To prevent losses, retailers need to be aware of their unique business risks as well as their insurance policy options.
Retailers face different risks based on factors unique to their business. This dynamic can create a dangerous opportunity for major gaps in their insurance policies. (Photo: iStock)
For retailers looking to protect their business, there are various exposures that might slip off their radar when shopping for insurance coverage.
To properly protect themselves, retailers need to be aware of risks that could threaten their business as well as the insurance policy options that provide the right coverage.
Just consider these worst-case scenarios:
- Is the store covered if a customer trips and falls over a misplaced ladder?
- What if repairs from a fire keep the store closed — and employees out of work — for weeks or months?
- How about if an employee conducts criminal activity through the business?
There are coverage options for these scenarios. It’s important to know what they are to properly protect retail businesses.
Commercial property insurance and more
Aside from property damage caused by natural disasters, retailers face other property loss risks as a result of the equipment utilized in their facilities. Insurance providers can help outline some of these risks for retailers and provide some insightful information on their websites, including Farmers Insurance, Progressive, Liberty Mutual and others, who have detailed possible risk scenarios and insurance coverage options that would protect against those potential losses. Here are a few retailers should consider.
If a display case falls over and thousands of dollars worth of inventory is destroyed, business personal property insurance will protect against that loss and cover the cost of repairing or replacing covered business items.
Business property insurance will also help pay for damage caused to the building and business from vandalism, fires, severe weather and other covered incidents.
If business operations are disrupted due to a damaging event like a fire, for instance, business income coverage will help replace lost profits while damage to the store or equipment is being repaired.
Separately, if any inventory is lost or damaged in transit to a retail store, transportation and cargo insurance can cover the cost of those goods, mitigating the loss.
For retailers like supermarkets or convenience stores where perishable food items are sold, spoilage coverage can help reimburse the business if these goods are compromised and ruined due to factors like a mechanical breakdown or power outage.
Business liability insurance
If a customer is somehow injured in the retail store — perhaps a shelf collapses or a ladder falls — business liability insurance protects retailers from losses due to the cost of claims made by the injured customer.
If the computer system is hacked and customer data is compromised, business liability insurance that includes cyber liability protects retailers from any claims costs and provides legal and forensic assistance in recovering that stolen data.
Employee-related risk exposures
Sometimes, employees are given access to financial matters and systems that make criminal activity possible, stealing from the business while also putting it at risk legally.
If an employee steals directly from a retail business, writes a bad check, or commits any other act of theft, business crime insurance covers money and securities losses stemming from robbery, fraud, forgery or employee theft of money or securities.
Consult an insurance professional
When customizing an insurance policy for any retail operation, consider any exposure risks specific to the store, whether it be from the equipment onsite, the value of inventory sold, or any other risk factor that could threaten the business. Speak with an insurance agent or broker about the most suitable coverage options.