Retail business insurance defined
Retail business insurance is a specific type of commercial insurance coverage that is intended to protect owners of retail businesses from the risks that they face. Specifically, it can help safeguard you against the risks that come with producing and selling merchandise to customers both online and in-store. Retail business insurance policies can be tailored to meet the needs of a wide variety of retail businesses. For example, a BrokerLink business insurance specialist can help you find coverage for your retail business, whether the type of retail business you operate is a bike shop, clothing store, flower shop, grocery store, gas station, pop-up shop, candle shop, cannabis retailer, e-commerce store, or anything in between.
Insurance coverage for retail businesses
Since each retail business is different, the type of coverage it requires will be different too. That said, there are a few types of coverage that nearly all retail businesses will benefit from, including commercial general liability insurance, product liability insurance, cyber liability insurance, commercial property insurance, business interruption insurance, crime insurance, and commercial auto insurance. To give you a better idea of how it works and how it can benefit you, we break down each type of retail business insurance coverage below:
Commercial general liability insurance
Commercial general liability (CGL) insurance, which is also referred to as slip and fall insurance, is a type of liability coverage designed to protect business owners against the everyday liability risks that come with running a retail business. Specifically, this type of coverage can cover the cost of any third party legal claims alleging bodily injury or property damage that are brought against you. An example of this is if a customer slipped and fell on a wet floor in your store and sued you. In such a scenario, your commercial general liability coverage could pay for legal fees, medical expenses, and more.
Product liability insurance
Product liability coverage is another type of coverage that is especially important for retailers who sell products to customers. This type of coverage is often part of commercial general liability coverage, except it specifically protects business owners from liability claims arising from the products they sell. For example, if a product your business sells, regardless of if you manufactured the product, results in property damage or bodily injury to a customer, they could sue you and you could be held liable. With this type of coverage, your insurer would help you pay for any associated costs, like legal or medical fees. More often than not, damages paid for by product liability coverage are the result of a design defect or a marketing or manufacturing error.
Cyber liability insurance
Cyber liability insurance is another type of liability insurance for businesses. However, this type of insurance protects retail business owners from liability issues stemming from their online services. It is an important type of online business insurance and is a must-have, whether you sell products online or not. It is certainly important for businesses that sell products to customers via a website. However, it can also protect you if you store customer information online, such as through a point of sale (POS) system or loyalty program. With cyber liability insurance, if your business falls victim to a hack, breach, or cyber attack, your insurance company will help you cover the costs. Some of the costs your insurance might pay for include legal fees, client notification, etc. If you want to learn more about why you may need cyber insurance, contact BrokerLink today.
Commercial property insurance
Commercial property insurance is designed to protect the physical location of your retail business, along with its contents, like stock and inventory. Specifically, it can protect them from property damage that is caused by an insured peril. Insured perils in commercial property insurance coverage vary and it is up to you to decide which you want to include. Your options are typically fire, theft, flood, vandalism, etc. If you need to claim this type of coverage, your insurer may reimburse you for the cost of repairing or replacing any damaged items. If you have business interruption coverage, discussed in more detail below, it may also reimburse you for income lost due to the damage.
Business interruption insurance
Business interruption insurance is often part of commercial property insurance coverage. It is the coverage that will help you recover lost income if your retail business is forced to close temporarily due to damage caused by an insured peril, like fire, theft, or water damage. Sometimes it will also pay for essential employee wages in the event that you require employees to help restore the business back to the prior state before a loss.
Crime insurance
Crime insurance is ideally suited to retail businesses as it can give you peace of mind knowing that if you are the victim of an employee or customer crime, you will be protected. An example of when crime insurance may come into play is if a customer purchased merchandise from you using a fraudulent credit card.
Commercial auto insurance
Auto insurance for businesses, also known as commercial auto insurance, is one final type of coverage that many retail businesses can benefit from. This type of coverage is needed - and may even be mandatory - if you use vehicles for business purposes. Using a vehicle for business purposes could be anything from transporting materials to and from your brick and mortar shop to delivering items to customers. Whether your retail business has one single business vehicle or multiple business vehicles - no matter what type of vehicle it is - commercial auto insurance may still be required. Commercial auto insurance coverage varies between provinces. In Ontario, it may include third party liability coverage, uninsured automobile coverage, direct compensation - property damage coverage, and accident benefits coverage. In other provinces you may be able to purchase more or less coverage, depending on the provincial regulations. You will also have the option of adding extra coverage to your commercial auto insurance policy, like collision coverage or comprehensive coverage, which might be wise if you want to protect yourself and your business against the widest range of risks. Discover more about how to insure your business vehicles by contacting BrokerLink today.
