Retail insurance refers to the various insurance policies retail businesses need to cover the liability they face in their day-to-day operations. Most small business retailers need, at a minimum, general liability and commercial property insurance. They can typically combine these in a business owner’s policy (BOP) for around $1,000 to $2,500 per year.
Finding the right coverage for your retail store is easy with The Hartford. Their team of experts will help you identify the insurance you need at the right price. Get a free, no-obligation quote online in minutes.
How Retail Insurance Works
Retailers need insurance to protect their assets from the risks that come with owning a business. Every risk is covered by a different policy. Two of the biggest risks for retailers are damage to their business property and lawsuits from third parties like customers or vendors. The first is covered by commercial property insurance and the second by general liability insurance.
Other risks are covered by other retail insurance policies. For example, retailers who have employees generally need workers’ compensation insurance because this policy is required in most states. Businesses that use vehicles in their operations should consider getting commercial auto insurance. In some cases, policies need to be purchased individually, but they can sometimes be added to a retailer’s BOP for additional premium.
Key Retail Insurance Policies
Type of Insurance | What It Covers |
|---|---|
General Liability Insurance | Third-party claims for bodily injury, property damage, and advertising injury |
Commercial Property Insurance | Damage to business-owned assets, such as building, equipment, and inventory |
Workers’ Compensation Insurance | Employees’ injuries and illnesses suffered as a result of their work tasks |
Commercial Auto Insurance | Repairs and lawsuits from accidents involving vehicles owned and used by the business |
Cyber Liability Insurance | Losses resulting from cyberattacks or data breaches |
General Liability Insurance
General liability insurance is a fundamental insurance policy for retailers because it covers some of the most common risks they face, namely third-party accusations of bodily injury, property damage, and advertising injuries like defamation and copyright infringement. Standard general liability policies also cover a retailer’s product liability.
Some situations where you might need general liability insurance include:
- A delivery person suffers a head injury when your shelving unit topples onto them
- A customer’s laptop disappears after your clerk allowed them to charge it in the breakroom
- An artist claims you stole their artwork and used it for your store logo
- A customer suffers third-degree burns when the electronic cigarette they purchased at your store explodes in their pocket
In claims like these, general liability often pays for the injured party’s medical bills or damaged property, and it can also cover your legal defense if a lawsuit follows.
Commercial Property Insurance
Commercial property insurance covers retailers’ physical business assets, including their building, equipment, and inventory. Small shop owners often qualify for a BOP. BOPs combine property and general liability into a single, convenient package and often include business interruption coverage to pay for expenses when covered events keep retailers from operating.
Events typically covered by property insurance include:
- Windstorms
- Fire
- Hail
- Vandalism
- Theft
As a small business owner, you can probably get your general liability and commercial property bundled in a business owner’s policy, or BOP. Most insurers also add business interruption insurance (BII) to their BOPs to cover lost income and ongoing expenses due to a covered property loss.
In the News
BII may not cover retailers who have been shut down by COVID-19 for two reasons. First, most policies do not pay for losses caused by viruses or communicable diseases, plus many only pay for direct physical damage. However, recent rulings in Missouri and New Jersey may change the narrative for some small business owners.
Workers’ Compensation Insurance
Workers’ compensation insurance is a state-mandated policy that provides coverage for your employees when they suffer occupational injuries and illnesses. Policies typically pay the employee’s medical bills and partial lost wages, and most workers’ comp policies also cover your legal bills if an employee claims your negligence or bad intentions caused their injuries.
Every state has its own requirements for workers’ compensation, but most require employers have a policy in place as soon as they hire staff. Depending on your state, failure to comply with workers’ comp law can result in fines and penalties. You can learn more in our ultimate guide to workers’ compensation insurance.
In the News
Whether or not your workers’ compensation insurance covers COVID-19 claims depends on your state’s laws. Many states exclude coverage for communicable disease, but some are using amendments or executive orders to extend coverage to certain essential workers.
Commercial Auto Insurance
Retailers with business-owned vehicles or who drive other vehicles for work-related trips need commercial auto insurance. Most states require business owners have at least liability coverage to pay for damage and injuries they cause other people while driving, but retailers can opt for additional coverages.
