Retail insurance is a kind of insurance that protects retail companies from certain risks. Retailers need to consider what will happen if they suffer fire or theft losses and how to cover their legal liability for faulty products to people who buy them. Retail businesses can protect themselves against losses by obtaining the appropriate insurance cover. Consumers want to buy products and services online, but they also want reassurance that the retailer will protect them if things go wrong.
Retail insurance gives consumers confidence that their rights will be protected if something goes wrong and that there is a safety net if they have a grievance. Retail covers the sale of goods in traditional stores and via the internet, mail order and telephone ordering services, and vending machines.
It also covers the provision of such services as dry cleaning, hairdressing or building materials supply.
What is Retail Insurance
The retailer’s inventory policy usually covers this type of insurance. If an inventory is destroyed or stolen, it will be replaced by the insurance company. It also protects retailers against lawsuits if product liability is an issue with their business. Typical issues include defective products, products that are sold incorrectly labelled, damaged products, products with missing parts or improper instruction manuals. This kind of coverage protects against malpractice claims and product liability issues up to the policy limit decided upon by the retailer before signing an agreement with their broker. Some policies will also provide coverage for medical expenses incurred due to injuries obtained from defective merchandise.
Retail insurance policies differ depending on the retail sector, as well as the products and services offered. Each policy is tailored to meet individual business needs. For example, many policies cover both goods and premises, including those used for storage or those undergoing repair or refurbishment.
Other policies cover delivery vans or aircraft used to deliver goods. And some provide cover for sales staff whilst they are travelling on business (for example sales reps).
Theft and money and jewellery insurance provide coverage against the loss of money and valuables and stock and stock-in-trade. These policies give retail businesses insurance coverage in case merchandise is stolen. They also cover business interruption due to robbery or armed robbery, employee theft, vehicle theft or looting, product liability claims or death or disability claims caused by defective merchandise. Even with this type of coverage, there are some exclusions, such as losses resulting from war, terrorism or nuclear hazard, if they occur outside the retail store or on a delivery route.
Insurance cover for retail businesses is generally divided into fire and theft; liability; professional indemnity; stock; stock-in-trade; money and jewellery; business interruption, employee theft, dishonesty, and health and safety.
Insurance companies will offer a range of policies to meet their customers’ needs, tailored to suit individual businesses. Retailers can tailor a program to provide the best protection for their specific needs by using a combination of in-house and specialist retail insurance products, multi-line programs, policy endorsements, and multi-year policies. Retail insurance policies differ depending on the retail sector, as well as the products and services offered. Each policy is tailored to meet individual business needs.
Some retail industry experts suggest that when considering insurance programs for businesses in the sector, three main categories should be considered:
Inventory/Injuries/Insurable Interests Insurance: This insurance policy pays for replacement or repair costs caused by employees’ negligence or destruction of inventory. Retailers should make sure that their insurance program covers this type of risk.
General liability insurance ensures against lawsuits, product liability claims, death or disability claims for employees, accidents and other risks. These types of risks are often associated with high volume or low-value merchandise. Retailers can choose to insure against these risks instead of covering them with an inventory/injuries/insurable interests insurance policy.
Property insurance policies cover the business’s assets – such as buildings and vehicles. This type of insurance can be used for the unique risks unique to the retail sector (e.g., climate or disasters, which are not covered under general property insurance). Shopping centres and malls will often offer an outsourced retail insurance program to retailers within their buildings. For example, a shopping centre may provide a retailer with a package of reinsurance and protection and indemnity covers designed specifically for that retailer.
Workers compensation insurance pays for wages if an employee is injured or suffers a long-term disability due to a work-related accident. It also pays the worker’s family if they are killed on the job. Because of its narrow focus, this type of policy is most often available in the retail sector.
Retail insurance companies have a variety of products designed to meet the needs of retailers. Some insurance companies offer specialised programs that cater to a specific retail sector, such as markets, speciality stores or wholesale. Retailers can use insurance agents or brokers to shop around for the best deal. Insurance agents are not regulated, but they are only allowed to recommend specific insurance policies (for example, property and casualty). Insurance brokers are required to be regulated. They can offer their customers a wide range of insurance policies, but they cannot advise customers about those policies. Their expertise is in negotiating with insurance companies and finding the policy that best meets customers’ needs.
Learn more about protecting your retail business here.
Other useful links about business insurance:
Business Contents Insurance
Business Building Insurance
Employers’ Liability Insurance
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