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Other types of business insurance coverage for retail businesses
Although the coverages listed above are among the most common for retail businesses, they are not the only options available. Depending on the needs, size, and scope of your retail business, you may require additional coverage. Below is a list of some of the other types of commercial coverage that a BrokerLink business insurance expert can help you find:
- Employer liability insurance
- Employment practices liability insurance
- Employee benefits liability insurance
- Directors and officers/management liability insurance
- Legal expenses liability insurance
- Builders risk insurance
- By-law policy insurance
- Commercial earthquake insurance
- Overland water insurance
- Sewer backup insurance
- Equipment breakdown insurance
- Tool floater insurance
- Umbrella insurance
Retail business insurance considerations: retail store vs. online retail business
When selecting a commercial insurance policy for your retail business, you will need to make several considerations. One of the biggest distinctions between retail businesses is whether you operate a physical store or an e-commerce store only. This can dramatically impact the type of coverage you need. To help you understand which type of coverage is right for you, we break down a few things you will need to consider if you own a retail store or an e-commerce store:
Retail business insurance coverage for owners of retail stores
Retail business owners who operate a physical retail store, whether they rent or own it, will need to make sure they have coverage to protect themselves against liability claims and their physical property. As mentioned above, commercial property insurance is the main type of insurance coverage that can protect retail businesses from property damage. For example, under this type of coverage, if a fire broke out at one of your brick and mortar locations, your insurer would reimburse you for the cost of any repairs, as well as the cost of replacing any lost inventory (so long as fire was a named peril in your policy). Adding business interruption coverage to your commercial property insurance coverage may also be especially important for retail businesses with physical stores as if your store is the main way you sell products and it is forced to close temporarily due to damage, you could be out a lot of money. But with business interruption insurance, your insurer may reimburse you for this lost income.
Meanwhile, you would need commercial general liability insurance to protect you from third party claims arising from customers who visit your store. For example, if a customer visited your retail store but fell and injured themselves on the icy pathway leading to your front door, they could sue you for bodily injury. Without CGL, you may be forced to pay for an expensive lawsuit out of pocket, which could hurt the finances of your business. But with CGL, your insurer would step in and cover costs like legal fees, medical bills, and more. Note that cyber insurance will also be important for owners of retail stores as chances are, your store uses a POS system to store the financial and personal information of customers. Since you have a legal obligation to protect the sensitive customer data you store, cyber liability insurance will be important in the event of a cyber hack or other online security breach. Overall, the following types of coverage are recommended for retail businesses with retail stores:
- Commercial general liability insurance
- Commercial property insurance
- Business interruption insurance
- Product liability insurance
- Cyber liability insurance
Retail business insurance coverage for online and e-commerce retail businesses
The types of insurance coverage that are important for online and e-commerce retail businesses are similar to that of those with retail stores, with a few key distinctions. Both types of retail businesses will benefit from commercial property insurance and commercial general liability insurance. These are staples of almost any commercial insurance policy. However, while cyber liability insurance is important for retail businesses with brick and mortar stores too, it might even be more important for online businesses. Why? Online retail businesses are even more vulnerable to data breaches or cyber attacks, which makes cyber liability insurance a must. The reality is that any customer who is browsing or entering their personal details on your retail business’s website expects their data to be secure and protected. If something occurs and their information is lost, your business could be in big trouble. But with cyber insurance, your insurance company would help cover the costs associated with an attack, which could make a huge difference.
Further, product liability insurance is also wise for online retail businesses, especially if you are not seeing the items you sell before shipping them out to customers. Product liability coverage offers financial protection in the event that a product you sell to a customer causes bodily harm or property damage, and they sue you. For example, if you sell specialty energy drinks and a customer buys one, drinks it, and has an allergic reaction, they could file a lawsuit against you. Luckily, product liability coverage would protect you.
