Launching and running your own retail store or outlet takes a particular passion and dedication. Being a retail store owner is a fascinating kind of art. It requires a genuine passion for the products you sell, the people and communities you serve, and an independent, entrepreneurial spirit.

There are pros and cons to owning a retail store, of course. Being your own boss, creating the atmosphere and culture you want to share with your community, and helping people get the products they need and want are among the benefits. 

But there are cons as well: you’re the boss, so the buck stops with you for everything. There are long hours, financial risks, and sometimes, disagreements with employees or customers. Moreover, every retailer or business owner has significant liability risks.

Retail store liability insurance

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Retail liability insurance can help with many of these challenges. In many instances, you might be required to have insurance. If it’s not a regulatory or legal requirement, you shouldn’t bypass getting adequate coverage because it’s a gamble that’s not worth taking. Let’s explore why:

What Are the Consequences of Not Having Retail Liability Insurance?

The most common scenario a retailer faces is if a customer or visitor to your store slips and falls on a wet floor and is injured. Without liability insurance, you could be faced with covering their medical bills, rehabilitation costs, and your own legal fees if they sue you. That financial burden could have a devastating impact on your finances and potentially lead to bankruptcy.

But other risks can also prove financially debilitating to your business without adequate insurance coverage, including:

Product Liability Claims

If a product sold in your store causes harm or injury to a customer, you can be held liable for damages whether you manufactured the product or not. Also, dissatisfied customers may file claims for various reasons, such as product dissatisfaction or disputes over refunds or returns. 

Product liability insurance covers such unpleasantries and expenses, helping to resolve customer complaints or liability claims.

Damage to Your Property

Many unexpected events can significantly damage your business property, contents, and inventory. One of the most common is fire and smoke damage. Whether an electrical fire, a heating unit fire, a fire from the improper disposal of cigarettes, the cooking and heating of food, or a wildfire, no commercial property is safe from the threat of fire. 

Furthermore, water-related damage or flooding is also common. Floods are usually caused by severe weather. Internal flooding can result from a burst pipe, a leaky roof, plumbing-related blockages or issues, or a municipal sewer backing up and discharging inside your store.  

Commercial property insurance is designed to cover damages to your business premises, contents, and inventory if damaged by fire, water, or a natural disaster.

Theft or Vandalism

Theft and vandalism also pose risks to any retail store owner. A 24/7 monitored surveillance and alarm system can help deter thieves and vandals, but not always. Commercial property insurance can also cover the financial burden of replacing stolen or damaged goods and repairing any property damage because of theft and vandalism. However, it doesn’t cover internal theft, fraud, or dishonest acts by employees. Adding commercial crime insurance to your policy covers your expenses for dealing with internal theft.

Expensive Legal Fees

Defending yourself against a third-party lawsuit, even if you’re not found liable, or the suit is dismissed because it lacks merit, can be incredibly costly. Hiring an experienced attorney and paying related expenses is not cheap. Additionally, many common business transactions require a lawyer’s time and assistance to tackle efficiently. Legal expense insurance makes retaining legal counsel affordable.

Loss of Business Income

If your store is damaged by fire or water and is forced to close temporarily for repairs, it could result in substantial income loss during the downtime. A liability insurance policy that includes business interruption insurance can alleviate that pain by covering your everyday overhead expenses, including rent, loan, or mortgage payments, utility bills, supplier-related expenses, and employee payroll up to your coverage limit following an insurable loss.

Cyber Liability Claims

Whether your retail business operates as a traditional brick-and-mortar location, solely online, or both, you face the threat of costly cyber-attacks or data breaches. For example, taking digital payments through a point-of-sale (POS) system, having a website and using email, selling goods online, having in-store WiFi, and storing confidential information in the cloud are all at risk of being compromised. Cyber liability insurance can help you recover from a breach or cyber-attack by covering your expenses if you’re hacked. 

Regulatory or Legal Fines and Penalties

Failure to comply with various federal, provincial, or municipal regulations and laws, such as health and safety codes, can trigger fines and penalties from the authorities. You’re personally responsible for paying fines out of pocket if you lack insurance protection.

Bankruptcy and Financial Ruin

A single incident or lawsuit involving a third party could put your business under financial duress. That could result in the closure of your business and possibly lead to having to declare personal bankruptcy if you’re a sole proprietor.

What Types of Retailers Need Liability Insurance?

Every type of retail business should have some form of liability insurance. That’s because interacting with the public, other companies and suppliers could result in damages, injuries, or legal disputes. 

Additionally, if you need to get a loan from a financial institution, you’ll be required to provide a valid certificate of insurance.

How to Get Low-Cost Retail Store Insurance Quickly

Getting affordable retail liability insurance is easy through Zensurance.

Fill out our online application for a free quote. Let our experienced brokers shop our partner network of over 50 Canadian insurance providers to find the policy you need and customize it to suit your business’s requirements. 

If you’re unsure what coverage and coverage limits you need, we’re just a click or call away.

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About the Author: Alexandria Anthony

Alexandria Anthony is the Team Lead, Property & Hospitality, at Zensurance.