Retail Store Business Insurance

Faulty goods can impact retailers. If your store sells a product that turns out to be harmful or defective, you can be liable for any damage it causes.

When a product is deemed dangerous, anyone involved in the journey from manufacturer to consumer can be held liable, including the design company, materials vendors, distributor, and all retailers that sold the product. 

However, understanding what causes product liability lawsuits and taking the proper steps to manage those risks can ensure public safety, as well as potentially save your small business a fortune.

One of the most important steps is carrying the proper insurance to shield your business from potential lawsuit costs. Consider investing in these retail insurance policies:

• Product liability insurance: If your general liability insurance policy excludes damages caused by products, ask to add a product liability insurance rider to your coverage. In exchange for a higher premium, a product liability rider offers your small business the extra protection that a general liability policy wouldn't normally cover.
• Product recall insurance: Covers the costs of notifying customers and disposing of faulty items. This is usually an endorsement you can add to your general liability policy.

When it comes to shoplifting, it's not if but when it will happen. And while there's no way to 100% safeguard your business, you can take steps to protect your assets and minimize the damage.

In the event of an incident, the following types of small business insurance policies can help your business recover from the financial losses of stolen items and reputational damage:

• Commercial property insurance: Compensates your business for supplies, equipment, inventory, and furnishings stolen from your premises. This policy, sometimes called business hazard insurance, protects your assets and business space, regardless of whether it’s leased or owned. Plus, it can typically be bundled with general liability in a BOP for extra savings.
• Fidelity bonds: Employee dishonesty coverage, a type of commercial crime insurance, protects business owners or their clients against employee theft.

To fully protect your retail store business from all risks and liabilities, you may need additional types of coverage. For certain locations and landlords, your retail store might be required to carry liability insurance before you can even sign a lease.

• Electronic data processing (EDP) insurance: Covers your electronic data processing equipment, such as computers and POS systems, against data loss during a power surge, fire, natural disaster, or similar incident.
• Equipment breakdown coverage: Protects your company’s computers, electrical systems, production machinery, and other equipment from sudden and accidental malfunctions. It’s designed to cover losses such as short circuits, loss of air pressure or vacuum, or power surges that commercial property insurance typically excludes.
• Hired and non-owned auto (HNOA) insurance: Provides liability coverage for accidents involving personal, leased, or rented vehicles used by your business.
• Professional liability insurance: Also called errors and omissions (E&O) insurance, protects small businesses against the legal fees of client lawsuits over unsatisfactory work.
• Per-location aggregate endorsement: This general liability add-on gives each of your store locations its own separate aggregate limit, rather than sharing one limit across all of them. It can help prevent a pricey claim at one store from reducing the coverage available at the others. 

Some of the above types of insurance can be added to a BOP for additional coverage, as well as savings. Learn about other ways you can save money on small business insurance.