A clothing retail business is nothing without its inventory. From the latest seasonal collections to your most Instagram-worthy designer pieces, you need to protect your inventory using a well-rounded insurance strategy designed with the needs of clothing stores in mind.
Here’s a look at the essential coverage you’ll need to protect this central part of your business.
Commercial Property Insurance
A strong commercial property policy should be at the heart of your insurance portfolio. This coverage protects your inventory against common risks, such as fire, theft, vandalism, and water damage. However, many clothing retailers fail to realize that standard property insurance contains limitations that could exclude your more specialized inventory.
For example, if your inventory contains designer merchandise, it could easily exceed standard policy limits. In addition, some causes of loss, such as flood damage, might be excluded. This can be complicated, but working with an agent who is experienced with retail clothing operations can help you obtain customized coverage limits that will protect even your highest inventory levels, such as those during peak shopping seasons.
Business Personal Property Coverage
Property insurance may cover your store’s building and basic property, but business personal property (BPP) coverage offers specialized protection for your inventory, fixtures, and equipment.
As a clothing retailer, you’ll want to make sure your BPP contains protection for:
- Merchandise while it is in transit between locations or being shipped to customers
- Inventory you are storing at temporary locations, such as for seasonal sales or pop-up events
- Any display fixtures, mannequins, and other types of storage systems you use
- Point-of-sale systems and technology used for managing your inventory
Another point to keep in mind is that your BPP coverage should ideally reflect the full replacement cost of your inventory; many only cover what you paid for wholesale. This will allow you to restock at current market prices if disaster strikes.
Stock Throughput Insurance
If your clothing store sees a lot of inventory movement, stock throughput insurance is a great way to obtain seamless coverage for your merchandise that encompasses every minute from when it leaves your supplier until it reaches your customer. This coverage is useful for all those surprising gaps between different policies that catch many store owners off guard when disaster strikes, such as:
- During domestic or international shipping
- While it’s being stored in warehouses or distribution centers
- During handling and transportation between multiple locations
- Through final delivery to your customers
Stock throughput insurance is especially useful for retailers who import clothes and other goods or maintain inventory across multiple locations.
Business Interruption Insurance
Have you ever considered what would happen if a covered loss forced you to close your store temporarily? With business interruption insurance, you can replace your lost income and ongoing expenses while recovering from the loss. As a clothing retailer, this is especially important at busy times of year, such as the holiday shopping season or back-to-school rush.
You should make sure your policy includes the following:
- Coverage for lost profits calculated based on your historical sales data
- Funds for paying your employees’ salaries and maintaining core staff members
- Extra expense coverage for setting up your temporary operations
- An extended period of indemnity that allows for the time it takes you to rebuild customer traffic
Specialized Endorsements for Clothing Retailers
Standard policies may need enhancement from specialized endorsements to protect your inventory fully. Consider adding the following endorsements:
- Peak season coverage to raise your limits during periods of higher inventory
- Pairs and sets coverage to address clothing items that match and go together
- Label coverage for damaged branded merchandise
- Market value endorsement to cover more expensive designer and limited-edition pieces
- Coverage for your samples and display merchandise
Climate Control Failure Protection
Another factor that many clothing retailers tend to overlook is protecting their inventory from incidents related to climate control systems such as heaters or air conditioners. Extreme temperatures, humidity, or water damage from malfunctioning systems can ruin entire collections. That’s why you should consider adding specific equipment breakdown coverage and dedicated protection against climate-control-related failures.
Cyber Insurance
In today’s retail environment, your inventory management system can be just as important to your daily operations as the inventory itself. Cyber insurance protects against:
Data breaches that impact customer information- Ransomware attacks that target your inventory management system
- Business interruptions caused by cyber attacks
- The costs associated with notifying your customers their data was involved in a breach
Don’t Wait For Disaster to Strike
Disasters can expose unexpected gaps in your coverage; however, it will be too late to obtain protection. John M. Glover Insurance Agency specializes in creating insurance solutions that address the needs of all types of clothing retailers. Our experienced agents understand the specific challenges you face and can help you create a thorough and flexible plan that suits your budget. Reach out today to review your current coverage and discuss potential risks.
