What insurance coverages do I need for my retail business?

4 minute read  

If you own and operate a retail business, you know it takes hard work, dedication, and an entrepreneurial spirit. You may have started your business for any number of reasons: it’s your passion, you want to serve your community, or you like being your own boss. And once you see your vision turning into reality, it can be incredibly rewarding.

But being your own boss also comes with plenty of challenges. Maybe you’re operating out of a storefront, or maybe you run your business online or out of your home. Maybe you rely on selling your wares at markets, fairs, festivals, or other events. Whatever the case, it often means putting in long hours and taking on a lot of risk — including liability.

That’s where retail insurance can help. Even if it’s not a regulatory requirement in your province, having the right insurance coverage is crucial. Without it, you could be responsible for costly damages or losses, which could jeopardize the business you’ve worked so hard to build.

But there are other potential consequences too. You may require insurance to secure certain contracts (not just with suppliers, but also for leasing a storefront). And you may require proof of insurance to participate in events and tradeshows. That’s why it’s worth looking into insurance for retail business owners and making sure you have the right coverages for your specific industry.

What is retail insurance?

Retail insurance helps to protect your business from costs related to liability, damage, and loss, from lawsuits to theft to equipment breakdown. Essentially, it acts as a safety net, ensuring that unexpected events don’t derail your hard work and investment. A policy can be customized to meet the unique needs of your business, depending on its size, physical location, and the type of products or services you’re selling.

Who needs retail insurance?

Whether you operate a gift shop, pet food store, flower shop, bakery, or fashion boutique — or any other type of retail business — you’ll want to consider insurance for retailers. Even if you operate out of your home, don’t assume that your homeowners’ policy will cover your business activities. Home-based businesses have unique risks that require specialized coverage. The same goes for online and pop-up shops, which face their own set of challenges and potential liabilities.

What are some key retail risks?

When it comes to liability, if a customer believes you’re at fault — even if you’re not — that’s enough to trigger legal action. If you have a physical storefront, liability could be related to your property — say, a customer injures themselves in your store (such as a slip, trip, or fall), or a customer is injured by one of your products (even if it’s a manufacturer’s defect). If the customer decides to take legal action, retail insurance coverage can help you cover legal fees and potential costly settlements.

If you sell food or beverages, there’s an added layer of risk. Say you operate a bakery and someone gets sick after eating a slice of your quiche (whether in your shop or after they returned home). They can sue you for bodily injury, claiming that your food made them sick and had financial consequences, such as medical costs or lost wages.

If you have inventory, equipment, and furnishings in your storefront, they’re also at risk of damage (say, from a fire, flood, or natural disaster) as well as theft and vandalism. If you occasionally operate a pop-up shop, your commercial property insurance policy may not cover inventory outside of your physical storefront. So, if you regularly travel with inventory and/or operate pop-ups, you’ll want to find out which additional coverages may be required.

Even if you run a home-based or online business, you’re not immune to risk. If you store inventory in your home, you still face the same physical risks as a storefront — from fire to theft. Most homeowners’ insurance policies don’t cover business activities, so don’t assume you’ll be covered in the event of business-related damages or losses.

What are some additional coverage options to consider?

Say you run an online business and don’t store any inventory – one thing you likely do store is customers’ personal information, such as credit card numbers. An online business is at risk of cyber threats, from data leaks and breaches to ransomware and phishing attacks. If a cyber event leads to the disclosure of your customers’ personal data, you could be faced with business downtime, regulatory fines, and reputational damage. If you’re a small business, you’re still a target; in fact, that could make you more enticing to cybercriminals who view you as easy prey. This is why cyber insurance is important.

If your business involves deliveries — whether you’re delivering products or picking up supplies — a car accident could derail your operations, especially if you’re using a personal vehicle (and assuming your personal auto policy has you covered). If you’re using a vehicle for business purposes, a commercial auto insurance policy will help protect you, your employees, and your vehicle from financial losses related to an accident.

Whether you run a storefront, an online shop, or a home-based business, you may rely on a piece of equipment, such as a point-of-sale system, printing press, or refrigeration unit. If it breaks down, it could impact your ability to do your job. Equipment breakdown insurance can be added onto your retail insurance policy so you’ll have coverage for the repair and/or replacement of your essential equipment.

If a worst-case-scenario does happen and you have to temporarily shutter your business, then you won’t be able to earn a living. You could even lose customers. Business interruption may even occur because one of your suppliers is facing a business interruption (say, a fire), causing supply delays. Whatever the situation, you need to get back on your feet as quickly as possible — since, in the retail business, time is money. Business interruption insurance can help with loss of income while you’re forced to close.

Protect yourself and your retail business

The right retail insurance coverage can help protect your business from many types of losses. So, you can keep doing what you love — and have fewer sleepless nights over the things you can’t control. Check out our retail insurance page to learn more about how the right coverage can help mitigate your risks and safeguard your business.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.