Given the many financial pressures involved in running a retail business, the last thing you want to do is overpay for insurance coverage. However, many small retailers end up locked into a policy that doesn’t fit their needs: it is either overpriced for what it provides or is insufficient to address the business’s specific risks. Although the increasing competition in the insurance marketplace is beneficial for business owners in many respects, understanding the numerous options can be tedious and time-consuming.
The simple fact is that many retail business owners pay too much for insurance, whether it’s because they are working with the wrong carrier, they’re not taking advantage of available discounts, or their coverage simply does not suit their specific business model.
Understanding Your Retail Risk Profile
All businesses have a distinct risk profile, and this should form the basis for all insurance decisions. A high-end jewelry store is exposed to a different set of risks and liabilities than a bookstore. This is precisely why business owners should never accept generic coverage recommendations without considering how their inventory, location, customer base, and operations affect their insurance needs.
The location of a business matters more than many business owners realize. Boutiques running out of quiet suburban strip malls do not have the same liability exposures as stores situated in a busy downtown area. Likewise, crime statistics, local building codes, and weather patterns can all influence insurance costs and business risks. Therefore, it makes sense that carriers specializing in a particular region can offer more favorable rates due to their better understanding of the local risk environment.
The Business Owners Policy Trap
It is essential to be aware of the business owners policy trap. These policies are marketed as convenient solutions for small retailers and can indeed offer good value for businesses with straightforward operations. However, those with a complex set of needs may find that these one-size-fits-all bundles leave them paying for coverage they do not need while missing protection that could prove useful one day.
For example, the basic cyber liability coverage included in most business owner policies may not be sufficient for retailers who process a lot of credit card transactions online, while the costly equipment coverage in these policies could be too much for a business that focuses on selling inexpensive goods. In these cases, purchasing individual policies rather than an entire bundle could provide better coverage at a lower cost.
Hidden Discounts and Credits
Many insurance carriers offer discounts that retailers don’t claim because they are unaware of them. Multi-policy discounts, professional association memberships, and safety program discounts are available to many businesses and can provide a substantial reduction on their premiums.
The payment method a business uses for its premiums can also affect costs. For example, many insurers offer discounts for businesses that make their payment in an annual lump sum rather than monthly installments. It may also be helpful to time your business’s policy renewal to coincide with softer market conditions when rates tend to be more favorable.
Comparing Coverage Properly
One significant mistake that many retailers make is comparing insurance policies solely based on price without looking into the differences in coverage among the policies. For example, a policy that costs 20% less may offer significantly lower coverage limits or higher deductibles than a higher-priced one. There may also be important exclusions that could prove to be an expensive lesson in the future.
The Impact of Technology on Insurance
It is also important for businesses to consider the impact of technology on their insurance. Although modern security cameras, inventory management software, and point-of-sale systems may help a business qualify for an insurance discount, these items also tend to create new exposures.
This development is why cyber liability insurance can no longer be considered a luxury, something to have only if it fits the budget. Instead, it has become imperative for retailers, particularly those who have both online and brick-and-mortar operations. A general liability policy might not cover incidents that stem from online sales or social media marketing.
Find the Right Policy at the Right Price
Are you confident that your retail insurance offers you the right coverage at the best price? Given the constantly changing nature of the insurance marketplace, a policy that made perfect sense when your business first opened may no longer be suitable for your needs.
At John M. Glover Insurance Agency, we specialize in helping retail businesses get the most out of their insurance through plans customized for their specific operations. Our knowledgeable team can help you identify opportunities to reduce your costs while improving your protection. Contact us today to schedule a consultation.
