Why do retail stores need insurance?
In the USA the retail industry is the second biggest industry, preceded only by the education industry. With over $4.5 trillion in annual sales, retail is responsible for approximately 11.5% of all US employment. The bigger the industry the bigger the risks and therefore lawsuits involved. Since retail for the most part involves customers walking into a physical location, there are many inherent risks involved, like slip and falls, theft, and many other risks involved. It is therefore imperative on every business owner especially a retail shop to protect their business with "retail store insurance".
The vast majority of all retail stores are single location businesses, these small businesses account for more than half of all retail sales in the U.S. Thus the majority of the revenue in the retail industry is generated by single location and small retail businesses. The other type of retail businesses are large companies that run retail chains stores. Some of the bigger chain-store companies have as many as thousands of retail locations all over the United States.
Retailing can fall into two distinct types, specialty and wholesale. Specialty retailers offer a limited capacity of products in order to serve a smaller market more effectively by targeting specific customers for their products. Typical retailers include stores that sell food, clothing, shoes, jewelry, plumbing and paint supplies, furniture, dry cleaners and the like. Wholesale retailers and department stores, on the other hand, are companies that sell a wide range of items usually at discounted prices. While the clientele targeted by that of a retailer is a narrower based objective, the clients targeted by a wholesaler are a broader diverse clientele.
Which insurance policies does a retail shop need?
A typical retail store might need all or some of these insurance coverages:
Commercial General Liability (CGL) or Business Liability is a must-have insurance coverage for all businesses no matter the size. "General Liability Insurance" protects the retail business against lawsuits for negligence or held legally liable for loss or injury that might have been caused by a careless mistake made by the company or its employees. It is critical to understand that liability insurance only protects third parties and their properties that get injured from your property, but it will not include the owner or employees.
Workers' Compensation Insurance is required in every state. This coverage is essentially a way to protect employees that have been injured on the job.
Business Auto Insurance is specifically designed for commercial vehicles used by businesses as part of their daily operations, either to deliver orders to clients or doing installations for service oriented businesses. "Commercial Vehicle Insurance" covers liability and may or may not cover comp and collision.
Property Insurance, this type of insurance will cover the property owned by the business owner and contents which would include stock. Insurance coverage of a retail businesses property will include losses derived from perils such as fire, water damage, theft or most any other types of damage.
Crime Insurance covers theft of business property incurred on premises or under care and custody of an employee or messenger or watchperson.
Business interruption insurance will reimburse a business for loss of income after a covered loss. When the business sustains a covered loss such as fire, causing the closure for an extended period of time, due to renovations, this insurance will reimburse the full net profit the business would have incurred, in that same time frame.
For small retail businesses a "Business Owners Policy" would be the best option as it includes all or most of the coverages needed. Larger or chain retailers would need to get a commercial package policy, where the insurance broker will package together all insurances needed for the specific needs.
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