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    What kind of insurance does a retail store need?

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    Small business owners face numerous risks. And when your business takes steps to open its first, second, or even third retail location, these business risks increase. That’s why it’s essential to purchase the right insurance policies for your retail location.

    This article describes some of the policies that mitigate the risks of having a physical store.

    General liability insurance

    General liability insurance protects your business from lawsuits arising from day-to-day risks. For example, suppose someone visits your store and trips on a wet floor. In this case, they may have the right to sue you for bodily injury or property damage. If a lawsuit occurs, general liability insurance can pay for legal fees and damage awards. This way, you can dodge the financial fallout of such a scenario.

    General liability insurance can also cover lawsuits relating to property damage. Suppose a fire starts in your store, it may also spread to adjacent units. As a result, you may be liable for the fire damage that your neighbours face. The right general liability insurance, however, can quickly pay for these damages and any related lawsuits.

    Related: The Importance of Retail Insurance 

    Commercial property and contents insurance

    Commercial property insurance protects your retail location from certain risks beyond your control—think fires, floods, or break-ins. It pays for the repairs and replacements of anything destroyed in these incidents. Commercial property insurance also includes contents insurance and occasionally business interruptions insurance.

    Contents insurance covers the loss or damage of your business’ assets. This includes furniture, equipment, and much more. In an instance where a fire or flood results in significant damage to not only your physical store but to all the items inside, you can rely on contents insurance to provide the compensation to replace or repair your business’ assets. You can further rely on contents insurance to provide a replacement value if someone breaks into your retail location to steal valuables.

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    Business interruptions insurance

    Suppose your retail location faces a fire or flood. Your store will need to make repairs and replace furniture and inventory. During this time, you’ll likely halt the operation of that store, meaning losses in revenue.

    Business interruptions insurance can remedy this situation. When you purchase a business interruption policy, it can compensate you for the days your store can’t open due to an unfortunate incident. This means you won’t be scrambling to pay employees or make rent because forces outside of your control didn’t let your store operate

    Product liability insurance

    Product liability insurance protects your business from claims that the products you sold, manufactured, or distributed caused bodily injury or property damage. Suppose your store sells camping equipment, and someone purchased a gas burner. You may not have realized that the burner was defective. If the defective product causes the customer a bodily injury, they may have the right to sue your business. A product liability policy can ultimately pay for any legal fees or damage awards that arise as a result.

    Cyber liability insurance

    Just because you’re a physical retailer doesn’t mean you can ignore cyber threats. Your loyalty, POS, and CRM systems all create the potential for cyber liability. If hackers steal the information you keep in any of these systems, customers and clients who’ve had their data stolen may have the right to sue. Like other forms of liability insurance, cyber liability insurance can cover the legal fees and damage awards that arise from these legal disputes.

    Retail locations are core to many small businesses. But they come with additional risks. It’s essential to have the right small business insurance plan to cover your retail stores. This ultimately mitigates the consequences of unfortunate circumstances that could force you to pay thousands or even millions of dollars in legal fees or replacement costs.

    Related: Why do you need business insurance

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    Originally published October 22, 2021, updated August 25, 2023

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