Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.
Employees are the heart of any retail business. Whether you run a computer store or a thrift shop, your employees answer questions, sell your products, and keep everything running smoothly. However, accidents can happen even in the safest workplace.
When an employee suffers a workplace injury, workers’ comp helps cover medical expenses, lost wages, and more.
Employer’s liability insurance, which is typically included in a workers’ comp policy, provides protection when a drug store clerk, florist assistant, or other retail employee decides to sue a business owner over an injury.
Employer’s liability insurance can help cover:
Without proper coverage, you could find yourself paying out of pocket for a legal defense, even if there’s no real basis for the lawsuit. Employer’s liability insurance, however, does have limits to how much it will pay for a claim.
The amount you pay for workers’ compensation is a specific rate based on every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and your payroll (per $100).
The formula is:
Classification rate x Experience modification rate x (Payroll / 100) = Premium
Each state dictates its own laws for workers’ compensation requirements. For example, every retail shop in Nevada must carry workers’ compensation insurance for its employees – even part-time workers. However, stores in Alabama are only required to carry workers’ compensation when they have five or more employees.
While self-employed or independent contractors, sole proprietors, and partners don’t have to carry workers’ compensation insurance, you can purchase a policy to protect yourself, too.
In certain states, retail businesses must purchase workers’ compensation insurance through a monopolistic state fund. Those states are:
If you purchase workers’ comp through a monopolistic state fund, it might not include employer’s liability insurance. However, you can purchase it from a private insurer to fill this gap in coverage.
Whether you own a clothing store or a vape shop, retail is filled with risks. Employees can injure their back while stocking shelves, or suffer repetitive motion injuries from working the cash register. At any retail store, you can facilitate a safer work environment with:
By creating a safe work environment and managing your risks, you can decrease workplace accidents at your retail business. That means fewer claims – and a lower insurance premium.
Workers’ compensation insurance protects your employees and to some extent your business, but it doesn’t cover common risks such as property damage and customer injuries. Other recommended insurance policies for retailers include:
Business owner’s policy: This policy bundles general liability insurance with commercial property insurance, usually at a lower rate than if the policies were purchased separately.
General liability insurance: This policy can pay legal expenses related to customer property damage, customer injuries, copyright infringement, and more.
Liquor liability insurance: If your shop sells alcohol, you likely need this policy to comply with your state's dram shop laws and protect against lawsuits.
Commercial umbrella insurance: Similar to excess liability insurance, this policy boosts coverage on a retailer’s general liability, commercial auto, and employer’s liability insurance once the limit is reached.
Commercial auto insurance: State laws usually require this coverage for business-owned vehicles. It helps cover costs if your retail shop's delivery truck or other vehicle gets into an accident.