However you shop – we all constantly step into many retailers to purchase food, clothes, technology, or any products. These physical shops, e-commerce or franchises are crucial for any country’s economic growth. As retailers are the key connection between manufacturers and customers. They are the final sales point and instrumental to the entire distribution channel.
Millions of retailers globally provide customers with products they need or desire. There are some huge retailers that are known worldwide like Walmart, Ikea, Apple, H&M and many more. These big retailers have a powerful brand image and business protection. Although what about small retailers?
Small retailers are as crucial to the economy and local business growth. Small retailers may surprise the market with unique products or sell a range of branded products. However, they are as prone to suffer retailer risks as any other big retailer. Additionally, small retailers should be more careful with how they protect their business, as retailer liability claims can be costly with no business cover.
If you run a big or small retail business, you need the right insurance solutions. Hence all retailers should purchase retail insurance to cover their business from claims and sudden financial loss. The article will explain what retail insurance is and what the various policies cover.
What Is Retail Insurance?
If you sell products directly to customers online or offline – you are a retailer.
Each retailer has several business risks, especially those with a physical shop(s). However, as a small retailer, you may believe these risks could not affect your business, as you may not be dealing with a large client base just yet.
Unfortunately, it takes one mistake, fire, slip or just one person to sue or destroy your business. Retail insurance consists of various policies that help cover the risks and provide financial and brand protection when things don’t go as planned.
What Policies Are Included in Retail Insurance and Why?
Public Liability Insurance
As a retailer, people always enter and exit your shop. As soon as they step into your business premises, their safety is your liability as the retailer. This doesn’t mean your employees should be protecting them like a bodyguard, but you should be prepared for anything. Various things could go wrong to these customers on your premises, including injuries or property damage. If one of these retail risks does occur, you will be held liable and possibly sued.
Sadly, you won’t be able to let it off easily by offering a product discount or free product. As a retail business owner, you will be liable to pay for medical, repairs, compensation, or settlement costs. These costs can be expensive and significantly damage the financial sheet. For example, the most common public liability claims in retail stores are slip & falls and product falling accidents.
Facing public liability claims are expensive unless you have purchased retail insurance. The insurance includes public liability insurance. The policy covers your business if a third party sues your business, alleging that your business premises/activity caused them bodily injury or property damage. However, you can never be too safe, as accidents await at the worst times.
Property All-Risk Insurance
A physical retail business is always great; your business is more visible, and you can provide a better experience, leading to more sales. In addition, the physical property is crucial for retailers that depend on offline sales and should ensure you do everything to keep it safe. However, unfortunate risks can occur internally and externally to your store. These can include fires, floods, vandalism, natural disasters, or freak accidents. These risks can crash your business and result in a large repair bill.
Even minor accidents by your customers can be costly and damage your property. For example, recently, in May 2022, a child accidently broke an HKD 33,000 toy figure of Teletubbies. Unless the retail business can confidently prove that it was the customer’s fault, the company will have to suffer the loss.
Retail insurance may not be able to stop property damage, but it can reimburse you the cost of fixing your property. As the solution includes property all-risk insurance. The insurance covers the building, your equipment, and all other physical assets under the business ownership against a certain type of unpredicted event.
Business Interruption Insurance
Sometimes your property damage might be critical that you shut down your business during the repair. These moments are terrifying as a business owner when you think of the income loss, outgoing salaries, and additional rent costs. These times are worse for small retailers that work through just one shop and must wait till everything is fixed to run again.’
These situations sometimes happen, and business owners must repair the shop to move on; there is no other way. For example, a tree has fallen into your property (during a storm), and the owner must rebuild the structure.
Your business shouldn’t suffer when recovering from property damage. Therefore, retail insurance can include business interruption insurance. The insurance will cover all the lost costs while the business is paused. Although the insurance will only cover property damage interruption, nothing pandemic related. The insurance gives you the confidence to get back on your feet after everything is fixed and not worry about costs.
Cyber Insurance
The retail industry like any other industry worldwide – uses technology and the internet to sell and store data. It is a huge part of being a business in 2022. Retail technology includes modern cashiers (tablets), accounting software, data storage apps and an online website itself. Each retail business has a large amount of sensitive data about their customers, their finance and more. Any device or system that is connected to your business can be hacked or used to enter your business server. For instance, 500 Coop supermarket stores in Sweden were forced to close in 2021 due to a cyber-attack on their operating system. Such cyber-attacks can ruin a business and attack any type of retailer.
Additionally, Cyber-attacks against retailers are a big concern, especially during holiday seasons. For example, cyber experts noticed a 38% increase in cyberattacks in 2022. The statistics prove that cybercriminals try their best to take advantage of customers and their data during high-traffic days. If a retailer is a victim of a cyber-attack, they are liable for all the sensitive data lost or leaked (breach). Additionally, the attack can ruin the business’s future.
Thankfully retail insurance can comprise cyber insurance to cover and recover from cyber-attacks. The policy covers the cost of recovery from cyber-attacks, including connection with experts, restoring data and advice on avoiding possible attacks. These costs can add up to a lot, and with cyber insurance, you don’t need to worry about it – as it is more important to be cyber safe.
Product Liability Insurance
Product liability depends on your retail business and what products you sell. If a retail company sells products from different brands, you may not be liable if the products cause harm or property damage (the brands are liable). Although if the products are your brand, you will be responsible if the product causes any negative third-party outcomes. There are occasions when products cause severe injuries and damage to customers, which lead to lawsuits against the business.
In such cases, the business is responsible for providing medical, compensation and damage costs to an affected third party. For example, if your food brand or your food causes severe food poisoning. The sick customer may decide to sue your business for medical and compensation payments. One product defect can cost a company hundreds of thousands to fix and recover.
Retail businesses can deal with product defect claims with the help of retail insurance, which contains product liability insurance. The insurance will cover legal costs and damages for the business due to the product defect. Although product liability insurance will not cover the cost of a product recall, your business will need a product recall extension.
Employee Compensation Insurance
Employees are one of the most essential parts of a retail business’s success, online or offline. Employees are the main pushing factor that makes the products move, especially on retail premises. Although while they perform their duty, they can get injured or ill. The business is legally liable for their medical care, salary, and compensation as they recover. Therefore, they deserve the best care for the hard work they put in for the company.
Fortunately, retail insurance can incorporate employee compensation insurance. The insurance covers all costs related to an employee’s work injury or illness. Moreover, in many countries and cities – like Hong Kong, it is a compulsory insurance to purchase when hiring. Hence, it is the business’s duty to buy high-quality employee compensation insurance that will cover all its employees during tough times.
Why Retailers Should Be Insured with Retail Insurance?
Whatever your retail business sells, you will need retail insurance to protect your business liability. The solution includes a range of the most powerful insurances to ensure the retail industry can adequately face claims, surprising events, injuries, or cyber-attacks. A retail insurance solution will cover your business from almost all possible risks and claims
The main benefit of retail insurance the financial protection; with this insurance. Your business doesn’t need to dip into your income and ruin your financial plan. Instead, the insurance will reimburse you for your loss and financially assist you when facing a claim.
The insurance will also protect your online business and data from most cyber-attacks. As a result, cyber insurance is the top fit in the solutions, with more and more companies going online.
Finally, the insurance allows you as a business owner or employee to focus on growing the business, and you don’t need to worry about negative events that could happen. Retailers can’t avoid some risks; therefore, it’s better not to stress and just have the best safety net cover.
To Learn More about Retail Insurance in Hong Kong and Asia, contact Red Asia Insurance.
