When you own a retail store, investing in a major remodel is about more than just updating your space; it means reimagining your customer experience and giving yourself a competitive edge at a time when consumers increasingly prefer to do all their shopping online.
However, along with those luxurious new fixtures, high-end finishes, and carefully curated atmospheres comes the responsibility to protect your investment. When you’ve invested a lot of money in your store’s appearance, standard insurance coverage may no longer be sufficient.
Here is a look at the essential insurance policies you need to protect your newly enhanced retail space and your business’s long-term success.
Commercial Property Insurance
After a major remodel, your first priority should be updating your commercial property insurance to reflect your store’s greater value. Many retailers make the mistake of keeping their previous coverage limits in place, which can leave them dangerously underinsured.
Your policy should cover not just the basic structure of your store but also those expensive new built-in fixtures, custom shelving, and other luxurious touches that set your store apart.
Pay particular attention to your policy’s coinsurance clause, which will require you to insure your property for a minimum percentage of its total value. For example, you may be required to insure it up to at least 80% or 90% of its total value.
If you’ve recently remodeled but haven’t updated your coverage, you might find yourself receiving only partial payment on claims as a result of being underinsured.
Always go for replacement cost coverage instead of actual cash value, as this will enable you to restore your space to its current luxurious standard without factoring in depreciation.
Business Interruption Insurance
When you make expensive renovations, you will often find yourself enjoying increased customer traffic, higher average purchases, and greater revenue. Business interruption insurance, therefore, becomes even more important because it takes longer and costs more to restore high-end finishes and custom features following a covered loss.
This coverage can replace your lost income during repairs, along with the extra expenses of temporary relocation if needed. Consider how long it would take you to restore your store to its current condition after a major incident. Standard policies typically provide 12 months of coverage.
Although this may be enough for a standard retail store, those needing custom materials and specialized contractors for upscale renovations may consider extending this period to account for the longer time involved.
Enhanced Liability Protection
Upscale retail stores often face greater liability risks. Don’t forget that customers in luxury retail spaces tend to carry expensive personal items, and claims that involve damage to such items can be significant.
Additionally, the presence of high-end fixtures and materials may sometimes increase the claim amounts involved in common mishaps such as slip-and-fall accidents, as customers could argue that a more expensive store should maintain higher safety standards.
Your general liability insurance limits should reflect these increased risks. For example, although a standard policy might offer $1 million per occurrence, $2 million or more could be a better fit for expensively remodeled stores. An umbrella policy can provide additional protection beyond these limits, and it often comes with a relatively modest cost increase.
Specialized Coverage for Unique Features
Your remodeled store likely includes elements that require specialized coverage. Plate glass insurance is needed if you’ve installed sweeping display windows or custom glass fixtures because these are often excluded or limited in standard policies.
Building ordinance coverage may also be needed if you’ve updated your space to current building codes, as it makes sure you can rebuild to the same standards after a loss and don’t risk losing compliance.
If your remodel included custom-designed fixtures or architectural elements, make sure your policy covers them at their full replacement value. Consider additional fine arts coverage if you’ve incorporated expensive decorative elements into your design.
In addition, equipment breakdown coverage protects new point-of-sale equipment and other technical installations that enhance your customers’ shopping experience.
Protecting Your Investment
Protecting your expensively remodeled store goes beyond just purchasing insurance. It is also a good idea to implement a comprehensive documentation system for your improvements, including photos, receipts, and professional appraisals to cover all your bases. Regular insurance audits ensure your coverage keeps pace with your store’s changing value.
Although your new insurance premiums may be higher, keep in mind that many insurers offer premium discounts for advanced security systems and employee safety training programs.
Partner with JMG Insurance Agency to Protect Your Investment
At JMG Insurance Agency, we understand the particular challenges involved in protecting high-end retail spaces. Don’t wait until after a loss to discover your coverage falls short; we can help you create a customized insurance package that properly protects your investment.
Contact us today to schedule a consultation and coverage review.
