Buying the right retail insurance may save your business and your life savings

Insuring your business is similar to insuring your home and it’s belongings but still so different. Insuring a retail operation can be very tricky.

If you own a retail store you know above all else you must have insurance. Your landlord requires it and in many cases so do the local municipalities where you offer your goods for sale. Finding the right company to engage and foraging through the maze of the legal mumbo jumbo can be daunting. It should not be.

When you insure your home and the things you own liability is certainly a big factor. It is much bigger in the world of retail. For instance, if you own a store where children frequent you have to look at all the major problems you may run into. Let’s say you own a toy store or a baseball card store or even a convenience store. Children frequent these stores often by themselves rather than with their parents. This is where the liability comes in.

Ask yourself do you have showcases with sharp corners? Are there items on the floor where a child may trip and fall hitting their head on a counter? Are your showcases at a height where a child can boost himself up to where his face and chin are above the top edge? These are all critical elements when it comes to owning a store where kids frequent. Children are unpredictable so you have to think out of the box. Think of every scenario where a child may get injured.

The reasons are simple. They all center around how a child may get hurt or the liability of it all. If a child falls in your store are there sharp corners on showcases which may cause the child to be seriously injured? By serious we mean injured for life? Damaged ear, eye or worse yet brain damage.

Since a child has a life expectancy of 80 years, if he gets hurt and damaged for the rest of his life, and he’s only five now this means he has to be compensated for 75 years. Not including medical bills a good lawyer has to figure the child would earn at least $75,000 a year for at least 40 of those 75 years. This translates to $3 million in earnings lost. Add in the cost of medical care, retirement and all that goes with it and you easily have a $7 million to possibly $10 million lawsuit. Ouch!

Even if a four year old lifts himself up to where his chin is over the counter and then let’s go knocking out a few teeth, you will be liable. While damage in this case may only mean $10,000, is this money you are prepared to pay out? No, probably not. Your insurance company will if you have enough coverage and you should.

Shopping for your retail insurance means meeting with agents and while you might find what you want on the Internet, meeting with an agent where you can ask specific questions and they can visit your place of business to advise you is much more important.

Most of the big companies still offer retail insurance while some do not. There are companies which specialize in certain types of business insurance and you should search these out before making a decision. They may be a better fit for your store.

Depending on the size of your operation you may spend between $2,000 and $5,000 a year for insurance. Most of the protection will involve liability but most of the cost will come from things such as the type of glass you have in your windows, the size and value of your inventory and the location of your business.

A few companies even offer extras you might want to look into. You may be able to get reimbursement insurance if you get robbed on your way to the bank to make a deposit. If you own a collectibles store a few companies offer “real” replacement value while others look at the price you paid for an item when you bought it rather than what it is worth on the open market today.

These are all things you need to consider when shopping for business insurance. Make no mistake about it you must have it not only for your business but your own peace of mind.

Luca Richardson manages corporate risk. In her spare time she writes for business blogs on how to lower risk and increase profit. Click to learn more about Lloyds.

 

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