For the Retail Owner: Pre-holiday Season Tips & Exposures

For the Retail Owner: Pre-holiday Season Tips & Exposures

September 13, 2019

9 common pitfalls that expose you to risk

Owning and operating a retail store can be a fulfilling experience. Years of hard work, risk-taking, and financial investments have allowed you to turn your dreams of opening a store of your own into a reality. However, many business owners don’t realize how many exposures they must address to keep their business operating smoothly.

With the holiday season around the corner perhaps now is the time to make sure you are properly covered as you prepare for the busy and profitable shopping season. We know that these mass shopping days during the holidays are essential to your retail business. You prepare your inventory, stock your shelves, hire temporary help, and map out your promotion calendar. Don’t overlook these common areas of risk exposure.

Quick Note About Peak Season Inventory

During the holiday season, your peak season inventory may be higher than other times of the year. Having increased inventory requires you to increase the amount of coverage on your policy unless your policy does not have a co-insurance requirement or there is a peak season endorsement included in your policy wording.

Perhaps you have a policy that automatically increases your business personal property limit by 25%. Is it enough?

Failure to have the right property limit exposes your business to a co-insurance penalty that will prevent you from recovering a significant amount of any partial loss.

Have questions about your current policy? Let one of our experts help review your current coverages.

Request a Commercial Insurance Quote

Year-Round Exposures You Need to Know

Depending on the specific type of store you manage, there are a number of exposures to consider, including risks related to property and merchandise damage, general and product liability, crime and business continuity. The list below provides an overview of these retail industry risks and more—helping you identify potential blind spots in your risk management and insurance programs. Plus you will want to be sure you are properly covered before the holiday season is in full swing so you can avoid any hidden pitfalls that can come with the added inventory, traffic, and employees.

Let’s look at the types of exposures you could experience as a retail business owner at any time during the year.

Property & Equipment

As a business owner, you’ve invested your own money into your building, signage, merchandise, and equipment. Just one incident involving any of this property can significantly impact your business’s chances for survival. In fact, property exposures in retail operations can come from many sources, including natural disasters and extreme weather (e.g., lightning and torrential rain), customers, employees, and vandalism.

Equipment Breakdown

Retail stores depend on functioning equipment to service their customers effectively. In the face of an equipment breakdown (e.g., a power outage occurs or your point of sale system goes down), retail operations can experience business interruptions or even prolonged closures. Specifically, a business owner’s computer, mechanical, electrical and HVAC systems all have the potential to break down, causing major disruptions that can impact your reputation and bottom line.

Loss, Theft, & Other Scams

Crime can be a challenge for retail stores, especially as they are the target for a variety of different types of scams. Business owners can have product stolen or damaged by shoplifters. In addition, criminals can easily steal money through robberies, money fraud (e.g., using illegal methods to pay for goods), checkout fraud (e.g., swapping bar codes), refund fraud (e.g., returning a stolen item for cash or credit) and online scams.

Accidents & Injuries

Because of the high number of individuals entering and exiting your retail store, premises liability exposures are significant and, when injuries occur at your business, you could be held responsible. Accidents related to slips, trips, falls, equipment and unauthorized access to your building are common and major sources of concern. Something as simple as a wet floor or an uneven surface can lead to costly insurance claims following an incident.

Workers’ Compensation

Any time one of your employees is injured on the job, your business could be subjected to expensive workers’ compensation claims. Common sources of on-the-job accidents for retail operations include slips, trips, falls, musculoskeletal injuries caused by repetitive tasks, sprains and strains. Normal, everyday tasks related to stocking shelves, unloading product and climbing ladders can all lead to accidents and, in turn, increased costs for your business.

Product Malfunctions

Your customers expect you to have safe and reliable products, and failing to meet these expectations can lead to huge financial losses. If one of the products you sell harms a customer in any way, they can sue your business, leading to costly legal fees and settlements. These costs can easily reach six figures, making product liability a major concern for retail owners. While you may do everything in your power to ensure your products (e.g., goods, medicines and foods) are safe, mishaps can still occur without warning.

Interruption of Business Operations

Continuity is critical in business, and there are few things more important than continuous revenue and cash flow, particularly for small to medium-sized organizations. In fact, just one brief business interruption can be incredibly costly for a retail store, often leading to serious reputational damages or long-term closures. Common interruptions for retail operations can include natural disasters, fires, product recalls, cyber events, staff shortages and supplier issues.

Cyber Threats

Retail operations are a common target for cyber criminals, as these businesses often process a high volume of credit and debit card information. In addition, employees who are improperly trained on computer and data safety could put your organization at risk to ransomware, viruses, phishing scams and malware.

Auto Claims

Depending on the services your store offers, employees may be required to operate a vehicle on behalf of your business, creating automobile exposures in the process. While important for daily operations, the improper use of a vehicle can lead to potential accidents and major insurance claims.


Get More Information

While the proper risk management practices can reduce certain exposures, no system is 100 percent effective in ensuring an incident-free workplace. As a result, it’s all the more crucial to work with a qualified insurance broker to not only assess your exposures but secure the appropriate coverage as well. To learn more, contact Pasadena Insurance Agency, Inc. today.

Request a Commercial Insurance Quote