Retail Insurance, Explained

You’re exposed to theft, product malfunctions, and more unexpected events as a retail business. Therefore, you need a steadfast, comprehensive retail insurance package to overcome these otherwise catastrophic occurrences. Luckily, LiabilityCover has years of experience helping companies like yours find their one-true insurance match.

We’ll discuss retail insurance in more detail in the following sections and answer some of your burning questions.


Business Insurance for Canadian Retailers

The world is full of possibilities — especially when it comes to retail. After all, you can make and sell pretty much anything. But with that comes a whole host of risks and exposures that could cause your business to permanently shut its doors.

But with the right insurance coverage, you can mitigate such risks and live your retail dream for years to come.

LiabilityCover works with the top insurance brokers and agents in the country to help you easily access the coverage you require. We’ve uncomplicated the commercial insurance process to ensure maximum efficiency and effectiveness for you and your business.


What Is Retail Insurance Coverage?

Retail insurance is a comprehensive policy package designed to protect you from the unique risks in your industry. Whether you’re an e-commerce shop or a brick-and-mortar store, acquiring correct coverage is essential to your long-term survival.


Real-World Retail Insurance Claims Scenarios

For a better understanding of how comprehensive retail insurance can help your business during tricky times, consider the real-world scenarios below:


Example One: Incorrect Instructions Claim

Your client purchased a hairdryer from your store. They claim it didn’t come with the right instructions and thus, severely burned their bedroom carpet.

They decide to sue your business for property damage and are successful. Thankfully, your product liability insurance covers the repair and legal fees, equalling $10,000.


Example Two: Fire Damage Claim

A fire breaks out in your home, destroying your home office and inventory. It’s going to take three months to repair your office and replenish stock.

Thankfully, your business interruption insurance covers your lost income during the repair time. Plus, your commercial property insurance pays for the repairs, totalling $15,000.


Example Three: System Hack Claim

You store your e-commerce customers’ data in a cloud-based system. Unfortunately, somebody hacks the network and compromises hundreds of customers’ financial information.

Luckily, your cyber liability insurance coverage pays for the data system repairs, legal fees, notification expenses, and monitoring costs, totalling $225,000.


What Does Retail Insurance Cover?

Retail insurance isn’t one type of policy. Instead, it’s an umbrella term used to describe a policy package that covers the unique risks of the retail industry.

In general, you can expect these policies in a comprehensive retain insurance bundle:

  • Commercial general liability insurance (CGL) coverage — It covers you against the daily operational risks of having a brick-and-mortar store. Claims of third-party bodily injury and property damage that happen at your location are covered. The policy pays for medical and legal fees, even if you lose the lawsuit.
  • Product liability insurance coverage — It protects you against allegations of third-party bodily injury or property damage caused by a product you sell, manufacture, or distribute. Normally, the damages covered are incorrect labelling, insufficient safety information, and other design, manufacturing, or marketing defects.
  • Commercial property insurance coverage — The policy protects your business location and its contents from insured risks (typically fires, thefts, and vandalism). Your inventory and stock are covered under commercial property insurance.
  • Cyber liability insurance coverage — Whether you sell online or use an in-person point-of-sale system, you need cyber liability insurance to protect your customers’ data. The policy pays legal expenses, notification fees, restoration costs, and more associated with company cyber hacks.
  • Commercial auto insurance coverage — If you utilize a vehicle for work purposes (e.g., taking orders to the post office or transporting goods to your store), you need a commercial auto insurance policy.
  • Business interruption insurance coverage — Typically included in your commercial property insurance, it covers your income lost during an unforeseen temporary business closure. However, it won’t cover income lost due to infectious diseases or pandemics.


Who Needs Retail Insurance Coverage in Canada?

Any retailer or business that manufactures, sells or develops products needs a comprehensive retail insurance policy package to ensure their company stands the test of time.

We’ve helped hundreds of Canadian businesses acquire the coverage they need, including:

  • Brick and mortar shops
  • Candle sellers
  • E-commerce stores
  • Amazon sellers
  • Flower shops
  • Cannabis retailers
  • Manufacturers
  • Home-based stores
  • Pop-up shops
  • Soap sellers
  • Vendors


How Much Does Retail Insurance Coverage Cost?

For a small, low-risk business, you should expect to spend at least $450 per year on a regular commercial general liability insurance policy with a coverage limit of $2 million.

With that said, multiple factors affect the premium price, including the following:

  • Your years of experience — Insurers believe that the longer you’ve worked in your industry, the less chance you have of making mistakes. Ultimately, that means your risk of lawsuit decreases drastically, allowing providers to award lower rates.
  • The number of employees — The more people employed by your retail business, the more chances your company has of being named in a lawsuit. Therefore, insurance issuers must increase your premium price.
  • Your store’s location — Some areas of Canada have higher crime rates and harsher weather conditions than others. If your retail store or factory is located in a more perilous place, you should anticipate higher insurance premiums. Statistics show that the following areas often come with more expensive insurance costs:
    • Hamilton, Ontario
    • North Bay, Ontario
    • Regina, Saskatchewan
    • Red Deer, Alberta
    • Québec City, Quebec
    • Trois-Rivières, Quebec
    • Saguenay, Quebec
    • Montréal, Quebec
    • Barrie, Ontario
    • Sudbury, Ontario
    • Moncton, New Brunswick
    • Windsor, Ontario
    • Saint John, New Brunswick
    • Brampton, Ontario
    • St. John’s, Newfoundland and Labrador
    • Winnipeg, Manitoba
    • Lethbridge, Alberta
    • Surrey, British Columbia
    • Sault Ste. Marie, Ontario
  • Your annual and projected annual revenue — A high revenue is one of the easiest ways to establish the success of your business. However, it also means more is at stake should a third party pursue legal action. Claimants will typically request more compensation if they know your revenue can withstand the amount. Thus, you’ll pay more for retail insurance as a profitable company.
  • Your insurance claims history — You benefit from lower premiums if you have a clear insurance claims record. Insurers believe you’re less risky than those who have a track record of consistently claiming.
  • The products you sell, develop, or manufacture — As you may imagine, different products carry different risks. For example, selling chemical-based commercial cleaning solutions is a lot riskier than selling reams of paper. On top of that, different manufacturing processes come with ever-changing risk exposures. As a result, your insurance costs will increase if you deal with risky products and/or manufacturing procedures.

