Pharmacy

The Most Important Insurance Coverages for Your Pharmacy

The pharmacy and drug store industry in the United States is dominated by large retail chains, such as Walgreens, CVS and Rite Aid. Grocery and big-box stores also frequently include pharmacies where people can get their prescriptions filled while they shop. Nevertheless, there is still a demand for smaller, stand-alone pharmacies. Some people prefer these mom-and-pop type drug stores because they feel they get better, more personalized attention. Regardless of its size, if you own a pharmacy, you will need to be sure to protect your investment with a suitable pharmacy insurance portfolio.

2014 Pharmacy and Drug Store Industry Facts From IBISWorld

  • There are approximately 26,000 pharmacy and drug store businesses operating in the U.S.
  • These businesses employ more than 723,000 people.
  • The pharmacy and drug store industry generates about $263 billion in revenue each year.

What Could Go Wrong at a Pharmacy?

There are a number of things that can go wrong at a pharmacy, and some of these things have the potential to be financially devastating to businesses that do not have the right insurance coverage. For example, how would your drug store handle the repercussions if

  • a customer falls while approaching the pharmacy counter and suffers a hip fracture that requires surgery. The customer sues your business for the medical treatment, physical therapy and lost wages.
  • an employee is using a personally owned vehicle to make a prescription delivery to a customer. On the way, the employee is responsible for a serious collision that injures a family of four. The family sues your business for liability.
  • a pharmacist accidentally mislabels a prescription bottle, and a customer who takes the medications ends up in a coma. The family sues.

Distributing medications has a number of risks. A small mistake can cause catastrophic health problems to a third party. For this reason, insurance companies began offering package policies for pharmacies in the 1980s. In fact, this is one of the first types of business to have industry-specific, custom-built insurance packages.

Pharmacies Need the Right Property Coverage

Your business property makes up a large portion of your assets. A catastrophic disaster could mean the difference between profitability and bankruptcy. It is therefore important that you protect your business property with the right types of coverage. You can speak with an independent insurance agent about these coverages:

  • Building insurance: If you own the building in which your pharmacy is housed, this provides coverage for damage to its structure.
  • Contents insurance: This covers the property kept inside your store from loss or damage caused by covered events such as fire, storms, theft or vandalism.
  • Spoilage insurance: This provides compensation for medications that require refrigeration if an extended power outage renders them unusable.
  • Equipment breakdown insurance: Also known as boiler and machinery coverage, this provides compensation if equipment in your store, such as heating or cooling systems, or the computer system goes down and causes you to lose business while you are unable to remain open.

Pharmacy Insurance Portfolios Must Include Liability Coverage

A liability lawsuit can be financially devastating for your pharmacy. Even if your store is found to be non-negligent, the cost of your legal defense can be overwhelming. Fortunately, liability insurance provides your business with a financial safety net. Some coverage types you will want to discuss with your insurance agent include the following:

  • Druggist liability insurance: This is a form of professional liability insurance designed to protect your business from lawsuits brought on by pharmacist errors. This can include such things as mislabeled pill bottles, inaccurate customer consultations, failure to notice a drug interaction or other problems unique to pharmacies.
  • Premises liability insurance: This protects your pharmacy if a third party suffers property damage or injury while in your place of business.
  • Product liability insurance: If your pharmacy sells a faulty product that causes illness or injury to a third party, your business may be named as a defendant in a liability lawsuit. This provides coverage for this type of situation.
  • Auto liability insuranceIf your pharmacy offers drug delivery services, you will need the proper auto liability coverage. For company-owned vehicles, you will need a commercial auto policy; for personally owned vehicles, you will need hired or non-owned vehicle liability coverage.
  • Cyber liability insurance: Your pharmacy likely keeps confidential patient records in a computer system. If that computer system is hacked and the information is leaked, your business may be sued by those affected. Similarly, hackers may steal credit card and insurance information, and this can cause your business legal troubles as well. Cyber liability insurance provides coverage for this type of situation.

What Other Pharmacy 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 including the following:

  • Business income insurance: This coverage provides your pharmacy with a continuation of income in the event that a covered disaster forces you to close shop for an extended period while repairs are made. That way, you can continue to pay employee salaries and monthly expenses until you can resume normal business operations.
  • Workers’ compensation insurance: This coverage, which is required of employers in most states, covers medical treatment for employee injuries sustained on the job. It can also protect your business from a liability lawsuit pursuant to the injury.
  • Flood insurance: Commercial insurance policies exclude coverage for losses sustained due to floods. To get this protection, you will need to add a commercial flood insurance policy to your portfolio. An independent agent can help you secure a flood insurance policy through the National Flood Insurance Program (NFIP).
  • Employment practices liability insurance: This insurance provides coverage in the event that one of your employees sues your pharmacy for breach of contract, wrongful termination, discrimination or any other illegal business practice.
  • Employee dishonesty insurance: This insurance protects your pharmacy from financial losses in the event that one of your employees steals from your business or engages in other illegal practices while on the job.

There are a number of different insurance options available to you, and some may be a good fit for your pharmacy. Be sure to discuss your day-to-day operations with an insurance agent who can suggest appropriate coverage.

Independent Agents Can Help You Build a Strong Pharmacy Insurance Portfolio

When you are ready to build your pharmacy insurance portfolio, be sure to meet with an independent agent in the Trusted Choice® network. These agents can help you understand your various coverage options, can find and remedy gaps in your insurance coverage and can even shop around to find you policies at competitive rates. Best of all, you will be able to enjoy the convenience of having all your different policies housed under one roof. Find a Trusted Choice agent near you to get started. Soon you could be comparing rates on pharmacy insurance products designed specifically for your business.


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