Get a quote on Business Insurance
A single department store can offer a wide range of products and services. While this is certainly convenient and appealing to customers, this large variety exposes the department store to just as many different liability risks. It is important to carefully review your department store’s offerings in order to obtain adequate insurance coverage for the many risks involved in owning and operating a department store.
What insurance coverage do I need for my department store?
There are many types of insurance coverage to consider, but these policies are particularly relevant to department stores:
General Liability Insurance
Department stores receive heavy foot traffic from customers on a daily basis, which exposes your business to a number of liability risks. General liability insurance financially protects your business if you unintentionally cause bodily injury, property damage, or personal injury to a third party.
For instance, this form of coverage would protect your business if a third party is injured within your business premises from a slip-and-fall accident. Your general liability policy would pay for any medical fees for the injured customer, as well as the cost of legal fees to defend your business if the customer sues for damages.
General liability insurance also provides coverage for claims of third-party personal injury. This can include allegations of false arrest, wrongful ejection from the property, discrimination, invasion of privacy, and more. This can be particularly important when your business deals with shoplifters.
Examples:
- Bodily injury: An employee does not properly store a mop after he is done cleaning the floor. A customer trips on the mop and sprains his wrist trying to catch his fall. Your general liability insurance would pay for his medical bills and provide funds for legal fees if the customer decides to sue your business.
- Product liability: After purchasing a face moisturizer from your department store, a customer breaks out into several rashes. When she examines the product, she notices that it is well past its expiration date. If the customer sues your business for selling expired products, the product liability portion of your general liability policy would cover the costs of defending your business.
- Personal injury: Your general manager suspects a shopper of stealing. She forcibly prevents the customer from leaving the store until she has called security. When security arrives and reviews the security footage, they find no evidence of theft. The shopper sues your business for false arrest and discrimination. General liability insurance would provide coverage for the lawsuit.
Commercial Property Insurance
Your department store is entirely reliant on your business premises, and any damage to that property will have a direct impact on your ability to operate. This is why it is essential to obtain commercial property insurance to protect the value of your business’s property, which can include your commercial space, merchandise, equipment, and more.
With commercial property insurance, your policy would provide funds for repairs and/or replacements of essential business property if it is damaged or destroyed by a covered peril. Common perils covered by commercial property insurance include fire, theft, vandalism, windstorm, and water damage.
Example:
- Vandals sneak into your department store at night. They smash a number of glass cases, ruin inventory with spray paint, and steal high-value electronics such as televisions and computers. Because theft and vandalism are covered perils, your commercial property insurance would cover the costs of repairing and replacing the damaged business property.
Commercial Crime Insurance
Due to the nature of your business, commercial crime insurance is a necessary insurance policy for department stores. With expensive products attracting the attention of thieves and employees handling monetary transactions, department stores are heavily exposed to crime risks.
Commercial crime insurance protects your business from losses resulting from criminal acts, such as forgery, robbery, burglary, and theft. Standard commercial property policies provide some protection from criminal acts, but this coverage is limited and it does not cover losses resulting from employee dishonesty. This is where commercial crime insurance can fill the gap and keep your business safe from criminal acts no matter where it comes from.
Example:
- When she believes no one is watching, one of your employees pockets some high-value jewelry pieces from the glass showcase. Your insurer would cover the financial loss of this offense.
Workers’ Compensation Insurance
It is vital to keep your employees safe and to try to mitigate work-related illness and injuries. But even with proper training and important safety measures in place, accidents are impossible to avoid. In addition to bodily injuries—which may happen to any employee tasked with standing for long periods of time—the various departments within your store pose a variety of unique risks to your employees.
For instance, if your department store has a food court, your employees are exposed to cuts and burns during food preparation. If your department store has a jewelry or electronics department, your employees are more likely to face robberies. If you provide tailoring services in your clothing department, your employees are at risk for cutting and sewing injuries. In all cases, workers’ compensation insurance is an important coverage when it comes to protecting your business.
