Retail Store Insurance FAQs
Before we get into the more technical aspects of retailer insurance, let's take a few minutes to address some of the more common questions and concerns asked by those shopping for retail shop insurance as well as online retailer insurance.
What Insurance Do You Need for a Retail Store?
Most shopping centers require their retailers to have a general liability insurance policy. These policies are designed to protect the store owners (and the shopping center owners) against any claims made by customers. They cover accidents and issues such as customers slipping and falling, tables/displays causing injury, and others.
Retail stores need to get general liability insurance. General liability insurance might be a requirement for business permits. Moreover, in case the retail store is planning to rent a commercial space, then the landlord needs to be added as an additional insured in the terms of the general liability coverage.
So what is general liability insurance for retail stores? General liability insurance for retail stores is the primary protection that most insurance companies offer. This insurance kicks in if a retail store caused or allegedly caused personal injuries or property damage to third parties. Here are some example situations where general liability insurance is helpful:
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A retail store specializing in handyman tools failed to arrange items on display as it’s a very busy day. A customer tripped on one of the items lying on the floor and sustained injuries. The customer then filed a claim and demanded the retail store to pay for his injuries.
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The retail store’s vending machine suddenly burst in flames. Someone was passing the moment the incident happened. Startled, the person dropped her phone and had it damaged. After everything toned down, the passerby filed a claim and asked the retail store to shoulder the repair or replacement cost of her phone.
Defective items can injure customers or cause property damage. Basic general liability insurance doesn’t cover a retail store’s liabilities connected with the selling of a defective product. That’s why there’s product liability insurance for online retailers and brick and mortar retailers to cover this loophole.
Product liability coverage is an optional policy in general liability insurance for retail stores. This one kicks in when customers file a claim after a defective product caused injuries or destroyed property. Here are some examples to understand how product liability coverage works:
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A retail store is selling salads to customers. After eating, one customer began to feel nauseous and weak. The customer then filed a claim and accused the retail store of selling spoiled food
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A retail store is selling handyman products. One customer decided to buy a drill. One day after he visited, the customer came back and filed a claim because the item bought suddenly exploded and left some damage on the customer's project site.
Aside from product liability coverage, there’s another optional policy in retail business general liability insurance called advertising injury coverage. Advertising injury coverage kicks in when third parties file a claim against a retail business that committed or allegedly committed copyright infringement, slander, libel, and other forms of reputational harm.
General liability insurance provides excellent protection against claims from third parties. But still, claims from customers aren’t the only exposure that will do some significant damage to a retail business. For one, the retail business commercial space might get destroyed or damaged. The same might also happen to stocks in the inventory too.
Retail Business Commercial Property Insurance
If you have a higher-end retail store, then you also may want to consider some form of theft insurance. Or, if you own the building your store is located in, then you may also want property damage insurance.
Many retail businesses decide to get commercial property insurance aside from general liability insurance.
Commercial property insurance protects the commercial space of the retail business. Particularly, it covers reconstruction costs if the retail business’s commercial space is destroyed by fire or extreme weather. Also, if the commercial space is only damaged by fire, extreme weather, theft, or vandalism, commercial property insurance will take care of building repair expenses.
The following optional policies can be added to retail property insurance for more comprehensive protection:
A retail store makes money by selling the stocks in its inventory. If stocks get damaged, a retail business will surely suffer from significant losses. Carriers understand this and offer stocks and contents coverage.
Stocks and contents coverage will reimburse losses after a retail store’s inventory got damaged or lost because of fire, extreme weather, theft, vandalism, and other covered perils. Stocks and contents coverage is underwritten in two ways. The first type of stocks and contents coverage only covers items in the inventory that you schedule or list on the policy’s terms. On the other hand, the second type covers all items in the inventory.
