The holiday season isn’t all sleigh-bells and sugar plums for retail shop owners. Sure, you will probably experience increased profits, but as the weather gets colder and the holidays draw nearer, the risk of liability insurance claims skyrockets for both in-store and online retail business owners.
For example, a customer walks into your store, slips, and falls on a puddle of melted snow —the next thing you know, you’re served with a lawsuit for bodily injury. Or say a client claims an essential oil diffuser you sold to them was defective and started a small fire, resulting in minor property damage.
Liability insurance for retailers may cover the costs associated with lawsuits such as these and is a critical component of any retail business owner’s risk management strategy.
What is Liability Insurance?
Liability insurance, also referred to as commercial general liability insurance (CGL), is a business insurance policy that protects your business against claims alleging bodily injury or property damage. The most basic form of protection, a CGL policy covers the expenses associated with lawsuits and the payout of any losses.
During the holiday season, general liability insurance may protect your retail business from the following:
- Increased Foot Traffic: Since 2008, there have been a reported 117 shopping-related injuries on Black Friday in the US and Canada. Fights, crowding, and stampedes have left shoppers severely injured, and if it happens in your store, guess who they may come after. Liability insurance provides coverage for third-party lawsuits, alleging bodily injury, and property damage. If you are sued, your insurance may cover the associated costs.
- Property Damage: Furniture and electronics stores across Canada, both physical and online, have some pretty sweet holiday deals, meaning increased home deliveries for large items. If you sell products that require your employees to deliver them to your customer’s home, there is a risk of property damage.
- For example, your employee accidentally damages a customer’s hardwood floors while assembling a piece of furniture, and the customer sues your business for damages. Luckily, your CGL policy covers the cost. The chances are slim, but nothing ruins the holidays like a liability claim.
While these claims don’t only happen during the holiday season, an increase in sales means higher exposure to risk, and not just for bodily injury or property damage.
Extra Coverage For The Holidays
- Product Liability Insurance: You know those giant inflatable Santas you see lining Inglewood Drive in Toronto every year? Pretty awesome, right? Do you know what isn’t as awesome? When the Christmas decorations, you sell malfunction and cause damage or injury. A faulty light bulb short-circuiting is all it takes for a fire to break out.
- Product liability insurance protects against claims alleging property damage or bodily injury resulting from products you manufacture or sell. If you sell seasonal holiday decorations, this is a critical form of coverage you need to protect your business.
- Employee Theft Coverage: To deal with the increased foot traffic during the holidays, you may hire seasonal part-time employees. If you’re in a rush to hire in order to meet the increase in demands, you may not have time to adequately screen your employees. Unfortunately, not every employee is as committed as Buddy the Elf. During the holidays, shoplifting and employee theft rates go up. Blame it on crowded stores or lack of holiday cheer, but the point is, in 2017, employee theft accounted for 33.2% of inventory shrink.
- While you can, and should, take measures to prevent internal theft, should it happen to you, employee theft coverage protects your business against thefts committed by your employees. If you’re a store operating with multiple employees, you may want to have coverage just-in-case.
- Cyber Liability Insurance: No one loves Cyber Monday like a cyberhacker. Cyber Monday is an excellent opportunity to direct customers to your e-commerce site. However, with increased traffic and purchases, there is an increase in customer financial information stored in your system, meaning more customer data for a cyberattacker to access should they successfully hack into your network.
- Cyber liability insurance can’t secure your data, but it can cover the costs associated with attorney fees and notifying customers should their data be compromised.
How Much Does It Liability Insurance Cost?
‘Tis the season to protect your business. The holidays can be stressful, but your insurance doesn’t have to be. When determining the cost of your liability insurance premium, several factors are considered, such as the products you sell, your store location, and the size of your business. On average, a small retail business owner can expect to pay around $450 for a $1M limit.
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