Hardware stores are an important resource for professionals like contractors and handymen, as well as homeowners and the general public. However, owning and operating a hardware store comes with a wide range of liability exposures due to the types of merchandise sold and the particular services offered by your business. It is important to obtain adequate business insurance to protect your hardware store from the financial burden of lawsuits and accidents.

What insurance coverage do I need for my hardware store?

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

General Liability Insurance

General liability insurance is an important form of coverage for hardware stores because it provides financial protection from accidental incidents that result in third-party bodily injury or property damage. With heavy equipment, dangerous inventory, and high customer traffic, it is important to protect your business should any customers or visitors to your business get hurt. Your policy will cover any legal fees to defend your business, as well as third-party medical payments.

Your general liability insurance policy will also protect your business against third-party injury or damage caused by a product sold by your business. This product liability is important for hardware stores due to the types of items sold in your store, which should be handled with caution. This includes dangerous power tools, flammables, electrical equipment, and cleaning supplies.

In addition to these types of risks, general liability insurance can provide financial protection from lawsuits based on personal injuries. These non-physical risks include claims of invasion of privacy, false arrest, and discrimination. Protection against these claims is particularly important when dealing with suspected shoplifters. 

Examples: 

• Bodily injury: Heavy inventory falls on a customer as she tries to reach a product from the top shelf. Your general liability insurance would cover her medical fees and would provide coverage for a lawsuit if she sues. 
• Product liability: A customer sues your hardware store for selling a defective fire extinguisher. Your general liability insurance would provide funds to defend your business. 
• Personal injury: You detain a customer because you believe he is shoplifting. Security footage reveals that the customer is innocent and he sues your business for false detention. General liability insurance would provide coverage to defend your business. 

Commercial Property Insurance

The flammable inventory sold in a hardware store and the various services offered increases your business’s exposure to liability risks. Because your business is heavily reliant on your physical location and inventory to operate, it is important to obtain commercial property insurance in the event that a disaster damages your valuable property. 

Commercial property insurance provides financial protection for your business property, including buildings, equipment, furniture, and merchandise. For a hardware store, damage to any property may have a direct impact on your ability to conduct business, and costly repairs can be difficult to recover from. Commercial property insurance is essential because it provides funds to repair or replace property that is damaged or destroyed by a covered peril such as fire, windstorm, hail, vandalism, and explosion.

Example:

• Faulty wiring causes an electrical fire to break out in your hardware store. The fire damages the building and destroys merchandise and equipment. Your commercial property insurance would provide funds to replace your items and repair the building.

Workers’ Compensation Insurance

Like many retail businesses, the employees of your hardware store are susceptible to slip-and-fall incidents, injuries from standing for long periods of time, and even injuries from heavy lifting. These exposures highlight the importance of obtaining workers’ compensation insurance. 

Workers’ compensation insurance covers lost wages, medical expenses, and rehabilitation costs if an employee suffers a work-related injury or illness. In the event of an employee’s work-related death, your workers’ compensation policy can pay for funeral costs and death benefits for surviving family members. Your state determines the types of illnesses and injuries that are covered, as well as the benefits available for employees. 

Example:

• One of your longtime stockroom employees develops a shoulder injury due to overuse and heavy lifting. The injury requires surgery and physical therapy. 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. 

Inland Marine Insurance

Inland marine insurance covers your business property that is not tied to a fixed location or covered by commercial property insurance. For instance, if your hardware store provides a delivery service for customers, it is important to protect inventory that is damaged while on its way to the customer. A standard commercial property policy may exclude or have low limits for property that isn’t within your business premises. 

Additionally, your business may have repair services that require you to temporarily take possession of third-party property, and you may be held liable if that property is damaged or lost. Bailee’s customer coverage is a type of inland marine insurance that is essential when your customers’ property is under your care, custody, or control.

Example: 

• Your delivery truck is involved in an auto collision and much of the merchandise within the truck is damaged. Your inland marine insurance will cover the property loss. 

Commercial Crime Insurance

Commercial crime insurance provides protection for businesses from financial losses resulting from criminal acts. This includes forgery, robbery, burglary, theft, and employee dishonesty.

This form of coverage is particularly relevant because of high-value products sold in your hardware store and the fact that employees may manage monetary transactions. In both instances, the exposure to theft is high. 

Although background checks on employees, security systems, and trained management are all recommended to reduce the risks of crime, it is impossible to avoid crime completely. This is why it is essential for all retail businesses, including hardware stores, to have commercial crime insurance to protect your business in the event of criminal activity. 

Example: 

• At the end of the day, the employee running your cash register pockets a portion of the cash payments. Your commercial crime insurance would cover this financial loss.

Additional Coverages

• If your hardware store owns and operates delivery trucks, commercial auto insurance can protect your business if you or one of your employees are at fault in a collision while driving a company vehicle. This coverage provides funds for the medical costs of the other vehicle’s occupants and damages to the other vehicle. Additionally, it protects company vehicles if they are damaged by a covered hazard.
• Pollution liability insurance—also commonly referred to as environmental impairment liability insurance—helps protect businesses from unexpected pollution exposures that may not be covered by standard commercial property insurance policies. This coverage can protect your business against claims of bodily injury, property damage, and cleanup costs due to a pollution event. Pollution liability insurance is an important coverage for hardware stores because of the inventory sold in your business (such as paint), as well as your disposal of used oil, solvents, and batteries.
• 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 caused by a covered peril. This coverage includes your business’s net profits and normal operating expenses such as rent, employee salaries, and taxes. 

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 hardware 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 hardware stores:

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

Final Word 

With so many hazards that could have an impact on your hardware store, obtaining a wide range of business insurance is key to coping with unexpected disasters. Lawsuits from injured employees or third parties can put your business at risk if you are not prepared. Adequate coverage can give you the confidence to know that even if a catastrophe occurs, your business will be financially protected.