensation insurance may be legally required
Depending on the location of your retail business, your local or state laws may require that you purchase workers’ compensation insurance and unemployment insurance. In some states, the law may also require disability insurance to cover your employees’ sickness or injuries outside of work. If you are curious about compliance, the Workers’ Compensation Office is your state can provide more information about the rules in your city.
Because of the legal requirements of retail insurance, the industry is more complex than personal insurance. It’s recommended that you meet with a local insurance agent who can help you navigate the needs of your specific retail business and help you compare different policies. The U.S. Small Business Association (SBA) is a great resource for small businesses and their website has information about different types of business insurance.
Are you a restaurant owner? Check out our article, “Restaurant Insurance: Know the Basics,” for more information about small business insurance for restaurant owners.