Business equipment and tools insurance is useful for retail stores that use specialized tools and equipment for business operations. The purpose of this optional policy in commercial property insurance is to reimburse losses of specialized tools and equipment are damaged or lost because of fire, theft, vandalism, extreme weather, and other covered perils.
Does Commercial Property Insurance Cover a Rented Space?
Commercial property insurance doesn’t provide coverage to a rented building. If your retail store is just renting, consider adding rented premises liability coverage to general liability insurance. Rented premises liability coverage will reimburse the landlord in case the commercial space you’re renting is destroyed by fire, extreme weather, vandalism, and other covered perils.
Retail Store Workers Compensation Insurance
Employees working at retail stores can get injured while working. In connection, employers are responsible for treatment and compensation. Many retail store owners recognize how costly this will be. As a result, they decide to get workers compensation insurance.
Workers compensation insurance for retail stores takes effect when at least one employee becomes sick or injured because of work. With this insurance, the retail business can pay for the hospitalization and treatment of the employee. Workers compensation insurance also provides a weekly allowance equal to two-thirds of the average weekly wage in case the employee needs to take a leave to continue recuperating.
Retail business can’t refuse to get workers comp as it’s a state-mandated insurance. Non-compliance might result in fines or imprisonment.
Authorities also recognize the fact that carriers aren’t willing to cover some types of retail businesses. And so, there are alternative methods to cover employees with workers compensation insurance. The first one is to qualify for the state’s risk pool. The second method is to qualify for a self-insurance program.
Business Interruption Insurance for Retail Stores
There are many circumstances that will force retail stores to suspend business operations. This is why some are smart enough to get business interruption insurance.
Business interruption insurance helps minimize losses if a retail store needs to stop business operations to relocate, renovate, or wait for an economic crisis to pass. In practice, this policy provides an allowance that the policyholder can use to pay employee wages, loans, rent, mortgages, and other operation costs.
Do Retail Stores Have Insurance for Theft?
Yes! If you have a lot of expensive goods in your store, or think that your store may eventually have a problem with theft, then you might want to consider purchasing crime insurance for your retail store.
Crime insurance will reimburse losses if third parties manage to steal valuable items or money from your retail store. Actually, theft is only one of the many perils crime insurance covers. This insurance policy also covers losses if third-parties commit social engineering, fraud, misrepresentation, and others.
How about employee theft? Employee dishonesty insurance is an optional policy in crime insurance that covers losses if an employee of your retail store commits the following:
Is There Special Online Retailer Insurance?
If you own an online business, then you could benefit from a special online retailer insurance having a general liability policy with products liability coverage, stand-alone stocks and contents coverage, and cyber liability insurance.
We already discussed general liability and products liability insurance. And so, we’ll only have to explain what cyber liability insurance is.
Cyber liability coverage in online shop insurance is for businesses who own websites or any other similar platform that collects sensitive information from clients such as credit card numbers, addresses, phone numbers, and emails.
In case of a data breach, cybercriminals will steal such sensitive information. Affected parties might experience losses as a result. The job of cyber liability insurance is to cover defense costs and settlements if concerned parties file a claim to recover losses.
How Much Does Retail Insurance Cost?
The average cost of retail insurance in the United States is $500 per year, which equates to around $41.66 per month for a $1 million general liability coverage. Of course, retail store insurance cost can vary significantly depending on the type of business, the size of the business, and what type of retail establishment you have. For example, if you're selling used items your retail business insurance cost will probably be a lot higher than if you're selling t-shirts.
For more idea about retail store insurance cost, here’s a table showing the best commercial retail insurance companies and their pricing:
| Cost per Month | Cost per Year |
| CoverWallet | $41.66 | $499.92 |
| Thimble | $53.72 | $644.64 |
| NEXT | $55.41 | $664.92 |
| Hiscox | $97 | $1,164 |
| State Farm | $97.41 | $1,168.92 |
| The Hartford | $99.19 | $1,190.28 |
| Travelers | $101 | $1,212 |
