Last Updated: May 30, 2024 by TRUiC Team


Formal Wear Rental Business Insurance

Getting insurance for your formal wear rental business is essential.

Formal wear rental businesses need to be protected against things like claims of product liability, personal injury, and contractual breach.

For example, a client is injured slipping over the floor of your premises, or a client claims that you didn’t provide the requested attire according to their contract.

We’ll help you find the most personalized and affordable coverage for your unique business.

Compass needle pointing towards blue insurance logo
How to Start an LLC Tip Icon

Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.

Best Insurance for a Formal Wear Rental Business

General liability insurance is — generally speaking — one of the most important insurance policies for formal wear rental businesses. 

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

Some additional insurance policies that might be worth checking out if you’re interested in enhancing your protection include:

  • Commercial property insurance — covers your formal wear inventory as well as the commercial space you operate out of
  • Workers’ compensation insurance — covers any medical expenses or lost wages should your employees require time off due to on-the-job incidents
  • Cyber liability insurance — covers any hacking or data breaches your business faces
  • Commercial umbrella insurance  — covers claims that exceed your other policies’ limits

Finding an insurance provider that fits the needs of your formal wear rental business can be difficult. Narrowing down your search to one of the two main types of insurers can help. These are:

  • Traditional brick-and-mortar insurers
  • Online insurers

Generally, online insurers such as Tivly and Next are our choice for new and/or small businesses, as they typically offer quality personalized coverage at more affordable rates than traditional insurers like Nationwide.

Let’s Find the Coverage You Need

The best insurers design exactly the coverage you need at the most affordable price.

Cost of General Liability Insurance

On average, formal wear rental businesses in America spend between $350 – $750 per year for $1 million in general liability coverage.

Compare the average cost of general liability insurance for a formal wear rental 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.

Graph showing average price of general liability insurance prices per industry
How to Start an LLC Tip Icon

Find the Best Rate

Discover the best coverage at the lowest rate in our affordable business insurance review.

Common Situations That General Liability Insurance May Cover for a Formal Wear Rental Business

How to Start an LLC Tip Icon

Example 1: While several groomsmen visit your shop, one of them slips on a wet floor in your restroom, breaks his tailbone, and asks your business to pay for his medical expenses. General liability insurance would cover his medical treatment and any awarded damages in the event of a lawsuit.

How to Start an LLC Tip Icon

Example 2: A competitor sues your business, claiming you stole your logo design from her company. While you don’t believe the logos are similar enough to make a valid claim, you know you need a lawyer. General liability insurance would pay for your legal defense and any required settlement.

How to Start an LLC Tip Icon

Example 3: As an employee accepts delivery at your loading dock, the overhead door malfunctions and crashes down onto the delivery vehicle. The impact damages both the truck and some of your inventory. General liability policy would pay to repair the delivery truck and replace the damaged goods.

Other Types of Coverage Formal Wear Rental 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 made a major investment to design a beautiful, welcoming formal wear rental business stocked with the latest fashions. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as your inventory and other business supplies.

Workers’ Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for both part-time and full-time workers. 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 or death benefits stemming from a workplace accident.

Data Breach Insurance

If you offer a loyalty program for your returning customers, data breach insurance can help safeguard your business in the event a cyberattack compromises their sensitive personal information. This essential coverage provides an extra layer of protection not usually included in a general liability insurance policy.

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 formal wear rental 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.

Formal Wear Rental 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.

Yes. Since your formal wear rental business will be exposed to potential risks from its first day of operation, it will need business insurance beforehand so that its assets are safeguarded in advance.

Another important reason why your formal wear rental business could require insurance is that it could be legally obligated to do so.

Not necessarily. Certain exceptions may be written directly into your formal wear rental 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.