At the end of the day, the following types of coverage are suggested for online or e-commerce retail businesses:
- Commercial general liability insurance
- Commercial property insurance
- Product liability insurance
- Cyber liability insurance
Calculating the cost of retail business insurance
By now, you’re probably wondering how much retail business insurance will cost you. As you might suspect, retail business insurance premiums vary widely between policyholders. This is mainly because retail businesses are so varied in size and scope. Beyond the circumstances surrounding your specific retail business, many other factors will influence rates, which further impacts how much you will pay. Such factors include the coverages you choose, along with the limits and deductibles. For example, a retail business insurance policy that only includes $1,000,000 in basic commercial general liability coverage will likely be less expensive than a comprehensive policy that features higher coverage limits and multiple types of coverage on top of CGL, like commercial property insurance, crime insurance, commercial auto insurance, and more. Generally speaking, the following is a list of factors that insurance companies will consider when calculating your retail business insurance premium:
- Your years of experience as a retail business owner
- The size and location of your retail business
- The annual and projected gross revenue of your retail business
- The number of employees at your retail business
- Your insurance claims history
- The coverages, limits, and deductibles you select for your retail business insurance policy
- Whether your business operates online, in-store, or both
Retail business insurance quotes
Are you ready to obtain a free retail business insurance quote? Contact BrokerLink today. A BrokerLink commercial insurance specialist can answer all of your business insurance questions and provide you with business insurance quote information to make getting a quote quick and easy. For example, we can explain how our online quote tool works, which allows you to obtain a free and accurate quote in minutes. A BrokerLink insurance advisor can also provide insight into what factors impact retail business insurance rates and how you can keep costs down. Note that all BrokerLink insurance quotes, including our retail business insurance quotes, are 100% obligation-free, meaning you are under no obligation to purchase a policy after obtaining a quote from us. It’s a win-win.
Discuss retail business insurance with BrokerLink
Are you ready to dive deeper into the world of retail business insurance? Get in touch with BrokerLink today. We can help you find a policy that is tailor-made for your retail business. We will find out what makes your business unique and find coverage that protects it from the specific risks it faces. A BrokerLink insurance advisor will also make sure that you get the best retail business insurance coverage for the lowest possible rate. If you want to discuss the insurance needs of your retail business insurance in greater detail, contact BrokerLink now. You can reach us in whichever way you prefer - by email, over the phone, or in person at one of over 200+ locations across Canada.
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FAQs on retail business insurance
My retail business is based out of my home. Do I still need to purchase business insurance?
Yes, even if you operate your retail business out of your home, you will need to purchase business insurance coverage. In this scenario, chances are that you sell items to customers online, which means business insurance coverage is still necessary. However, even if you don’t and you sell items to customers directly out of your home, you would still need coverage to protect you from the risks that come with customers visiting your home and storing inventory at your home. Home insurance will not protect you.
How can I save money on retail business insurance?
Customers can save money on retail business insurance in many ways. For example, they can bundle insurance policies by purchasing more than one insurance product from an insurance company. They can also select a higher deductible for their policies and pay for their policies annually instead of monthly. Implementing a risk management strategy is also a good idea, both for the long-term health of your business and your insurance premium. By developing and employing such a strategy, you will minimize your odds of an incident, which reduces the odds that you will need to file an insurance claim. The fewer business insurance claims you have, the lower your retail business insurance rates will be.
How do I change my retail business insurance coverage if it no longer meets my needs?
The best time to change your retail business insurance coverage is when your policy is up for renewal. This is a great time to make any updates you wish, whether it be adding or taking away coverage or adjusting your coverage limits or deductibles. Of course, before your policy expires is also a great time to shop around and find a brand-new policy if you decide that your current policy and provider are no longer working for you. Just make sure that your new policy begins the day that your past policy expires to avoid a gap in coverage.
What kinds of businesses need retail business insurance?
Lots of businesses can benefit from retail business insurance. Both online retail businesses and those with brick and mortar stores can use business insurance. Further, retail businesses of all sizes, whether it has ten employees or 200+ employees, could use retail business insurance. Lastly, retail business insurance is important for retail businesses that manufacture or sell a wide variety of goods, like food and beverages, clothing, sporting equipment, jewellery, alcohol, cannabis, beauty products, candles, and more.
Does commercial general liability insurance cover my retail business’s inventory and stock?
No, commercial general liability insurance does not protect against damage caused to your business’s inventory and stock. Rather, it covers third liability claims that are brought against your business. However, commercial property coverage can protect your retail business’s inventory and stock from damage caused by insured perils, like theft, fire, vandalism, and more. In order to have your inventory and stock covered, additional insurance would have to be purchased.
Is employee theft covered by crime insurance?
Yes, crime insurance coverage for retail businesses is designed to protect customers from a range of employee crimes, and that includes employee theft. For example, if one of your retail employees stole cash from your cash register, fraudulently used a credit card, or stole a piece of merchandise from your store, crime insurance would likely cover you.
If you have any questions, contact one of our local branches.
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