Why is insurance a must for clothing stores?
Clothing stores and local boutiques often face threats of burglary, customer accidents, employee injuries, data breaches, and more. That's why carrying the right business insurance policies can help shield small shops from the unexpected costs of stolen inventory, accidents, and property damage.
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6 insurance policies every clothing shop should consider
Business insurance can help clothing stores and boutiques recover quickly from common risks in the retail industry.
Business owner's policy
A business owner's policy, or BOP, combines general liability coverage and commercial property insurance at a discount. Small clothes shops are often eligible for this bundle.
- Slip-and-fall injuries
- Damage to a customer's property
- Business property damage and theft
General liability insurance
A general liability insurance policy defends against third-party lawsuits, such as a customer who stumbles into a clothing rack and suffers an injury. It's often required for a commercial lease.
- Customer bodily injuries
- Accidental damage to a customer's property
- Advertising injuries and copyright lawsuits
Workers' comp insurance
Workers' compensation insurance protects retail stores and sole proprietors from work-related medical bills that health insurance won't cover. Most states require this coverage for your employees.
- Medical expenses from workplace accidents
- Disability benefits for injured workers
- Legal costs from work injuries
Cyber insurance
This policy covers the cost of cyberattacks and data breaches that expose customer information. It's also called cyber liability insurance or cybersecurity insurance.
- Data breach investigations
- Customer notification costs
- Fraud monitoring services
Commercial umbrella insurance
This policy covers the most costly lawsuits that exceed the limits on your general liability, commercial auto, or employer's liability insurance. It activates when the underlying policy reaches its limit.
- Customer injuries
- Auto accidents
- Employee injuries
Commercial auto insurance
Almost every state requires commercial auto insurance for business-owned vehicles. It covers costs in the event of an accident involving a delivery truck or other company vehicle.
- Legal fees from an auto accident
- Vehicle vandalism
- Vehicle theft
Clothing store insurance costs
From our customer data, here's a quick look at average clothing store insurance costs:
General liability: $42 per month
Business owner's policy: $88 per month
Workers' compensation: $73 per month
Factors that can influence your retail business premiums include:
- Type of business, such as e-commerce or brick and mortar
- Products you sell, such as clothing, flowers, jewelry, or cosmetics
- Number of employees
- Value of your business property
- Types of insurance purchased
- Deductibles and coverage options
- Claims history
Hear from business owners like you who purchased insurance coverage.
Why clothing shops choose TechInsurance
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Common questions about business insurance for clothes shops and boutiques
Review answers to frequently asked questions (FAQs) about clothing store business insurance and more.
Will insurance cover my clothing store if it's forced to close temporarily?
In short, yes. Often included in many commercial property policies and business owner's policies or BOP, business interruption insurance will cover temporary closures. You might also see this type of coverage called business income insurance.
Should your business be forced to close due to a covered peril, such as a fire or storm, business interruption insurance can help temporarily pay employee wages, lost income, and day-to-day operating expenses. You can also buy extra expense insurance to cover additional costs. For example, you might need to lease a piece of equipment or hire interim employees.
If your property insurance doesn't already include business interruption insurance, it can usually be added as an endorsement. The money you lose while your store is closed could end up costing even more than the damage itself, which is why this coverage is so important.
Are clothing stores required to have product liability insurance?
A key coverage clothing boutique owners should carry is product liability insurance.
Your store could be held liable should a customer file a lawsuit over a product your store sold – even if you didn't manufacture it. That means you could end up paying legal defense costs for a product defect or labeling error that wasn't your fault.
And, product liability claims are extremely expensive, costing an estimated $12 billion annually. A lawsuit of that scale could financially damage your retail store to the point of permanent closure.
Plus, depending on where you operate, your state may require you to carry product liability insurance to sell certain products.
This coverage is usually included in most general liability and business owner's policies. You can also buy product liability insurance as standalone coverage if it's not included, along with product recall insurance to cover the cost of recalling a potentially harmful product.
Does clothing store insurance cover theft?
Yes, shoplifting and burglaries are insured by commercial property coverage, which is also included in a BOP. However, your policy only protects against crimes committed by people outside your business. Clothing store owners should also consider employee dishonesty coverage, such as:
- Commercial crime insurance protects your business in the event of employee theft, such as a salesperson who steals from the cash register. You can usually add it to your property insurance.
- Fidelity bonds protect your customers from the acts of dishonest employees, such as identity theft or an unauthorized electronic funds transfer. Unlike insurance, the bond reimbursement for the amount stolen must be paid back to the company that issued the bond.
What other shop insurance coverage do clothing businesses and boutiques need?
Small business owners should consider the following types of coverage to protect against other risks that could potentially cause devastating damage to a clothes store business:
- Equipment breakdown coverage covers specialized equipment that suffers a failure due to uncontrollable circumstances, such as a recently purchased POS system that stops working suddenly.
- Electronic data processing (EDP) insurance handles any related financial losses when a power surge or other event destroys the data in your computer systems.
- Inland marine insurance provides coverage for business property, such as clothing and other goods, while it’s in transit over land or stored at an off-site location.
