When it comes to the process of purchasing small business insurance for your retail store, you have a lot of choices about who to buy from and what types of coverage to opt for.
Choice is always positive, but in this case, it’s easy to be steered off the right track. So, how do you determine the best plan to mitigate risk for your small business? It comes down to understanding the needs of your business, so that you aren’t spending money on coverage that you don’t need.
To help you get started down the correct insurance path, here’s a step-by-step guide to purchasing adequate small business insurance for your retail store.
1. Assess Your Risk and Understand Your Needs
No two businesses are identical, so it’s foolish to expect two small businesses to have the exact same needs. Take a look at your store and understand the unique risks that your business is taking on as it operates; what are your biggest liabilities and what do you need to protect them? Insurance companies will underwrite your risk when selling you a plan, so it’s important to know what to expect.
There are some types of insurance plans that are required, including: worker’s compensation, unemployment tax, and disability. These requirements, however, vary from state to state. Understanding the coverage that you need is an excellent way to start the process of buying effective small business insurance for your retail store.
2. Do Your Research
How can you choose the best insurance package if you don’t understand all your options? Researching different types of insurance can help you have a firm idea of what possibilities are out there for you. This takes us back to risk assessment; what are your biggest risks and what are you going to do to make sure they are provided for in your insurance plan?
Unique to small businesses and retailers, there are several types of insurance to be aware of:
Fidelity bonds are for when you don’t have the resources for effective oversight. For some small business owners, having untrustworthy employees is a concern. Small businesses often operate on tight margins and take a big hit if an employee is stealing. The same applies to other crime involving dishonesty action, coverage for which small businesses often have tied into their insurance policy.
Business interruptions are another key area of insurance policies regarding small businesses. If you only have one store, your hit will be huge if you’re forced to close your doors due to an environmental disaster. This is common for businesses in areas that face an increased risk from floods, earthquakes, hurricanes, or tornadoes.
You can find out more about small business-specific policies at the National Federation of Independent Business.
3. Browse the Insurance Market
The market for business insurance is broad and expansive, so you’ll almost certainly find a company that can fill your needs. But, you’ll also spend a lot of time looking around.
If your needs are more diverse, you can certainly mitigate your risks by mixing and matching policies from different insurers, but this can potentially lead to higher premiums. Many small business owners opt for buying a business owners policy (BOP). These policies typically bundle together the common insurance needs of an average business: business interruption, general liability, and property insurance. They do not however cover insurance just as workers compensation, disability, or health.
Again, you’ll want to look at your insurance needs and see if a bundle makes sense for your business. Make sure to take a look at what the cost would be to supplement a BOP with other specialty insurance plans that protect other aspects of your retail store.
4. Find a Reputable Broker or Agent
A broker is intended to match you with an insurer who is a good fit for you, and vice versa. Make sure that when you hire a broker or insurance agent that they are licensed and reputable, and when available, an expert in insuring your field of business.
Here is an excellent breakdown of insurance for businesses of different types and sizes, including tips about hiring a broker or an agent.
5. Continue to Assess Your Changing Needs
One of the most important aspects of purchasing small business insurance is to never stop revisiting your insurance needs. The goal of most small businesses and retailers is to grow, and as your business grows, you’ll develop a more diverse set of liabilities and insurance needs.
For example: let’s say you want to add a local delivery function as your retail business gets bigger. Suddenly, you’re operating a fleet of delivery vehicles but you don’t have the protection offered by a vehicle coverage policy with your insurance. Now your left exposed with new liabilities that are unprotected.
That’s kind of a straightforward example, and you’d probably know to get some additional insurance to protect your vehicles in that situation. But it’s not always that clear-cut, so it’s important to sit down and reassess your risks in terms of your growing business. For a retailer, as your inventory grows, so does your investment and in turn, your need for protection of these assets.
Understanding your options for small business insurance and what it takes to account for all your evolving liabilities can be tricky. Not enough insurance, and you can take a big hit when something unexpected happens. Too much insurance, and you could go out of business spending an unnecessary amount on coverage. To ensure you’re purchasing the correct coverage, make sure to always conduct thorough research, compare pricing and coverage, and always, always asks questions.