Business Insurance for Running Stores

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Business insurance is designed to protect a business owner's financial assets and is an essential investment for a running store.

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

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

While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A RUNNING STORE

Example 1: After a drink spill, an employee mops the store floor and displays a “wet floor” sign. Despite the sign, a customer’s child slips and breaks a leg. General liability insurance would cover the cost of the child’s medical bills.

Example 2: While rearranging displays, an employee deeply gouges the store’s wood flooring as he drags furniture across the room. Your landlord sues for damages, citing a cost of $9,000 to replace the flooring. General liability insurance would cover your legal fees as well as any resulting payout.

Example 3: After debuting your new advertising campaign, a competitor sues you for slander. Your general liability policy would cover your legal fees and other costs associated with this lawsuit.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost of General Liability Insurance

On average, running stores in America spend between $400 - $1,100 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

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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Other Types of Coverage running stores 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 other types of insurance all running stores should obtain:

Content and Equipment Insurance

As a retail store, you rely on your merchandise to keep the doors open. While you rent your physical space, you still need coverage for your business property in the event of a fire, burglary, or natural disaster. Content and equipment insurance protects your business property, but be sure to discuss policy terms with your insurance provider to ensure coverage for your items at full replacement cost.

You can typically purchase content and equipment insurance as part of a business owners’ policy (BOP).

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.

While your state may allow exemptions for business owners, consider including yourself in your workers’ compensation policy if you engage in the daily operation of the business.

You can typically purchase workers’ compensation insurance as a standalone policy.

Types of Coverage Some running stores May Need

In addition to the policies outlined above, there are a few other types of coverage your running store may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Professional Liability Insurance

Your customers often look to you and your employees for advice. Unfortunately, this increases your liability risk. Professional liability insurance, or “errors and omissions” insurance, provides protection in the event a customer claims a negligent act—whether by human error or a simple misunderstanding.

Additional Steps to Protect Your Business

Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

Frequently Asked Questions

What is included in a business owner’s policy?

A typical business owner's policy includes general liability, business interruption, and 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.

What is the difference between business insurance and general liability insurance?

"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.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it's best to be proactive when it comes to protecting your assets. After all, you can't buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.