Bike Shop Business Insurance
Getting insurance for your bike shop is essential.
Bike shops need to be protected against things like claims of breach of contract, personal injury, and property damage.
For example, a bike part that your shop sells turns out to be faulty and causes an injury or a break-in at your store results in the loss of inventory (including customer orders).
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Bike Shop Business
General liability insurance is — generally speaking — one of the most important insurance policies for bike shop businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Alongside general liability, many bike shops opt to employ several additional insurance policies, including:
- Commercial property insurance
- Product liability insurance
- Workers’ compensation insurance
- Commercial umbrella insurance
When selecting an insurer from which to obtain coverage for your business, you are generally able to choose between one of two types:
- Traditional brick-and-mortar insurers: Those that typically have a physical store and use an insurance agent in order to offer quotes. Some of the most reputable firms in the US fall into this category (such as The Hartford and CNA), though their prices are often quite high due to their overheads.
- Online insurers: By contrast, these providers are able to utilize their comparatively lower overheads in order to offer customers insurance that matches the accuracy and personalization of traditional providers — often for lower prices.
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Cost of General Liability Insurance
The average bike shop in America spends between $500 - $1,500 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a bike shop business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Bike Shop Business
Example 1: During a test ride, a customer seriously injuries themself in a crash and decides to sue. While a court may rule in your favor because the customer took on certain risks by riding the bike, general liability insurance would cover your legal fees and any damages awarded in a settlement.
Example 2: As an employee demonstrates a bike’s fast rate of acceleration, he loses control and hits a customer’s car. General liability insurance would pay for the customer’s vehicle repair costs.
Example 3: A competitor claims your marketing campaign defames their shop and decides to sue. Your general liability insurance would would cover your legal fees and any damages awarded in a settlement.
Other Types of Coverage Bike Shop Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
You’ve made major investments in your inventory of bicycles and cycling accessories. If you own the building in which you operate, you’re responsible for all business-related property housed there in the event of a fire or other natural disaster. Commercial property insurance would cover the cost of replacing your lost inventory after an accident so you can recover quickly.
Product Liability Insurance
While your customers assume a certain level of risk when riding your bikes, there’s always a chance someone may file a lawsuit if they believe one of your products harmed them. Product liability insurance would protect your business by covering your legal fees and any damages awarded in the event of a lawsuit.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability benefits stemming from a work-related accident.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your bike shop business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Bike Shop Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
It is highly recommended that you acquire the appropriate bike shop business insurance before its operations commence due to how prone to risk such an enterprise is.
Depending on your circumstances, your shop may even be legally required to carry some forms of insurance in order to maintain compliance with local laws (like if you hire staff).
Not necessarily. Certain exceptions may be written directly into your bike shop business insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.