When you operate a clothing store, your business could be affected by a variety of hazards, from clients suffering accidental injuries to disasters that damage your property. A major incident or lawsuit could prove financially challenging. Securing comprehensive business insurance coverage can help protect you from these common risks.

What insurance coverage do I need for my clothing store?

There are many types of insurance coverage to consider, but these policies are particularly relevant to clothing stores:

Commercial Property Insurance

Your commercial space is essential to your retail business, and it’s critical that you protect your property with commercial property insurance. If a disaster strikes, the costs to rebuild, make repairs, and replace merchandise could be overwhelming. 

Commercial property insurance can provide funds to replace or repair your business property if it is destroyed or damaged by a covered peril such as fire, explosion, storm, vandalism, and more. If you are leasing commercial space, property coverage will most likely be required of you by your landlord.

Example:

• A fire breaks out at your clothing store. Much of your merchandise is destroyed, along with your point-of-sale system and clothing displays. Your commercial property insurance would pay to repair any damages to the building and replace lost merchandise and equipment. 

Business Interruption Insurance

Business interruption insurance, also called business income insurance, covers your business for lost income and operating expenses if you are forced to temporarily close due to property damage from a covered peril. Since clothing stores may struggle to operate without their physical storefront, this coverage can be beneficial. 

Commonly covered perils include fire, lightning, windstorm, hail, explosion, and vandalism. Business interruption insurance can be added to your commercial property or business owner’s policy.

Example:

• Heavy snow causes the roof of your store to collapse, destroying your inventory and severely damaging your building. You must close your store for six weeks while repairs are made. Business interruption insurance will cover rent payments, employee salaries, and lost profits while you are unable to operate your business.

General Liability Insurance

General liability insurance is an important coverage for clothing stores since they see many customers on a regular basis. If someone is injured or their property is damaged while visiting your store, you could be held liable. 

Although you can reduce the likelihood of injuries by maintaining a clean, well-lit space, there is always a possibility that someone could slip or trip and fall. General liability insurance will protect you in this situation, covering claims of third-party bodily injury and property damage.

General liability insurance can also cover third-party bodily injury and property damage that arises from the products that you sell. While the risk of injury from clothing is relatively low, if your store sells baby clothes or children’s clothing, product liability protection may come in handy.

General liability insurance also features a personal and advertising injury component that can cover third-party personal injuries, including invasion of privacy, false arrest, wrongful ejection from the premises, and more. This coverage can often address conflicts with suspected shoplifters, who may sue your store for any perceived harassment or wrongdoing.

Examples:

• Bodily injury: A customer trips over an uneven step in your store’s front entrance. The customer falls and breaks his elbow. Your general liability insurance would cover medical costs as well as legal fees if the customer sues.
• Personal injury: You suspect a group of teenagers of shoplifting in your store. While they are in the dressing room, you barge in and accuse them of stealing. They deny any wrongdoing and their families later sue your business for invasion of privacy. General liability insurance would cover the lawsuit and any resulting settlement. 

Commercial Crime Insurance

Crime is a major risk for clothing stores, as they are open to the public, handle cash payments, and may have high employee turnover. While precautions can be taken to increase the security of your store and conduct thorough background checks of all employees, no retail store is immune from crime.

Most commercial property insurance policies do not cover losses from crimes committed by employees and offer limited coverage for losses from crimes committed by other third parties. Commercial crime insurance covers financial losses caused by theft, robbery, fraud, and other crimes, whether the crime was committed by an outside party or by your own employees. 

Example:

• One of your new employees steals $3,000 from a cash register at the end of a shift and disappears. Your commercial crime insurance would reimburse you for the loss.

Business Owner’s Policy

For smaller clothing retail businesses, a business owner’s policy (BOP) could be the most convenient way to obtain a wide range of coverage. A business owner’s policy combines the major property and liability risks that small businesses face, including general liability, commercial property, business income, and extra expense coverage. 

This type of package can help you save on costs, as the premiums for purchasing these coverages separately would likely be higher. Business owner’s policies are typically only available for small and midsize businesses that meet certain requirements, including a cap on revenue and number of employees.

Additional Coverages

• Workers’ compensation insurance provides financial and medical benefits for employees who suffer occupational injuries or diseases. Employees of clothing stores could suffer from slips and falls and heavy lifting injuries. If employees perform repair and altering services, cuts or repetitive strain injuries are also a risk. Securing adequate workers’ comp coverage is required in almost every state.
• Bailee’s customer insurance covers the property of clients while it is in your care, custody, or control. Your store may need this coverage if you offer tailoring, alterations, or clothing repair services. 
• Cyber liability insurance protects your business from the financial consequences of cyberattacks, data breaches, and other cyber threats. If your clothing store offers online sales or saves customers’ credit card information and other personal data, you could be held liable if the data is breached. Cyber liability insurance can provide the funds to defend your business in a lawsuit, as well as any expenses necessary to recover from a cyber event.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a clothing store with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for clothing stores:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

When you plan to open a clothing store, it’s crucial to be aware of the risks your business could face. From accidental injuries on your premises to unexpected disasters that damage property and force you to stop operating, there are many incidents that could have a devastating effect on your business. Your insurance policies can protect you from these common risks, providing financial support that will enable your business to continue operating even after a costly disaster or lawsuit.