As an owner of a floor store, you’re probably wondering which insurance coverage you need to operate your business smoothly.
Considering that flooring stores have some unique exposures, insurance coverage needs to be uniquely suited to your business model. For instance, if you have installers who work for your floor store, are you sure that you have enough workers' comp insurance if they’re injured on the job? Or what about a fire in your warehouse that ruins your stock? Would you have enough funds to replace lost inventory and replace a portion of the business’ income while your floor store recovers?
In this article, you will learn the basics of floor store insurance, including:
- What Types of Insurance Coverage Do I Need for a Floor Store?
- What Is the Cost of Insuring My Floor Store?
- Additional Forms of Insurance for Floor Stores
As with any financial decision, having an independent insurance agent to guide you through the process of finding comprehensive coverage for your floor store. Your independent insurance agent can explain your coverage options and help you get the coverage you need to cover your tools and materials.
What Types of Insurance Coverage Do I Need for a Floor Store?
A floor store needs insurance coverage for every aspect of the business. Sold under a business owners policy (BOP), your floor store can get coverage that prevents significant financial liabilities should a covered event occur. Most BOPs provide the following coverages:
- Commercial property coverage
- General liability insurance
- Workers' compensation
- Commercial automobile insurance
|Commercial Property Coverage|
|Your floor store needs property insurance in situations where the business needs to be reimbursed following property damage or lost property. This policy covers the cost of replacing your business equipment or other property when lost/damaged by fire, theft, vandalism, or natural disasters. Property coverage may include equipment, inventory, offices/premises, supplies, or tools.|
|Example: Smoke damage from an electrical fire ruined your inventory and interrupted your ability to handle customers until your showroom was rebuilt. A burglar broke into your premises and stole your computer equipment.|
|General Liability Insurance|
|General liability insurance covers your floor store from some of the most common liabilities. This coverage is particularly useful when you need to compensate third party lawsuits from third-party non-employees, such as customers or contractors. General liability covers legal bills and settlements resulting from personal injury, damaged property, advertising injury, and reputational damage. Because your floor store may hire installers to work on other people's property, this type of insurance coverage may prove useful when damage or physical injury is caused to third parties.|
|Example: A customer hurts themselves or damages their property while in your floor store or work yard and files a claim against you for medical bills. A competitor accuses your company of slander or libel and takes your floor store to court. A client discovers an error that includes damage to their home and sues you for damages.|
|Workers' compensation insurance is mandatory in most states for any non-owner employees. It is a broad form of coverage that protects your floor store from any number of costs arising from the workplace. This coverage is important for claims, as lawsuits are generally avoided if injured workers file a claim through workers' compensation. Workers' compensation can pay for lawsuits, funeral costs, medical bills, ongoing wages for injured or sick employees, and support payment for any dependents.|
|Example: A worker tears a ligament while climbing a ladder. Several employees are exposed to chemicals requiring medical attention and hospitalization. Your receptionist has to take time off for developing carpal tunnel syndrome (CTS) symptoms.|
|Commercial Automobile Insurance|
|A commercial automobile insurance policy can protect your floor store from losses that arise when car accidents happen, such as while picking up supplies, making deposits to the bank, and more. Considering that a portion of your business will be spent at client’s homes or commercial buildings, you should have auto insurance for business-related vehicles. Protection for your floor store’s vehicles may also include theft and vandalism coverage.|
|Example: Your delivery driver accidentally runs over a customer’s parked motorcycle. Your company cargo van is involved in an accident involving a pedestrian.|
Insurance is customizable for a floor store depending on its needs. Most insurers offer umbrella insurance, which increases the liability of existing insurance policies by paying a single premium. This coverage can include:
- General liability insurance
- Professional liability
- Commercial auto insurance
The value of an umbrella is that it pays for any lawsuits that exceed the current limits of your coverage, typically in increments of $1 million for covered events. This can be useful if, for example, you are being sued by multiple parties after a warehouse fire occurred with injured employees at your floor store.
What Is the Cost of Insuring My Floor Store?
The average cost of annual premiums for commercial business insurance for a floor store can range from as low as $300 to $3,000 annually. With the average premium rate at an estimated $1,200 per year, or around only $100 per month, protecting your floor store is more affordable than you may realize.
NAICS Code for Insurance Costs
Another way that premiums are determined by insurers for floor stores is the classification of the business’s industry by the government’s North American Industry Classification System (NAICS) code.
NAICS codes are used for insurance companies to compute premiums and risk. These codes are also used by a variety of other financially related purposes, such as qualifying for business loans and taxation. Underwriters use these codes to determine how likely a claim is to be filed depending on the hazardous conditions present in the business’ industry.
Most floor stores are classified under the primary code of 442210, which stands for “Floor Covering Store.” Be aware that having other aspects of your business, such as masonry or cabinetry supplies, can alter this code depending on the nature of your business.
Risk Factors for Higher Insurance Premiums
- Size of premises: Smaller, less-trafficked spaces are cheaper to insure.
- Condition of the property: Newer properties tend to be built with safety measures installed. Older buildings, however, require retrofits to be brought up to code.
- Business hazards: Floor stores contain hazardous materials and potentially dangerous inventory that can crush an employee’s body in an accident.
- Payroll size: The larger the staff, the more premiums will increase to reimburse injured/ill staff for lost wages.
- Claims history: More claims equal higher premiums.
- Employment status of employees: Full-time employees require more insurance, while independent contractors may be required to be insured depending on state guidelines.
- Severity potential: Depending on the nature of materials and operation of your floor store, you may be exposed to conditions that are more prone to injure individuals and/or property.
Risk Factors for Higher Commercial Auto Insurance Premiums
- Driver demographics
- How and where you drive
- Type of driving and vehicle
- Driving record
Additional Forms of Insurance for Floor Stores
Before we conclude this article, you should know that insurance policies are available for any aspect of your floor store. The following is a list of some other coverages that you should discuss with an independent insurance agent:
- Business interruption insurance
- Equipment breakdown insurance
- Cyber liability insurance
- Employee dishonesty coverage
- Earthquake insurance
- Flood insurance
- Errors and omissions (E&O) insurance
- Product liability insurance
Benefits of an Independent Insurance Agent
Independent insurance agents have access to multiple insurance companies, ultimately finding you the best coverage, accessibility, and competitive pricing while working for you. Find an independent insurance agent in your community here.
TrustedChoice.com Article | Reviewed by Paul Martin
©2020, Consumer Agent Portal, LLC. All rights reserved.