The coverages retailers can add to their commercial auto liability insurance include:
- Collision: Pays for your car’s damage after an accident with another vehicle
- Comprehensive: Pays for your car’s damage caused by something other than a collision
- Uninsured/underinsured motorist: Pays for damage caused by motorists who don’t have enough insurance
- Medical payments: Pays for medical bills related to injuries you and your passengers suffer during a collision
Retailer store owners who drive their personal vehicles for work-related errands and deliveries may be on the hook for damage they cause if they don’t have commercial auto insurance. Most personal auto coverage excludes business-related driving, leaving them uninsured.
Tip: You can also be on the hook for damages if your employees make deliveries or run errands for your business in their personal vehicles. The insurance response to this exposure is hired and nonowned auto insurance. You can purchase this coverage either as a standalone policy or add it to your general liability insurance
Inland Marine Insurance
Inland marine insurance is a type of property coverage that covers goods in transit, making it an essential coverage for retailers who ship products to customers. However, inland marine also covers customers’ property in your care and big-ticket items that are excluded in standard commercial property insurance like medical equipment, computers, antiques, and musical instruments.
Some examples of situations inland marine insurance covers include:
- An online store owner whose shipment is destroyed in transit
- A hardware store owner who also offers repair services and whose workroom is broken into
- An art gallery owner whose sprinkler systems go off unexpectedly
Inland marine covers these instances by paying to repair or replace your damaged property.
Cyber Liability Insurance
Cyber liability insurance covers cyberattacks and data breaches by paying for the costs that typically follow. For retailers, those costs may include paying for lawyers, customer notification, credit monitoring services, public relations campaigns, and fines.
Retailers who sell products online or store customer information like credit card numbers may be especially vulnerable to cybercrime. That said, cyberattacks take many forms, and shop owners may need coverage if they accept credit card payments, use email, or offer free Wi-Fi to their patrons.
Additional Types of Retail Insurance
The list of key retail insurance explains the fundamental policies needed to cover exposures shared by most retailers. However, it leaves out a few important coverages that are necessary in certain situations. For example, some retailers may need:
- Commercial umbrella insurance: Coverage that extends the limits on underlying liability policies like general liability and commercial auto
- Equipment breakdown coverage: A policy that pays for repairs when equipment malfunctions
- Spoilage and temperature change coverage: An endorsement added to commercial property insurance to cover the cost of replacing perishable stock stored at the premises listed in the policy
- Jeweler’s block insurance: A type of inland marine insurance that covers jewelry stores’ expensive inventory plus the raw materials, customer property, and jewels loaned to the store
Retail Insurance Costs
Retail insurance costs for small businesses range from about $450 to $7,500 per year, depending on the policies you need. However, your claims history, operations, size, and location can cause each individual policy’s premium to be higher or lower than the range we’ve given.
Retail Insurance Costs & Deductibles by Policy
Policy | Deductible | Annual Premium |
|---|---|---|
General Liability Insurance | $0 to $1,000 | $450 to $2,500 |
Commercial Property Insurance | $500 to $1,000 | $500 to $1,000 |
Workers’ Compensation Insurance | None | $500 to $1,800 |
Commercial Auto Insurance | $500 to $1,000 | $750 to $1,200 |
Inland Marine Insurance | Varies with value of goods | $350 to $4,500 |
Cyber Liability Insurance | $1,000 to $3,000 | $1,000 to $7,500 |
Insurers use a number of factors to determine retail insurance costs. One factor that has a major impact on your premium is the type of goods you sell. Some products, like e-cigarettes, are inherently riskier, so insurers charge more for the retailer’s general liability insurance. Others may be more attractive to thieves or more likely to spoil, so those retailers pay more for commercial property coverage.
