Running a successful retail business involves several moving parts, from managing inventory and keeping customers happy to training employees. It’s easy for some of the behind-the-scenes facets of retail, such as insurance, to get overlooked; however, insurance missteps could spell disaster when the unexpected occurs.
The truth is that most retail business owners would rather deal with a dozen other challenges or decisions than sit down and compare insurance policies. It’s a tedious process that is often confusing. Yet working with the right insurance provider can often mean the difference between recovering from a setback and having to close your doors forever.
What Coverage Do You Actually Need?
Before you even start shopping around, you’ll need to understand what types of coverage your retail business needs. One non-negotiable coverage is general liability, which addresses incidents such as a customer slipping on a wet floor or your product causing harm to someone.
Property insurance provides protection not only for a retailer’s physical location but also for their inventory, which is at the heart of their operation. Most states require you to have workers’ compensation if you have employees, and this is true even if you just have one part-time worker helping out on weekends.
Business interruption insurance might seem like an unnecessary expense, but think about what would happen if a fire forced you to close for three months. Could you survive without income while still paying your rent and other fixed expenses? Most businesses would struggle in this situation without help from insurance.
You need commercial auto insurance if you use vehicles for deliveries or other business-related purposes, while cyber liability insurance is increasingly necessary for retailers. If you process credit cards or store customer information, you’re at risk for data breaches and need this type of protection.
Evaluating Insurance Providers
Nobody wants to overpay for insurance, but choosing the cheapest option is like buying the cheapest parachute. Sure, it might end up working just fine, but the implications of failure are catastrophic.
Look at the provider’s financial stability first. Check their ratings with agencies such as A.M. Best, Moody’s, or Standard & Poor’s. An A-rated company may charge more, but they’re also more likely to be around when you need to file a claim. A provider that goes bankrupt won’t do you any good, no matter how cheap their premiums were.
Reliable insurance companies should have exceptional customer service. When something goes wrong (and in retail, something eventually goes wrong), you’ll want to be able to reach a real person who actually understands your business. Be sure to test this before signing up by calling their customer service line at different times. How long do you have to wait? Do they seem knowledgeable? Does it feel like they’re rushing you off the phone?
The Claims Process
An insurance provider could boast great marketing and competitive prices, but if their claims process is a nightmare, none of this matters. Ask potential providers about their typical claim processing times, and seek references from other retail businesses in your area.
Some insurance providers now offer mobile apps that can be used to file claims, which can be incredibly convenient when you’re dealing with an emergency. Others still require you to fill out paper forms in triplicate. Which one would you rather deal with when your store floods?
Industry Experience and Specialization
Not all insurance providers understand retail businesses. Some specialize in manufacturing, while others mostly work with businesses offering professional services. You want a provider who truly comprehends the distinct challenges of retail. They should understand seasonal fluctuations, the risks associated with carrying inventory, foot traffic, and the importance of maintaining your reputation.
A provider with experience in retail will not only offer more relevant advice and coverage options, but they might also suggest coverage you hadn’t considered, such as spoilage insurance if you sell perishable goods or coverage for items in transit if you frequently receive shipments.
Red Flags to Watch For
If a provider is a lot cheaper than all the others, there’s a reason. Maybe they exclude common claims, use extremely high deductibles, or are difficult to work with when you need them. Be wary of any provider who pressures you to sign up with them immediately or who can’t clearly explain their coverage terms.
You should also watch out for providers who seem to nickel-and-dime you for every little addition to your policy. If they’re not licensed in your state, avoid them at all costs.
Making Your Decision
Take your time making this decision. Get quotes from at least three providers and compare the prices and coverage details. Read the fine print, and ask questions about anything you don’t understand. Consider working with an independent insurance agent who can shop multiple providers for you.
Work With the Experienced Retail Insurance Providers
At John M. Glover Insurance Agency, we know the retail industry inside and out. We understand the late nights, the holiday rushes, the worries about making payroll, and the pride you feel when a customer tells you they love your store.
We’re not here to sell you insurance you don’t need or disappear after you sign on the dotted line. We’re here to be your partner, to answer your questions at 2 a.m. when a pipe bursts, and to make sure you have the coverage you need to sleep soundly at night. Give us a call today, and let’s talk about how we can protect the business you’ve worked so hard to build.
