Owning and operating a business takes a huge commitment of time, energy and financial investment. Problems and issues arise on a daily basis, but your NY retail store insurance should not be one of them. It’s of major importance that store owners, along with their insurance agent, address proper insurance coverage for all facets of the business from its inception as well as periodically through the years.
Inadequate coverage can lead to large financial losses or even closure of a store. Just a bit of proper planning can help you to avoid any potential insurance issues so your attention can be focused on running your business with assurance of protection.
Five Major NY Retail Store Insurance Coverages
Provides protection for accidental injury to non-employees occurring on your premises. Unfortunately, accidents to happen, even to the most safety conscious store owners. Personal injury lawsuits can reach a million dollars or more.
For instance, say you have a customer shopping in your store and they slip on a wet floor incurring a serious head and neck injury. You are later sued for $1.5 million but only have $500,000 general liability coverage. What will you do?
You want to be covered adequately from the start and not roll the dice that a serious accidental injury will never occur on your premises.
Business Personal Property
Business personal property includes such items as inventory, supplies, fixtures, furniture, tools, and equipment. Basically everything that you own and use to operate your business. You want to be covered for the replacement cost of all your property, not the current market value. For stores with moderately fluctuating inventory, choosing the high value of your annual inventory can be the wise choice. Stores that are seasonal, where inventory is significantly higher for say a 3 month time period, can choose a “Peak Season Endorsement” to increase inventory to peak season levels during peak season and maintain base inventory coverage for the remainder of the year.
If you own your retail store building, most owners will go with a Replacement Cost Policy (RCV). RCV policies typically have a Co-Insurance clause, meaning that you have to insure your building up to a certain percentage of the actual replacement cost or a penalty is applied to reimbursement.
For example, you own a $1 million replacement cost building and insure it at $700,000 with a 90% coinsurance clause. A fire causes $500,000 in damages to the structure. You are insured at 70% of RCV but should have been insured at 90% of RCV or $900,000. The penalty is assessed by dividing the insured amount of $700,000 by the required amount of $900,000, or .78. The loss amount of $500,000 X .78 equals $390,000 insurance company reimbursement less the deductible. Over $100,000 would have to be paid out of pocket by the store owner to repair the building.
Getting an accurate replacement cost estimate is critical to avoid incurring such penalties.
Tenants Fire Legal Liability
For those that lease their retail store space, tenants fire legal liability coverage is an extremely important coverage. If say a fire emanates from your store due to negligence, you may be responsible to pay for the damages to your space. In the case of a total loss, this can amount to hundreds of thousands of dollars or more.
Make sure to carry a limit high enough to cover a total loss. You can take total square footage of your space X average cost per square foot to rebuild plus an allowance for demolition and debris removal to derive an amount. You insurance agent should be able to help you with this.
This coverage helps you to recover lost income if your store has to be closed for a covered policy peril such as fire, wind, weight of snow and ice, etc. It provides for the income you normally would have received during normal business operation during the time you are closed, up to the number of months coverage you carry.
Some policies don’t include this coverage or add only 3 months of protection, but with most carriers, you can add up to 12-months of coverage with an endorsement. It’s advisable to carry 12-months of coverage for protection against a total loss where you have to move to a new location or rebuild the building that you own.
Protect Yourself And Your Store
With so much going on with the opening of a new store or the operation of an existing store, one of the last things you probably want to do is to spend time working with your insurance agent fine tuning your retail store insurance policy. But, as you can see, improper coverage can cause a financial nightmare for a store owner, even put you out of business. Please take the time to review these important coverages with your agent, you are worth it!
If you have any questions regarding retail store insurance or auto, home and business insurance options, please contact us, we’re always glad to help. The NY Insurance Hub serves Albany, Schenectady, Troy, Latham, Cohoes, Watervliet, Clifton Park, Saratoga Springs, surrounding Capital Region areas and all of New York State from NYC to Buffalo.