With our excellent relationships with the country’s leading licensed insurance providers, we’ll ensure you get complete coverage at the best rates. All you need to do is fill in our short inquiry form to get started.


Special Retail Insurance Considerations

While your products are undoubtedly one of the most important aspects of your business to protect, there are other specific risks involved in running an e-commerce shop and a physical store.

Here’s some advice for both retail business types that is sure to give you a head start in picking the right policies for you:


For Retail Store Owners

As a physical store owner or renter, you need a policy package covering your building, employees, and general liability issues.

To cover the latter, you need a commercial general liability policy. It protects your business during third-party claims of bodily injury or property damage. For instance, if your customer trips on your store’s step, they can sue you for bodily injury and request medical fees.

Then, you should purchase a commercial property insurance policy that will take care of your physical shop and its contents (notably, stock and inventory). It pays for repairs and replacements in the event of damage or total loss during an insured event (such as fires or floods from storms). Generally speaking, a small amount of business interruption coverage is included too.

Product liability insurance is also important. It covers you from third-party claims of property damage or bodily injury caused by a product you manufacture, distribute, or sell. For example, if a customer claims a hairdryer from your store caused severe damage to their fabric-topped dresser, they can sue.

Finally, cyber liability insurance is a must-have if you use a point-of-sale system to hold your shoppers’ data. Since you have a legal obligation to protect their information, the policy covers legal fees and other costs related to cyber hacks and other network compromises.

In a nutshell, physical retailers like you need:

  • CGL insurance
  • Commercial property insurance
  • Business interruption insurance
  • Cyber liability insurance
  • Product liability insurance


For Online Retail and E-commerce Stores

There are some similarities between online and physical stores. For instance, you still need a commercial property insurance policy for the place you store your stock or conduct administrative tasks. Your home insurance won’t cover any business-related areas of your house or its contents.

Of course, cyber insurance is one of the most essential policies for e-commerce companies. Anyone who browses your site or inputs their personal details assumes you will keep their information safe. The coverage pays for legal, monitoring, and notification fees associated with digital system security compromises and hacks.

Finally, product liability insurance is a must-have, especially if you’re a drop-ship business that doesn’t see the products before they’re sold and shipped. It covers third-party claims of damage and injury caused by your products.

In a nutshell, online retailers like you need:

  • Commercial property insurance
  • Cyber liability insurance
  • Product liability insurance


Why Choose LiabilityCover?

Over the years, we’ve built unbreakable working relationships with the country’s best insurers, so you always get the best rates available.

Our process is straightforward and affords you the time and space necessary to make well-informed commercial decisions. After all, protecting your business is a vital task that you shouldn’t rush!

LiabilityCover’s team has a wealth of industry know-how and experience. We can analyze your insurance requirements, so you never have to worry about being under (or over) protected ever again.


Frequently Asked Questions


How Do You Get Retail Insurance in Canada?

With LiabilityCover, obtaining retail insurance is straightforward. You’ll have your much-needed coverage in just four steps:

  1. First, complete our simple online inquiry form.
  2. Then, we’ll figure out your insurance requirements based on your answers.
  3. Our team connects you to one of Canada’s best insurance brokers or agents with experience covering retail businesses like yours.
  4. Your hand-picked broker or agent contacts you to help you acquire your tailored, comprehensive insurance package.


Is Retail Insurance a Legal Requirement in Canada?

No, retail insurance isn’t a legal requirement in Canada. However, it’s highly recommended to acquire a comprehensive retail insurance package to ensure the longevity of your business.


Does Crime Insurance Cover Employee Theft?

Yes, crime insurance coverage can protect your company from employee theft, such as stolen cash and card forgery. The loss of money and securities inside and out of your business location is also covered.

On the other hand, regular theft is covered under your commercial property insurance policy.


Can You List Your Landlord as an Additional Insured?

Of course, it’s a standard requirement. You just need to supply your insurer with your landlord’s legal name and mailing address so they can add them to your formal policy.


What Happens If You Don’t Have The Right Insurance For Your Business?

In this scenario, you may be responsible for paying compensatory damages and legal fees on your own. Depending on the loss’ nature, it’s likely to be an unexpected expense that could drastically impact the chances your company has of keeping its doors open.


Does Commercial General Liability Insurance Coverage Protect Your Stock and Inventory?

Commercial general liability insurance won’t cover your stock and inventory. Instead, it’s designed to protect you from third-party claims of bodily injury and property damage. Unfortunately, your own property isn’t covered. So, you need to take out a commercial property insurance policy to cover your inventory and stock.