Getting proper retail business insurance coverage is a must for retail businesses as it helps with costs related to physical damage to your store, bodily injury to customers, and other forms of harm that may come to your employees or your company property. A business owner’s policy (BOP) is a common form of insurance obtained by retail store owners as it combines general liability insurance with commercial property insurance. On average, you can expect to pay around $800 to $2,500 per year for retail store insurance, although this figure will vary depending on the details of your business.
Next Insurance is one company that specializes in providing insurance for retailers. It offers affordable policies, a quick online quote process, and easy policy management through its mobile app.
Retail business insurance costs & types
Retail businesses include hardware stores, electronics stores, liquor stores, pet stores, and clothing stores. While your specific business will determine the types of risk you’re likely to be exposed to, the following are common types of business insurance that should be considered:
Policy | Typical annual premium range | Purpose |
|---|---|---|
General liability | $800-$2,500 | Protects against costs incurred from accidental damage to property or people |
Commercial property | $600-$1,200 | Covers costs arising from damage to business property |
Product liability | $900-$3,000 | This can protect your company in the event your product causes a customer injury or damage to their property |
Commercial auto | $2,400-$4,000 | Offers coverage on costs incurred from property damage and bodily injury protection on business vehicles |
Hired/Non-owned auto | $500-$1,000 | Offers the same as commercial auto coverage, but is applicable for vehicles that are used, but not owned, by your company |
Workers’ compensation | $800-$2,000+ | This coverage protects against costs incurred if an employee becomes injured or ill due to work-related duties |
General liability provides protection against damage to property or injury to someone who’s not an employee. If you’re running a retail store, there are a number of different ways this could save you from bearing the financial costs yourself. For example, customers could slip and fall while browsing for products on your store premises. Or perhaps an employee accidentally spills a drink on a customer’s belongings. Similarly, a customer could get injured by a ladder or other business equipment that falls on them as a result of not being properly secured.
General liability can also provide protection against accusations of slander and libel. If you’re a retail store, there’s a good chance you may create marketing campaigns indicating why you’re better than the competition, and it’s possible that you could be sued by other companies claiming damages as a result of alleged false representation of their products and services.
Commercial property insurance can cover the costs associated with accidental damage to your retail store. This can include the building itself, business inventory, furniture, fixtures, and goods. Property damage could occur as a result of theft, vandalism, or fire. It can also result from hazardous weather, such as wind damage from hurricanes, tornadoes, and hail.
Depending on the insurance policy you get, you could also be covered for equipment breakdowns and lost income if you need to shut down your business temporarily in order to conduct repairs.
If you make or sell products, you should consider this type of coverage. In some cases, product liability coverage may automatically be included in your general liability insurance. It is designed to protect you against costs arising from damages that your products inadvertently cause to property or injuries to persons. It can also cover the legal costs associated with representing you in court.
For instance, this could occur if you create your own type of lotion, but due to a quality issue with one of the ingredients, some of your customers find that it has caused irritation to their skin, and they decide to sue your company for medical expenses.
If your retail store owns and uses vehicles in the course of business, you’ll need to get commercial auto insurance to provide financial protection in the event that an employee causes damage to other property, persons, or to the vehicle itself. Commercial auto insurance can be used to cover medical expenses, damage to property, rental reimbursement if your vehicle is not drivable, and towing costs.
This coverage is similar to commercial auto insurance, but it’s applicable to vehicles that are used but not owned by the business. For example, if an employee uses their personal vehicle to pick up supplies from a vendor for business purposes but gets into an accident en route to the store, hired/non-owned auto could be beneficial in covering the related costs.
Many states require this type of insurance if you have employees. Workers’ compensation is meant to cover costs associated with work-related injuries and illnesses, and can cover things like lost wages, medical bills, and rehabilitation costs. It may also cover retraining for employees who must find work in a new field of work, as well as survivor benefits to cover funeral expenses and income replacement.
Some examples of how workers’ compensation could be used include instances where an employee of yours falls from a ladder while repairing or adjusting a display for your store. Similarly, it could be used if an office worker develops chronic wrist pain as a result of using the computer for multiple hours a day.
