At the end of the day, you take the money, lock up the cash register, bolt the door and set the alarm. But what else are you doing to protect your business? Today, a number of insurance coverage options are available to help protect retail operations in any circumstances.
What to Consider
Business-owner policies cover your properties and inventory. Liability coverage assists you in the event of an accident caused by a product or service you sell. In addition, liability protects you against an accident occurring on your property. Workers compensation insurance protects your employees if they would become injured or ill as a result of the functions of their job.
Here is a rundown of policies that can protect your retail business:
- Business-owner policies. (BOP) are available under many names, and combine elements of property insurance, a homeowner's policy, and liability insurance, with additional, optional, riders. The BOP, at its most basic, covers your real estate (owned or leased often the landlord's policy doesn't provide for your inventory and equipment) and other business properties office equipment, inventory and many allow automatic seasonal variances in the insured value as an additional way to protect you when your inventory levels rise and fall with your selling seasons. The additional riders include coverage for burglary and robbery, spoilage and more.
- Liability Insurance. This covers you if a person was injured on your property, or as a result of a product or service you sell. Legal costs and damage settlements are covered by liability insurance. The most common liability case is the slip and fall, and there are steps you can take to minimize risks in this and other liability prone areas, a discussion with your insurance agent can help you find and fix these situations.
- Workers' Compensation Insurance. This coverage takes care of medical bills, settlement monies and a portion of lost wages for employees injured while performing a function of their job. Laws vary by state regarding requirements for coverage, so check state and local regulations. Often, certain types of employees (independent contractors, for example) are exempt, and certain numbers of employees may mean different levels of coverage.
- Other types of insurance, called riders, also can protect your business. They include:
- Business Vehicle Coverage. Because many standard auto policies will not cover a business vehicle, this affords an extra layer of protection in the event of an automobile accident. Check your current auto policy to see if your business vehicle is covered.
- Burglary and Robbery Coverage: This assists you after a burglary or robbery has occurred in your business. Some policies may require specific security measures, such as a security system or security cameras, be in place to be insured.
- Employee Dishonesty Policies: These cover threats from within - theft, embezzlement and fraud perpetrated by employees.
- Spoilage Coverage: This protects perishable goods like food and flowers from loss in the event of a power outage or some other event that would cause them to be spoiled.
- Transportation Floaters: These insure merchandise in transit over and above the insurance coverage provided by the freight carrier. The United States Post Office and other package shipping companies offer insurance on packages shipped by you for little cost, and, if you ship to customers, it is always a good idea to insure the package.
- Terrorism Insurance: This has become more popular since 9/11, and many insurers offer this coverage at no additional cost. Check with your policy or agent to see if you are covered.
One of the most important insurance products is an Umbrella Policy. This protects you over and above your other policies, acting as another layer of defense in the event a claim is filed. The monetary value of umbrella policies depends on the limit of your other polices and the amount you would need to cover your business assets.
Many riders overlap one another, such as burglary/ robbery and employee dishonesty, but it is a good idea to be fully covered and protected from any unforeseen circumstance.
What's a Retailer to Do?
The better an insurance professional knows and understands your business, the better he’ll know which types of coverage will fully protect your business. In many cases, a BOP covering property, liability, and vehicle coverage works best.
Costs for these different insurance coverages vary from company to company and by the terms of the particular coverage. According to Insurance Information Institute, there are a few things you can do to reduce your premiums:
- Shop around for rates. Costs and terms vary from company to company, so look around and find the best one for your business.
- Raise your deductible. A higher deductible means a lower premium.
- Buy a package policy rather than several small coverage packages. Most insurers offer discounts with bundled insurances; check with yours for rates and discounts.
- Build a relationship with an agent and work closely with them.
- Take steps to prevent loss. Upgrade your alarm system, locks and latches, and file security; install security lighting and cameras to help reduce premiums. Then, check with your agent for further steps you can take.
- Avoid losses (claims). Fewer claims mean lower premiums, so do your best to eliminate unnecessary risks on your business property.
The main thing to remember is to protect yourself and your business. A little shopping around and some careful examination of your niche in the retail world will help you find the best plan.