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Although it is rewarding to own and operate a business essential to any community, grocery stores are exposed to many liability risks. Customers are vulnerable to slip and fall incidents, a power outage can spoil expensive inventory, and employees are susceptible to injuries simply due to the nature of their work. Your major investment of time and money can be placed at risk with a single major claim, so it is vital to obtain adequate insurance coverage to protect your business.
What insurance coverage do I need for my grocery store?
Although there are several types of insurance coverages to consider, the following policies are particularly relevant for grocery stores:
Your grocery store may contain heating and air conditioning systems, cooking and baking equipment, processing equipment, and refrigeration units. These all increase your grocery store’s exposure to property damage. Coverage is essential because your equipment, perishable inventory, and your commercial space can be incredibly costly to repair or replace if damaged.
Commercial property insurance will provide funds to replace or repair your business property if it is destroyed or damaged as a result of a covered peril, such as a fire, windstorm, hail, vandalism, and water damage. Covered property includes your commercial space, merchandise, equipment, and more.
- A fire causes significant structural damage to your grocery store’s building, destroying half of your inventory and permanently damaging much of your expensive equipment. Commercial property insurance would provide the funds to rebuild the building and replace any property inside the building that was lost in the fire.
General liability insurance protects your business from the financial consequences of third-party property damage and bodily injury. Your exposure to third-party injuries is extremely high due to high customer traffic within your business premises. A customer may slip on a wet floor. Without enough staff, an unsupervised child may climb and fall off a shelving unit. No matter how big or small your grocery store is, accidents are impossible to completely avoid.
General liability insurance also covers any third-party bodily injury or property damage resulting from a product purchased from your grocery store. If a customer is injured or becomes ill as a result of eating your produce, they may sue your business. Your insurer would provide coverage for the legal cost to defend yourself.
Finally, general liability insurance can protect your business from lawsuits based on non-physical personal injuries, including claims of false arrest or detention, discrimination, and wrongful ejection from the premises. These claims often arise when dealing with suspected shoplifters.
- Bodily injury: A shelf collapses under the weight of heavy inventory, and a nearby customer sustains an injury when products fall on her head. Your general liability insurance will cover medical costs associated with this incident and any legal fees if she sues.
- Product liability: A number of customers suffer from severe food poisoning after consuming expired dairy products sold at your grocery store. General liability insurance would cover legal fees and settlements if the customers decide to sue.
- Personal injury: You suspect a customer of stealing groceries and detain him until the police arrive. Upon further inspection, you discover that he did not actually steal anything. If the customer sues your business for false detention, your insurer would provide coverage.
Perishable inventory can be difficult and expensive to replace. This is why it is essential to obtain spoilage coverage, which can help reimburse you for the cost of your lost food and beverages. Covered perils include power outages and equipment failures. It is important to note that equipment breakdown insurance can also offer some coverage, but it is limited depending on the cause of equipment failure. Spoilage insurance and equipment breakdown insurance can effectively work together to fill any coverage gaps.
- A power outage causes all of the food items in your refrigeration units to spoil. Your spoilage insurance would reimburse you for the inventory lost.
Your grocery store likely relies on many forms of equipment to conduct business operations. This includes your refrigerators, cooking equipment, air conditioning, and even packing equipment. If this business equipment is damaged or destroyed due to internal malfunctions or mechanical breakdowns, your business may experience significant financial loss without proper coverage.
Equipment breakdown insurance covers the repair or replacement of malfunctioned or damaged equipment. Standard commercial property insurance policies will not cover the breakdown of equipment that is not a direct result of a covered peril, so consider adding equipment breakdown insurance as an endorsement or as a standalone policy.
- A mechanical failure causes your oven to shut down and halt all bakery operations in your grocery store. Your equipment breakdown insurance would provide funds to repair or replace the damaged oven.
If a customer consumes alcohol purchased at your business and proceeds to cause injury or damage to others while in an intoxicated state, your grocery store may be held liable for the customer’s actions.
A customer may be at fault for a car accident, starting a fight, or damaging someone else’s property while intoxicated. If your business is sued, your liquor liability policy can cover damages and legal expenses in the case of a lawsuit.
- A customer purchases and consumes alcohol from your store and then crashes his car into another vehicle in your parking lot. If the owner of the vehicle sues your grocery store for this incident, your liquor liability insurance would cover legal costs and any resulting settlements in the lawsuit.
Workers’ compensation insurance covers an employee’s medical expenses and lost income if he or she suffers an injury or illness because of their work. In addition, workers’ compensation insurance also provides financial benefits for an employee’s dependents in the event of a work-related employee death.
Heavy lifting performed by your employees can result in a number of injuries, such as back strains. Employees responsible for cooking or baking are susceptible to cuts and burns. Those who handle heavy machinery are in danger of injury if they are not properly trained to handle the equipment. Even with safety measures in place, accidents are still likely to occur in the workplace.
- A stove fire breaks out in the prepared foods department of your grocery store. An employee badly burns his arm putting out the fire. Your insurer will provide funds for his medical expenses as well as a portion of his lost income while he is recovering from his burns and unable to work.
- Grocery stores may be the target of robberies and are vulnerable to a number of criminal acts. Commercial crime insurance provides protection for businesses from financial losses resulting from criminal acts, including forgery, robbery, burglary, theft, and employee dishonesty.
- Commercial auto insurance covers third-party bodily injury and property damage if you or an employee are at fault in an accident involving a company vehicle. This policy also covers the value of your company vehicle if it is damaged by a collision or another covered peril such as theft or vandalism. This coverage is especially important if your grocery store offers delivery services.
- Business income insurance (also known as business interruption insurance) provides funds for loss of income and operating expenses if your business must temporarily close to recover from physical loss, damage, or destruction. This coverage includes your business’s net profits and normal operating expenses such as rent, employee salaries, and taxes. In order to qualify, the damage to your property must be the direct result of a covered peril.
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
- Number of employees
- Claims history
Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a grocery 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 grocery stores and supermarkets:
|Provider||General Liability||Professional Liability||Business Owner's Policy|
It is important to recognize that owning and operating a grocery store presents several hazards. Common incidents such as employee injuries, malfunctioning equipment, and property damage could have devastating effects on your business. By maintaining a comprehensive range of insurance coverage, your business will be financially protected in the event of a disaster.