Factors impacting insurance costs & how to save money
How much you pay for insurance as a retail store owner will depend on how likely you are to have accidents, claims, and the expected payouts. Insurance companies have a wealth of data and statistical models to determine this information.
Below are the factors commonly considered by insurance companies, and how you can use this data to save money on your insurance premium.
How retail business insurance costs are determined
When getting quotes from insurance companies, you’ll be given a wide range of costs because insurance companies each consider slightly different factors and place varying weights on them. However, the following are the most common items that will be evaluated in determining your overall risk level and the premium you’ll end up paying.
- Business size: The larger your company’s operations are and the larger the building you occupy, the more you’ll be exposed to potential accidents and insurance claims.
- Payroll and revenue: The idea here is that the larger these figures are, the more interactions you’re likely to have with customers, which subsequently leads to more chances of accidents occurring.
- Industry: Each industry has its own set of unique risks, and insurance companies consider your line of work in determining things like your base premium for a general liability policy.
- Hours of operation: All other things being equal, the longer your store remains open, the more foot traffic it’s likely to get from customers, and therefore, the greater the risk of an accident happening.
- Claims history: By itself, a company with a history of little to no claims or those only requiring small insurance payouts is one that represents a lower risk to an insurance company, as it has shown itself to be less costly and less prone to accidents.
- Coverage details: The limits of your policy, coverage types, and deductibles, will impact your insurance premium. Higher limits represent the risk of a larger payout from the insurance company, and will result in higher premiums to reflect this increased level of risk. Higher deductibles, on the other hand, can help lower your premiums because it’s more money that you, as a customer, will have to pay first, before the insurance kicks in any money for paying out a claim.
How to lower your insurance premium
Insurance may be viewed as a necessary evil because it’s something that you hope to never use (and thus might not necessarily see the value in paying for it). With that said, there are ways you can save money and minimize your out-of-pocket costs for retail business insurance.
- Get multiple quotes: Insurance companies each have different preferences and risk appetites for certain retail businesses. Getting quotes from multiple insurance companies can ensure you find one that offers preferential rates for your specific business. However, when comparing quotes, make sure you also consider the company’s reputation and the details on the services and coverages that are being offered.
- Check for discounts: Certain characteristics of your retail store may entitle you to discounts. Some examples can include fire alarm systems, burglar alarms, and security cameras. You may also qualify for discounts if you have certain affiliations with professional groups or decide to bundle multiple policies with the same insurance company.
- Remove unnecessary coverages: Don’t pay extra for protection you don’t need. Carefully review your quote before finalizing a policy to ensure that the coverages provided are those you’re likely to encounter or be at risk of for your specific situation.
- Raise your deductibles: As long as you can afford paying a higher deductible in the event of a claim, this can help lower your premiums by quite a bit, as it means you have to pay more before the insurance company agrees to pay for any damages.
Best retail business insurance companies
If you’re not sure where to start looking for retail business insurance companies for coverage, here are three of my top recommendations:
- Next Insurance: Best overall for customizability and range of coverages
- Thimble: Best quick coverage for new companies
- Simply Business: Best for comparing multiple quotes
Next Insurance: Best overall for customizability and range of coverages
Pros
- Easy to get quotes online fast
- Good reputation for quickly resolving claims
- Easy to manage policy and claims online and through a mobile app
Cons
- May have maximum revenue limits
- Does not have a dedicated 24/7 call center for claims
- May require you to call to obtain some insurance coverages
Standout Features:
- Competitive pricing with discounts of up to 25%, a major factor in being selected on our list of the best small business insurance companies
- Payments can be billed monthly or annually to suit your cash flow needs
- Allows you to purchase insurance for retail stores, including online and brick-and-mortar business models
- Provides iOS and Android apps that allow you to manage your policy, file claims, and get instant certificates of insurance (COI)
- Offers a wide range of other insurance types including general liability, commercial property, product liability, commercial auto, workers’ comp, and more
Financial Stability: Although it’s a newer company, it has an A- (Excellent) rating from AM Best.
