What Types of Insurance Does a Shoe Store Need?
Like any retail store, a shoe store needs insurance to protect against various risks. The specific types of business insurance a shoe store needs will depend on the store’s size, location, and the products and services it offers.
Often, retail shoe stores have the flexibility to appeal to many interests and needs, offering amenities that online retailers cannot. For example, in a shoe store, the customer can see and touch items, test them out, and learn from employees. Since shoe stores see many customers throughout the day, adequate insurance coverage is essential to protect the store from risks, hazards, and lawsuits.
Related: Guide to starting a shoe store
What Are Some Risks for a Shoe Store?
Without good insurance coverage, most businesses have risk exposures that may lead to potential financial hardships. For shoe stores, some of those risks include
- Customer injuries
- Selling faulty items
- Employee injuries
- Fire damage
- Sudden loss of business
Since customers come on-site to shop, shoe stores have a customer injury concern. For example, common on-site injuries include slips, trips, and falls. Slips and falls may happen for a variety of reasons, with some of the more common reasons including
- Cluttered walkways
- Slippery or wet flooring
- Uneven flooring
- Poor construction of stairs or nonexistent handrails
- Narrow or overly filled aisles
Additionally, customers may be injured from falling objects inside a shoe store. Unsecured shelving and displays may fall or tip over, causing cuts, concussions, or crushed limbs. Customers may also be injured from falling inventory, lifting heavy objects, or testing items.
Selling Faulty Items
Another retail risk is the possibility of selling items that cause bodily injury. For example, a customer could sprain an ankle due to a defective sneaker.
Shoe stores selling children’s items are responsible for ensuring that the items are safe and age-appropriate to avoid lawsuits for injury or death. Although the item’s manufacturer is responsible for faulty items, the shoe store could also be held accountable for selling faulty items.
Like a customer is at risk of injury for slips and falls, employees also encounter those same risks. In addition, employees are also injured from muscle strains or back injuries caused by repetitive motions or lifting heavy objects. For example, stocking shelves, sorting boxes of inventory, and carrying heavy or awkwardly shaped items are sources of employee injury claims.
Shoe stores face a potentially large financial hardship if a fire damages the store. A fire causes wide-ranging damage, such as damage to the structure and inventory and possibly causing a store closure. While the store is closed, it cannot generate income, furthering the financial damage. Some of the more common sources of fire include faulty or aged wiring, malfunctioning equipment, and smoking.
A shoe store’s fire load also contributes to the extent of the damage. Items like furniture, clothing, chemicals, cleaning products, and paper products contribute to a fast-spreading fire, making the fire harder to put out and causing more damage.
Sudden Loss of Business
Shoe stores often rely on in-person shopping for regular income. So, a loss that reduces customers puts the business at risk of a sudden loss of income. In addition, although most shoe stores have the option to relocate, a location change could threaten the store’s client base. Existing customers may be unable or unwilling to travel to a new location, and as a result, the store risks losing income.
What Types of Insurance Should a Retail Business Consider?
Even though retail businesses are exposed to many risks, insurance policies are available to protect against the financial harm that risks may cause. Some of the key policies that a shoe store should consider include the following different types of coverage:
- General liability insurance – premises and operations
- General liability insurance – products and completed operations
- Workers’ compensation insurance
- Commercial property insurance
- Business interruption insurance
General Liability Insurance – Premises and Operations
A general liability policy covers bodily injury and property damage claims. A premises and operations general liability policy covers claims that occur on the store’s property or due to its operations (i.e., services performed or an employee’s actions). For example, should a customer slip on the store’s wet floor and injure themselves, this line of liability insurance covers the claim because it occurred on-site.
A general liability policy provides well-rounded coverage to protect the store’s financial well-being following a loss. For instance, this policy covers claim costs such as
- Medical bills
- Property damage repairs
- Legal defense costs
General Liability Insurance – Products and Completed Operations
A products and completed operations general liability policy also covers bodily injury and property damage claims. However, this line of coverage covers injuries or harm caused by the products or services provided by the store. For instance, if a recalled item sold by the store injures a customer, the customer may sue the store. Fortunately, this line of liability coverage protects the store from product liability lawsuits.
Like a premises and operations liability policy, a products and completed operations liability policy covers similar claim costs:
- Medical bills
- Property damage repairs
- Legal defense costs
Workers’ Compensation Insurance
A workers’ comp insurance policy covers an employee’s expenses following a work-related injury. Since there are many scenarios in which an employee may be injured at work, shoe stores benefit from this policy because it provides for employees and protects the store from potential lawsuits.
A workers’ compensation policy covers the following expenses:
- Medical bills
- Lost income
- Rehabilitation care
- Disability income
- Funeral expenses
Commercial Property Insurance
A property insurance policy covers the structure and business-owned items against hazards that cause damage or loss. For example, many property insurance policies include coverage for the following hazards:
- Malicious mischief
- Water from leaking pipes
Shoe stores that own the building need enough insurance for the structure to cover the rebuilding costs following an incident. A property insurance policy covers the structure up to an agreed value, based on the structure’s condition, size, and customization. Many insurance companies complete a visual inspection to ensure that the policy has enough coverage.
Additionally, property insurance covers damage or loss claims for business items, including furniture, inventory, materials, supplies, tools, and décor. Business items are covered up to an agreed policy limit. And the policy dictates whether the lost items are covered on a replacement cost basis or an actual cash value basis (which covers items at their replacement cost, minus depreciation).
Business Interruption Insurance
Business interruption coverage provides insurance for times when the shoe store unexpectedly closes such as after storm damage or natural gas leak. During a closure, a shoe store may be unable to generate income but is still required to make payments on bills and loans. Fortunately, business interruption coverage is designed to protect businesses from dips in revenue following an unexpected loss.
Although this type of coverage isn’t normally sold as a stand-alone policy, it can often be added to a business owners policy. This valuable coverage includes the following benefits:
- Payment on existing loans and bills
- Coverage for employee wages
- Compensation for lost income
- Compensation for the cost of a temporary relocation
How Much Does Insurance Cost for a Shoe store?
The cost of insurance will vary depending on the shoe store’s specific insurance needs. For example, a shoe store that rents space likely doesn’t need insurance coverage for the structure, whereas a shoe store that owns a large building needs generous property insurance coverage.
Two key factors that influence insurance costs for a shoe store are
1) the amount of coverage needed and
2) the level of risk exposure.
Some aspects that affect the coverage amount and risk exposure include:
– The size and condition of business-owned structures
– The amount of inventory
– The number of employees on the payroll
– The type of inventory sold (i.e., hazardous items, which increase the liability risk)
– Employee training and safety precautions
– Fire suppression systems
– Store security and loss prevention measures
– Any past or current lawsuits or insurance claims
The best way to determine insurance costs is to contact multiple insurance companies for a quote. Each insurance company offers different discounts, packages, rates, and coverage options. So, by gathering quotes from various sources, you can confidently pick the best option for your shoe store.