All retail stores must purchase business insurance in order to protect their assets, and auto supply stores and tire shops are no different. Business insurance for all kinds of retail establishments covers basic property and liability concerns, but owners of auto supply stores and tire shops need to make sure that their insurance policies are customized to their specific needs.
Business Risks for Tire Shops and Auto Supply Stores
Auto supply stores and tire shops must invest in insurance policies to protect their business assets from the following potential risks:
- Accidents, such as trips and falls in the store or parking lot
- Shopping carts or store fixtures causing injury or property damage in the store or parking lot
- Damage to your inventory due to some catastrophic or unexpected event (fire, smoke, weather, vandalism, etc.)
- Loss of income due to a catastrophic or unexpected event
- Equipment damage
- Employee theft of cash or inventory
- Delivery driver involvement in automobile accidents
- Selling faulty products
- Employee lawsuits related to discrimination or other claims
- Cyber breaches
- Fire damage to landlord’s property
Coverage Overview for Auto Supply Stores
Auto supply stores, like other retailers, have to protect their inventory from catastrophic loss. After all, your inventory is likely your greatest asset. In addition, you have to protect your building if you own it, and you must be able to pay your bills and resume operations if you must close for repairs after a storm, a fire or some other unforeseen event.
Equally important, tire shops have a variety of liability concerns where they can be held responsible for injury or property damage to others. Slips and falls, falling store fixtures and faulty products all leave you vulnerable to claims and costly lawsuits that could put you out of business.
Auto supply store and tire shop insurance programs address these risks and more. Working with your insurance agent, you can expect to consider the following types of coverage.
- Commercial general liability (CGL) insurance is critical for any retailer, auto supply shop or tire shop. It protects you from costs related to bodily injury or property damage that you or your employees cause to third-parties. CGL policies also cover your defense costs, court costs and court-ordered judgments.
- Commercial property insurance is essential for proprietors who own their buildings or handle a large volume of expensive inventory. Business property insurance protects you if a fire, vandalism, smoke, theft or other type of event damages your property. It provides coverage for lost inventory, office equipment, computers and more.
Auto supply shop owners must pay particular attention to the valuation of their business property, especially inventory, as it may fluctuate seasonally.
- Business interruption coverage, or business income coverage, protects your earnings if your business is unable to operate because of damage caused by some type of disruption (fire, hail, wind, equipment breakdown). This coverage, normally included in commercial property insurance, is usually quite affordable and invaluable if you are forced to close your doors for a period of time in order to make repairs. It pays for rent, employee salaries, lost income, relocation fees and more.
You can expand your business income policy to include coverage for breakdowns in utility services (water, electrical) that force you to temporarily close your doors.
- Business owners policy (BOP) insurance is something that auto parts stores and tire shops may want to consider if they qualify for it. BOPS are designed for small businesses and include liability, property and business income insurance in one affordable package policy.
- Commercial auto insurance is something you need if your auto supply store delivers. Business auto insurance covers your company’s vehicles and drivers (cars, SUVs, vans and trucks) that are damaged or injured in a collision or some other type of event. If you or your employees drive personal vehicles for business purposes, you must have nonowned or hired auto liability coverage to protect your company in cases where an employee is an accident while out making deliveries.
The Importance of Product Liability Coverage for Tire Shops
Tire shops and auto supply stores sell products to the general public. The products you sell are placed in vehicles that are driven on public roads, in the presence of other vehicles, pedestrians and other types of property. If an auto part or tire is faulty and leads to injury or death of a driver, passenger or bystander, your business could be held liable.
Product liability insurance covers a business’s financial responsibility for losses or injuries to a user, buyer or bystander caused by a defect or malfunction of the product. In some instances, product liability insurance may also cover the manufacturer or seller of the product for defective design and failing to warn a buyer of a particular danger.
Don’t be fooled into thinking that only manufacturers need product liability coverage. Any company that participated in bringing the faulty product to market can be included in a lawsuit and held liable for damage to the user. The resulting payouts for medical costs, compensatory damages, economic damage, attorney fees, court costs and even punitive damages can be insurmountable for a small business.
Your CGL policy or BOP might cover some product liability claims, but that coverage may be limited and insufficient for your needs.
What Is Employee Theft and Crime Coverage?
Small businesses are particularly vulnerable to crimes such as employee fraud or embezzlement. Even a small cash theft can be difficult to overcome.
Employee theft and crime coverage protects your business from the costs of theft, dishonesty and fraudulent acts committed by an individual employee or a group of employees. While it may be difficult for you to imagine, employees all too often steel property, money and securities owned by their employers.
Employee dishonesty coverage can be purchased as a standalone policy or as an endorsement on other business insurance policies. A basic standalone employee theft and crime policy provides coverage for forgery, alteration, theft, unauthorized electronic funds transfers, credit card fraud, computer fraud, money order fraud and counterfeit fraud. You can also add endorsements for additional coverage.
Other Coverage to Consider
In addition to the coverage types described above, tire shops and auto supply stores will want to consider some of the following types of business insurance. Whether or not you need them depends upon your specific business needs.
How to Find the Best Insurance for Your Auto Supply Store
No two retailers are exactly alike. To find the best business insurance policies that meet your budget, talk to a local independent insurance agent who can obtain a variety of quotes from reputable insurance companies that specialize in your line of work. Together you can evaluate and choose the combination of coverage and price that will best protect your business assets.
When comparing insurance company proposals, be sure that you are comparing equivalent coverage. Using an apples-to-apples approach to coverage comparisons is the only way to make sure you are choosing wisely.
Contact an Independent Insurance Agent today.