Essential Takeaways:
- General liability provides coverage for legal and medical costs arising from third-party physical injuries or property damage.
- A BOP bundles general liability with commercial property coverage into one policy.
- General liability alone might suit home-based businesses or those with very low inventory.
- Most storefront retailers benefit more from a BOP’s broader protections.
- Cost, inventory value, and physical location are the three main deciding factors.
Retail store owners are busy, and examining insurance coverage details often gets pushed to the back burner. It can be a very complicated topic, but there are two main options that all new owners need to understand: general liability insurance and a Business Owner’s Policy (BOP).
Both types of coverage protect against the types of risks retailers are vulnerable to, but they work in different ways, cover different types of exposure, and have different prices. Knowing which path to take can save you money and prevent you from a catastrophic coverage gap that only becomes apparent when it’s too late.
What General Liability Covers and Where It Stops
General liability insurance is considered the foundational insurance type for all small businesses, protecting you against claims that one of your products caused harm, a visitor or customer was injured on your premises, or your business caused damage to someone else’s property. For retail stores, some examples include customers slipping near your entrance, display racks falling onto one of your shoppers’ belongings, or a product you sold causing an adverse reaction.
In addition to property damage and bodily injury, general liability covers personal and advertising injury. This includes accidental copyright infringement and libel in marketing materials.
Although general liability is incredibly useful, it is important to keep in mind that it won’t cover your business’s own property. This means it won’t cover losses such as inventory destroyed by fire or theft.
How a BOP Combines Protections Into One Affordable Package
A Business Owner’s Policy is a specialized type of coverage built for small- and medium-sized businesses. It is a bundled product that combines general liability with commercial property insurance, securing that all of the main bases are covered. It is also convenient because there is only one premium and one renewal date to manage.
The commercial property component of this coverage covers equipment, inventory, signage, and furnishings against perils such as theft, vandalism, fire, and certain weather events. In many cases, BOPs also provide business interruption coverage to replace lost income if the store is forced to temporarily close due to a covered loss. They can offer better overall value than purchasing the same coverage separately.
When General Liability Alone Is Enough for Your Operation
Although a BOP can be a good value, there are some situations where a standalone general liability policy is enough. For example, a retailer that operates entirely online and keeps little inventory at home might find that general liability covers their most likely risks without paying for unnecessary property coverage. The same is often true of home-based sellers, seasonal booth operators, and pop-up vendors.
For businesses in these situations, it is also a good idea to check whether their homeowner’s policy already covers some of the business property they store at home. It is also important to consider exclusions and coverage limits when making these decisions.
Why Most Storefront Retailers Are Better Served by a BOP
If you are running a physical retail store, a BOP is usually the stronger choice because your inventory is expensive to replace and your equipment is vulnerable to theft and breakage. In addition, if you lease your space, your lease agreement will likely require you to have this type of coverage as a condition of occupancy. This means you don’t have any choice in the matter.
There is no denying that a storefront has a very different risk profile from a home-based setup. Foot traffic creates slip-and-fall exposure, while shelves of products put property at risk. In addition, displays, fixtures, and point-of-sale systems are not cheap to replace after a burst pipe or a break-in. Carrying general liability coverage alone on all of this leaves a wide gap.
Let’s Find the Right Coverage for Your Store
At John M. Glover Insurance Agency, we work with small retailers to find retail insurance that fits the actual operation, not a generic policy with features you won’t use. Reach out today for a no-pressure consultation. We’ll walk through your specific situation, compare your options side by side with you, and help you make a confident decision about your retail insurance coverage from day one.