Next Insurance was my pick for the best overall company here because it makes it incredibly simple to get a policy tailored to your specific needs. It’s basically a one-stop shop, as you’re able to get a quote, customize policy levels and coverages, buy and activate a policy, and manage claims if the need ever arises.
One of the possible downsides that may not make Next Insurance the best choice for everyone is that it does not have a dedicated 24/7 call center support. That, and coverage limits may be limited depending on your specific circumstances, such as your industry and location.
Thimble: Best quick coverage for new companies
Pros
- Offers flexible coverage terms by the day, month, and week
- Allows you to share an unlimited number of Certificates of Insurance (COI)
- Easy to get quotes and purchases policies online
Cons
- Can be difficult to speak with a live person for claims
- Limits may be lower than some competitors
- Does not offer commercial auto insurance
Standout Features:
- Mobile app is available and can be used to manage your policy, claims, and create a COI
- Short-term coverages are available, and you are not locked into an annual or otherwise long-term policy
- Company is a managing general agent (MGA) that works with nearly a dozen top-rated carriers, and can offer a wide range of coverages
Financial Stability: Thimble works with different carriers, the lowest of which received an AM Best rating of an A- (Excellent).
Thimble specializes in providing insurance for new small businesses, so if you’ve been having a tough time getting coverage elsewhere, this company is worth a look. On that note, if the quotes you’ve been getting from other carriers are far too expensive due to your lack of operating history as a company, Thimble’s specialization and focus on serving newer businesses could help you save a good chunk of money.
Another advantage of working with Thimble is that it works with a handful of highly-rated insurance carriers to get you coverage. Its website, which lists five different carriers, has AM Best ratings of no less than an A-. As a customer, this means a high likelihood that your claim will be paid out, as the carriers have demonstrated a solid financial ability to do so.
Simply Business: Best for comparing multiple quotes
Pros
- Quickly and easily get quotes, compare policies, and purchase policies online
- Allows you to customize coverages to suit your needs
- Works with multiple top-rated carriers in issuing quotes
Cons
- Does not have a 24/7 call center
- Claims are handled by your individual carrier, not by Simply Business
- You may need to contact your individual carrier for help with your policy after your initial purchase
Standout Features:
- Policy documents are generally made available you to right after purchasing a policy online
- You can get assistance and guidance from a dedicated insurance agent if you’re unsure of what coverages and limits to get
- Quotes are provided from top-rated carriers only
Financial Stability: Simply Business is owned by Travelers Insurance and carries an AM Best rating of A++ (Superior).
If you want options, check out Simply Business. Right from the company’s home page, it advertises nearly two dozen different insurance carriers it works with to provide you with multiple quotes and the ability to purchase a policy. With so many options, there’s a good chance you’ll find what you need at an affordable price.
If you’re not sure of what you need, you can always call and get guidance from one of its representatives. With that being said, Simply Business does not handle claims directly, so you’ll need to contact the insurance company you’ve selected with any questions. In other words, you can think of Simply Business as mostly like a middleman who’s there to help you choose the best company and insurance policy.
Frequently asked questions (FAQs)
Does retail business insurance cover theft?
Yes. This can vary depending on the insurance company and specific policy you choose, but many companies offer policies that cover theft. Additional endorsements can also cover lost wages, income, and other payroll expenses if you have to temporarily suspend business operations as a result of the theft.
A realistic figure could be between $800 to $2,500 per year. However, this will vary on a number of different factors such as the size of your business, its operating hours, your industry & location, and the coverages and deductibles you select for your insurance policy.
It’s possible to get insurance coverage as fast as the same business day. However, I recommend shopping for insurance at least several days before you know you need it, as you’ll want enough time to get the best coverage at the lowest possible prices. Additionally, some insurance companies may not be able to provide coverage until certain aspects of your business have been verified or reviewed.
Bottom line
Operating a retail business carries risks. Customers could get injured while visiting your store, competitors could claim that your marketing methods are a form of slander or libel, or you could be a victim of theft or other incidents that cause damage to your retail store building. Fortunately, retail business insurance covers these incidents and many more, and can help you avoid undergoing financial hardship if accidents do happen.
