Business insurance for the retail store is one of the most important business details that must be covered very early. The reason to acquire sufficient business insurance coverage is to support the continuity plan with sufficient funds to recover from a significant loss.
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Reputable insurance carriers offer numerous products that will address virtually any coverage need, but most will fall into definable categories, including:
Retail stores reside in rented buildings as well as facilities that are owned by the storeowner. Any number of events can result in loss that would be costly to repair without adequate insurance coverage, including: fire, flood, theft and vandalism. Basic business property insurance will address the following areas:
• Building – Replacing the structure that houses the retail store will be the highest priority. Property insurance will cover the cost of removing debris and rebuilding.
• Exterior features – Any feature that is attached to the property is covered under the basic property insurance policy. Additional buildings fall under this category as well.
• Fences – Even though a fence is not attached directly to the building, the property insurance coverage will pay to repair damage to fences and other property features.
• Signs – Exterior signage is an important part of conducting business. Storms and fires can cause significant damage to these costly features. The property insurance will cover the repair or replacement of signs.
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When the building is rented, the storeowner must insure against loss of the contents. This coverage would replace the inventory that is the very basis of a retail establishment. Specialized equipment falls under a different category of insurance and must be listed separately from the sales inventory. As prices rise and store selection increases, the coverage limit must be raised to prevent becoming underinsured.
Commercial Auto Coverage
Most retail storeowners will not have to purchase automobile insurance unless deliveries are made. If an employee is allowed to drive the owner’s vehicle, a commercial auto insurance policy must cover the vehicle. Insurance companies include disclaimers in personal auto insurance policies to give allow the denial of claims if the vehicle was used to conduct business activity.
Commercial General Liability
Liability insurance covers injury or damage to the property or person of a third party. This type of insurance will be carried by the property owner and the store owner if there are two people involved. Insurance companies that carry the two policies will determine which one will cover the damages. The importance of this type of coverage cannot be overstated. If a lawsuit is filed without sufficient coverage on the business, the court can order the seizure of property to pay damages to the third party.
One of the ways to lower the cost of insurance is to purchase an umbrella liability policy that raises the coverage limit paid by the insurance company. Every insurer offers a different level of liability insurance, and most of them encourage retail business owners to carry umbrella policies to mitigate the risk of loss.
Even retail stores can utilize specialized equipment that is essential for sales. If the equipment is damaged by a fire or other disaster, this class of insurance rider would pay to replace the equipment. Absence of this type of coverage can be very costly since most basic property insurance would not cover the equipment. Replacement coverage must be purchased to be certain that the right replacement equipment can be afforded.
Only one out of five businesses will survive a catastrophic loss. When sufficient business interruption insurance is carried, the business owner can utilize the property and contents insurance to replace the material belongings and this category of insurance to retain employees throughout the rebuilding process. Retail businesses are susceptible to damage from events that occur in nearby stores, and the time that the store is closed can be devastating. Business interruption insurance is designed to provide income that sustains the life of the business.
Business Owner’s Policy
Many small retailers pursue a business owner’s policy, or BOP, that is designed to cover various aspects of the business under one insurance policy. Insurance companies offer various coverage levels inside the BOP and careful comparison is the best way to determine which insurer offers the best options. If the liability portion of the BOP does not offer high enough coverage, the umbrella liability policy is a good idea. Every BOP is tailored to the needs of the business and annual updates are relatively easy to make. Maintenance of one policy is appealing for the busy business owner.
Balancing Cost Against Risk
Every retail business owner struggles to create sufficient profit margin. One of the easiest places to cut costs is in the insurance coverage, but the prudent businessperson knows that loss can be devastating. Statistics show that less than 20 percent of all businesses that suffer loss recover and continue to operate. Insurance coverage can make all the difference in the life of a business.
Special care must be applied to maintain adequate insurance coverage and make adjustments throughout the calendar year. Whenever assets are sold, immediate changes to the insurance coverage can save money. If loss does occur, the owner will have the peace of mind that the continuity plan can be executed using the proceeds from the insurance claim.
Reputable insurance companies offer numerous combinations of business insurance coverage for practically any size business. Business owners are wise to compare every aspect of the insurance policies using the same criteria to acquire each quote. When the quotes are evaluated, the amounts of coverage should be comparable. If a quote is extraordinarily low in comparison to the others, the coverage amounts have been adjusted in most cases.
The time it takes to find the best coverage at the most affordable rate will be invaluable. Saving money on premiums will not be welcomed if the result is insufficient coverage. The goal of carrying insurance is to mitigate loss.