No small business should operate without a comprehensive insurance policy, and that includes Santa’s workshop.

Sleigh bells may jingle, but if St. Nick’s sleigh gets into a collision, a fire ignites at his workshop, and all the toys are destroyed, or if one of those toys proves defective and he and his elves are facing a third-party lawsuit, the costs could upend the merriest of seasons.

Here’s a quick overview of the insurance coverage Santa needs (and your small business, too) to ensure all have a good night and a happy holiday:

Commercial general liability (CGL) insurance

It’s safety first and foremost at the North Pole, but accidents can happen anytime. Therefore, Santa’s policy features CGL insurance because it covers the cost of third-party bodily injury or property damage that result from the workshop’s regular activities because of negligence or an accident. 

Santa Claus thinking about his insurance needs.

So, if a delivery person visits the workshop to drop off supplies but they wipe out on the icy walk outside the front door and are injured, Santa’s CGL coverage may cover the injured person’s medical expenses. If that injured delivery person decides to sue for damages, Santa’s CGL policy provides him with financial support to defend himself and the compensation awarded to the plaintiff by the court.

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Commercial property insurance

If Santa’s workshop was damaged by fire, flood, or a natural disaster and all his inventory was destroyed, or if the place was vandalized or thieves broke in and ransacked it, his commercial property insurance is there to cover the expense of repairing the workshop. This coverage is also designed to pay for replacing or repairing his damaged inventory, electronics and office equipment, and furniture and fixtures.

Equipment breakdown insurance

The North Pole workshop has a lot of expensive equipment, including an automated assembly line, office equipment and computers, production systems, and alternative energy hardware. If any of that machinery should cease to work because of a mechanical malfunction or an electrical surge, it’s Santa’s equipment breakdown insurance that is designed to cover the cost of repairing or replacing them. 

Commercial auto insurance

Santa’s sleigh is a vehicle used for business purposes, which is why he has commercial auto insurance (he and Mrs Claus also own an all-electric SUV, but they don’t use it for work). It’s sensible since private-passenger car insurance policies aren’t designed to cover business vehicles. 

While the basic or standard coverages in a commercial auto policy mirror those in private-passenger car policies, they tend to come with higher coverage limits. He also wisely includes optional collision or upset coverage in his policy. So, suppose while landing on a rooftop, Santa’s sleigh smashes into a chimney stack and damages it. In that case, his commercial auto policy’s third-party liability coverage may pay to repair the damaged chimney, and his collision coverage may cover the cost of damages to his sleigh since he’d likely be found at fault for the accident.

Product liability insurance

Typically included in CGL coverage, product liability insurance protects Santa’s workshop from third-party bodily injury or property damage claims from the toys he and his elves manufacture and distribute. This same coverage is vital for any business, including retailers or online sellers selling goods they didn’t manufacture.

Cyber liability insurance

It’s true to say Santa is a traditionalist for many things, but his enduring legacy proves he keeps up with modern society. Although he may receive millions of letters from children worldwide, he also gets a lot of emails and is quite a tech-savvy fellow. Plus, his workshop adopted different software solutions to track the many orders for toys he gets. He runs a tight, efficient operation, Santa does. 

But using technology and storing data comes with the risk of data breaches and cyber-attacks, even for him. Santa’s cyber liability coverage shields him from those costs should, for example, an elf accidentally fall for an email phishing attack that exposes the workshop’s confidential data. Cyber liability insurance is designed to pay for incident response costs, software system damage and restoration, legal and breach management fees, and losses sustained by a cyber-attack that causes a systems-wide outage at the North Pole.

Business interruption insurance

The North Pole can be an inhospitable place to work, especially during the winter months, but that’s Santa’s peak season. Should an insurable loss resulting from extreme weather, fire, or a flood inflict damage on his workshop and he’s forced to close while repairs are underway, business interruption coverage pays his overhead costs. That includes the elves’ payroll, taxes and loan payments, mortgage payments, and utility bills.

This coverage is usually included in commercial property insurance, but if it isn’t, it can be added to an existing policy. However, you must have commercial property insurance to have this protection, and Santa certainly does.

Legal expense insurance

It’s hard to imagine Kris Kringle needing legal representation to deal with tax audits, statutory license protection, or contract and debt recovery disputes. But it can happen to anyone, including the jolly ol’ St. Nick. That’s why he has legal expense insurance to cover the cost of hiring a lawyer or seeking legal advice. Adding this coverage to a policy is far more affordable than paying for an experienced lawyer out of your pocket. 

It also covers Santa’s legal fees if he decides to pursue legal action against an individual or organization that damages his property or physically injures one of his reindeer, elves, or the big man himself.

Directors and officers (D&O) insurance

Also called management liability insurance, D&O insurance is designed to protect Santa, Mrs Claus, and the senior elves on his team from suffering personal financial losses related to breach of legal or fiduciary responsibilities, allegations of misrepresentation, and decisions that adversely affect his workshop’s shareholders. 

And though Mr and Mrs Claus are kind, generous business leaders, employment-related disputes with their elves can happen. D&O supports them if they face wrongful dismissal or employment discrimination claims.

Professional liability insurance

Let’s face it, Santa Claus is probably one of the world’s most popular influencers. With that kind of profile and audience, millions of people hang off his every word. But you know the likes of Scrooge or the Grinch are chomping at the bit to take him down a notch if the opportunity presents itself.

That’s why Santa includes professional liability coverage in his policy. In addition to covering his professional services for errors or negligent acts, it also provides protection for claims alleging defamation or disparagement should the North Pole’s advertising initiatives or any public comments he makes about the miserly likes of Scrooge and the Grinch trigger a lawsuit.

Protect Your Business Like Santa Does: Get Business Insurance

It’s the most wonderful time of the year, but if you don’t have business insurance and something goes wrong, it can quickly ruin the festive spirit (and potentially bankrupt you). 

Protect your business or profession by getting a free quote for your insurance needs from Zensurance. We don’t have a workshop full of elves, but we do have more than 50 insurance providers in our partner network and a team of licensed brokers who can get the protection you need quickly and affordably.

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About the Author: Matt Jardine

Matt Jardine is a licensed insurance broker and Team Lead, Property & Hospitality, at Zensurance.