Below are some examples of what different retailers might pay annually for a BOP:
- General merchandise store: $1,000
- Clothing store: $990
- Flower shops: $1,050
- E-cigarette or vape shop: $1,000
- Grocery store: $3,650
- Jewelry store: $1,000
- Bookstore: $700
Your industry isn’t the only thing that determines your retail insurance costs. Insures also consider certain business attributes when calculating your premium, including:
- Number of employees
- Annual revenue
- Coverage limits needed
- Value of merchandise and inventory
- Store location
- Industry
- Type and amount of stored customer data
As you can imagine, retail insurance costs vary widely. A florist with one employee doesn’t pay as much as a jeweler with five employees. Not only does the jewelry store require more workers’ compensation coverage, but they need higher limits on their commercial property for their expensive merchandise.
Top Retail Insurance Providers
Provider | Best For |
|---|---|
Retailers and franchisees who want fast quotes for customizable retail store insurance | |
Small store owners who want to compare retail insurance quotes from multiple carriers | |
Shop owners with delivery service who want to save money by bundling policies | |
Jewelry stores and florists who want personalized service from a local agent | |
Retailers who work from their home and want an affordable BOP |
The Hartford
Retailers and franchisees who want to get a fast, online insurance quote should work with The Hartford. The company is one of the few large carriers with an online application, and store owners can get insurance quotes within minutes of submitting. Plus, its BOP can be customized with endorsements for data breaches, franchise upgrades after a loss, and perishable goods in transit.
CoverWallet
CoverWallet is an online agency that specializes in providing small businesses insurance from industry leaders like Berkshire Hathaway GUARD, CNA, and Liberty Mutual. Shop owners can use the company’s online application to get quotes from multiple carriers in a matter of minutes, making it the best choice for retailers who want to comparison shop before they buy. Store owners review premiums and policy terms on their own or with the assistance of one of CoverWallet’s representatives to make sure they’re getting the best coverage for their operations.
Commercialinsurance.net
Commercialinsurance.net is unique because it is neither a broker nor a carrier. Instead, it’s an insurance referral service that works with more than 200 national and regional providers, brokerages, and agencies to bring insurance to small businesses. Once business owners submit their information online, they receive quotes from all available companies and assistance in selecting the best option. Because Commercialinsurance.net works with so many companies, providers often send their lowest premium for retail insurance.
Farmers Insurance
Farmers Insurance is the best choice for store owners with unique property concerns, like jewelers and florists. The company offers both affordable property insurance for retailers with important endorsement options for equipment breakdown, employee theft, and perishable inventory. Plus, store owners get to work with a local agent who can walk them through their quote and give them advice.
Hiscox
Hiscox specializes in insurance for microbusiness and offers coverage to a diverse set of industries. Retail, however, is one of its top industries, and store owners can get a BOP that starts at $500 per year for up to $4 million in coverage. Home-based ecommerce business owners may have even more reason to work with Hiscox. The company offers discounts up to 5% off for work-from-home businesses and an endorsement that covers interruption of computer operations and loss of electronic data.
Retail Insurance Frequently Asked Questions (FAQs)
Retail insurance covers the exposures that put your business at risk, so getting the right policies for your shop is important to your success. We’ve answered a few of the most commonly asked questions about retail insurance here.
Do I need product liability insurance?
General liability insurance has coverage for products and completed operations that pays for lawsuits related to defective products. This is usually enough coverage for retailers, but some store owners may want a standalone product liability policy, especially if they sell high-risk items or manufacture the items they sell.
Does my retail insurance cover floods?
Commercial property insurance generally excludes water damage when it comes from storm surge or overflowing riverbanks, but it may pay for damage caused by burst pipes, gradual leaks, and sewer backup. You should review your policy to see if you have coverage and consider getting commercial flood insurance if your store is in a flood-prone area.
Does commercial property insurance cover civil unrest?
Commercial property policies and BOPs typically cover damage caused by civil commotion or unrest, although many exclude damage to plate glass. BOPs with business interruption coverages also pay out for lost income if civil authorities restrict access to your property.
Bottom Line
Small business insurance may be the most important investment you can make other than the business itself. Choosing the retail insurance policies that work best for your business can keep the doors open for the long run. To get started on choosing the best retail insurance for your business, be sure to get multiple quotes from various providers.
Finding the right retail insurance policy is easy with The Hartford. Their team of experts will help you identify the coverage that best suits your needs. Get a free, no-obligation quote online in minutes.
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