Workers’ compensation insurance provides financial and medical benefits to employees who suffer work-related illnesses or injuries during the course of their work. This coverage includes the employee’s medical expenses, rehabilitation, and a portion of lost wages. Additionally, workers’ compensation insurance can provide funeral, burial, and death benefits for the employee’s surviving family in the case of a work-related death.
Each state has its own regulations and requirements for workers’ compensation insurance. Depending on the state, you may find differences in the types of illnesses and injuries that are covered, specific benefits available for employees, the types of medical examinations required to verify claims, and protocols for delivery of medical care. It is important to understand your state’s requirements to ensure that you have adequate coverage for your employees.
Example:
- One of your employees is tasked with stocking heavy furniture items. He sprains his back while lifting a particularly heavy couch and requires medical attention. Your workers’ compensation insurance would cover these medical costs as well as a portion of his lost income if he is unable to work during his recovery.
Business Income Insurance
Department stores rely on an open business location, and any damage to your business property (such as your building) will have a direct impact on your ability to operate and collect revenue.
Business income insurance—also known as business interruption insurance—provides coverage for loss of income and operating expenses if your business must temporarily close to recover from physical loss, damage, or destruction by a covered peril. These covered perils are the same ones listed in your commercial property insurance policy, which typically include fire, lightning, explosion, theft, vandalism, windstorm, and more.
Coverage from business income insurance includes the business’s net profits and normal operating expenses such as rent, employee salaries, and taxes.
Business income insurance is unavailable as a standalone policy. Instead, it is typically added to your commercial property insurance policy or bundled with a business owner’s policy.
Example:
- A heavy windstorm shatters the large glass windows that wrap around your entire building. Your inventory, furniture, and computers are all damaged after they are exposed to the violent storm. You are forced to close down your business until the damage is repaired and the inventory is replaced. Your insurer would reimburse you for lost income, rent, and other operating expenses while your business is closed down.
Bailee’s Customer Insurance
Bailee’s customer insurance covers your business for damages and losses to customer property that is in your care, custody, or control. This coverage is an important consideration for department stores because of the various services within your business that may require you to temporarily take possession of third-party property.
Your electronics department may take possession of a customer’s computer, phone, camera, or other electronic device for repair. Your clothing department may take a customer’s apparel for tailoring services, and your jewelry department may take a customer’s jewelry for resizing. In these scenarios, the third-party property is under the care, custody, or control of your department store, and you may be held liable for damages.
Example:
- A customer leaves his laptop with your electronics department for repairs. Overnight, your department store is burglarized, and the customer’s laptop is stolen along with a number of high-value products. Your bailee’s customer insurance would provide funds to replace the laptop because it was under your care, custody, or control during the time of the burglary.
Additional Coverages
- Cyber liability insurance financially protects your business against losses and damages stemming from cyberattacks such as hacks, data breaches, denial of service attacks, and viruses. Your department store likely relies on technology for credit card transactions and may have a membership program in place which stores sensitive customer information. This leads to increased liability exposure for your business.
- Commercial auto insurance protects the vehicles your company owns or leases. For instance, if you or one of your employees are involved in a car collision, your policy can provide coverage for damage to vehicles, third-party bodily injury, and property damage. This insurance also covers your company vehicles for damages as a result of covered hazards such as theft, vandalism, or collisions.
- If your department store provides services such as a hair salon or makeup boutique, professional liability insurance is an important consideration. This coverage can protect your department store against lawsuits for any damages your customers experience due to mistakes, negligence, or perceived failures in your work.
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 department 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 department stores:
| Provider | General Liability | Professional Liability | Business Owner's Policy |
|---|---|---|---|
| Embroker | ?? | ?? | ?? |
| CoverageSmith | ?? | ?? | ?? |
| CoverWallet | ?? | ?? | ?? |
| Hiscox | ?? | ?? | ?? |
| Thimble | ?? | ?? | ?? |
Final Word
The risks involved in owning and operating a department store are extensive. With such an array of goods and services offered in your business, taking the time to carefully pick insurance policies is what may save your business from the potential of financial ruin. Accidents, disasters, and injuries are impossible to control, but with an adequate range of coverage, you can become as prepared as possible to face these challenges.
