Hardware Store

Hardware Store Insurance Explained in 5 Minutes

Hardware stores offer customers an old-fashioned shopping experience. The staff seems to know a little bit about everything and is always helpful in finding what customers need. For some, simply the experience of shopping in a mom-and-pop type store where the workers remember them between visits is enough to keep them coming back. If you have invested in this type of establishment, you will want to be sure to protect your business assets with an appropriate hardware store insurance portfolio.

2014 Hardware Store Industry Facts From IBISWorld

  • There are approximately 15,700 hardware store businesses operating in the United States.
  • These stores employ more than 140,000 people.
  • The hardware store industry is responsible for about $24 billion in revenue each year.

What Could Go Wrong at a Hardware Store?

There are a few costly mishaps that could threaten the finances of your hardware store. For example:

  • A customer could slip and fall on a wet floor and become injured by a sharp tool.
  • Your key-engraving machine could become inoperable due to an employee error or a power surge.
  • An employee could be responsible for a serious motor vehicle accident while making a delivery, making your store liable for the damages.

These and other hazards make it necessary to cover your store with the right insurance coverage.      

Cover Your Hardware Store With Property Insurance

You will want to be sure that the property coverage you purchase with your commercial insurance policy is sufficient to fully cover your inventory as well as all your business property such as cash registers, computer systems and shelving. As your inventory may change over time, it is a good idea to review your coverage limits every three to five years.

Because hardware stores frequently make use of expensive machinery such as key cutting machines and paint shakers, you may want to supplement your property coverage with equipment breakdown insurance. This coverage, which is also frequently referred to as boiler & machinery coverage, provides compensation for the breakdown of machinery used in the course of operating your business as well as fuse boxes, air-conditioning, and other mechanical devices in your store. In some cases, this coverage will even include compensation for lost income while the machinery is being repaired.

Keep in mind that nearly all commercial insurance policies exclude coverage for flood damage, so if your business is at risk, you will want to be sure to supplement your portfolio with a commercial flood insurance policy. This insurance is provided through the National Flood Insurance Program (NFIP). Your independent insurance agent can help you secure a policy.

Your Hardware Store Needs Proper Liability Insurance

One of the main components of your business insurance policy will be commercial general liability coverage, or CGL. This coverage includes legal defense fees and financial losses associated with bodily injury or property damage sustained on your business property (premises liability insurance) or off premises such as when your employees are doing a job off site. It also provides coverage in the event that you are sued after a product you sell causes bodily injury or property damage (product liability insurance).

Not all events that can lead to a liability lawsuit are covered by CGL, however, so you may need to supplement your coverage with additional liability insurance products. These may include the following:

  • Pollution liability insurance: Most hardware stores do not carry enough chemicals or fertilizers to present a significant pollution hazard, but if yours does, as is the case with some hardware stores that partner with agricultural co-ops, you may want to consider this additional liability coverage.
  • Commercial auto insurance: If your hardware store has company-owned vehicles, you will be required by law to carry commercial auto liability insurance on them.
  • For-hire or non-owned auto insurance: If you sometimes rent trucks or have your employees use their personal vehicles to do business-related driving, your hardware store can be sued for liability in the event of an accident unless you purchase additional liability coverage.

You can speak with an independent insurance agent to review your liability risks and ensure that you have the right coverage to protect your business.

What Other Hardware Store Insurance Coverage Do You Need?

In addition to the property and liability coverage mentioned above, there are other insurance coverage types that may be required or are at least worth considering. They are the following:

  • Workers' compensation insurance: This insurance provides compensation for the medical treatment of injuries your employees may sustain while on the job. Most states require businesses that have employees to carry this coverage.
  • Business income insurance: If a covered disaster forces your business to close while repairs are being made, you stand to lose a lot of necessary income. This insurance coverage provides your store with a continuation of income so that you can continue to pay your monthly expenses and your valuable employees while the store is closed. This coverage is usually limited to one year.
  • Employment practices liability insurance: Frequently referred to as EPLI, this insurance provides coverage for your legal defense fees and financial damages if an employee sues your hardware store for an illegal business practice such as sexual harassment, wrongful termination or discrimination.

There may be other insurance types that are a good fit for your hardware store. An independent insurance agent can help determine what your different exposures are and can help you find suitable coverage to mitigate those risks.

Get Help Building Your Hardware Store Insurance Portfolio

Purchasing business insurance for your hardware store can be a simple process when you work with an independent agent in the Trusted Choice® network. These agents can shop around to find the right coverage to meet your various exposures. Find a Trusted Choice agent near you to learn more; soon you will be able to start comparing quotes on a hardware store insurance portfolio designed specifically for your business.


Now, who's ready to get their insurance problems solved?