Fireworks are inherently dangerous. They are classified as hazardous substances under the Federal Hazardous Substances Act (FHSA).
Consumer fireworks stores sell fireworks to the general public for use. Consumer fireworks—formerly called Class C Fireworks—are classified as such by the U.S. Consumer Product Safety Commission (CPSC).
These are the only types of fireworks that can be sold to the general public for use. The FHSA prohibits the sale of more dangerous types of fireworks to consumers, and some states may even prohibit the sale of consumer fireworks.
According to the CPSC, consumer fireworks include items like:
- Shells and mortars
- Multiple tube devices
- Roman candles
- Firecrackers with no more than 50 milligrams of powder
- Novelty items like snakes, airplanes, ground spinners, helicopters, fountains, and party poppers
Consumer fireworks stores may not sell to the general public items like large reloadable mortar shells, cherry bombs, aerial bombs, M-80s, larger firecrackers, and mail-order kits that can be used to build these kinds of fireworks.
But even consumer fireworks stores must comply with a myriad of local and federal regulations in order to ensure the safety of the general public.
If you own a fireworks store, you need to apply strict safety standards and rules of operation for your business if you want to stay in business both legally and ethically.
You also need business insurance to ensure that you can pay the bills when something goes wrong. Fireworks store insurance can be very hard to get and typically must be purchased from a surplus lines insurer that specializes in the fireworks and pyrotechnics industry.
A local independent insurance agent can help you find suitable fireworks store insurance in your area.
Why Do You Need Fireworks Store Insurance?
Consumer fireworks are small fireworks that are suitable for use by the general public. They typically contain restricted amounts of pyrotechnics, and are designed to produce visible or audible effects when they combust.
These fireworks must comply with a wide range of strict construction, performance, chemical composition, and labeling requirements imposed by the CPSC.
But even under these highly regulated conditions, things can go wrong. Any kind of retail store owner is at risk for mundane incidents like a slip or a fall on their premises. But in a fireworks store, the risks are much greater.
A single spark in the wrong place could lead to a devastating fire or even a large explosion. Such an incident could not only destroy your business but it could also cause injuries, property damage, or health hazards for bystanders or neighboring homes and businesses.
And even the “weakest” fireworks can cause an injury or death if they are faulty, improperly labeled, or used incorrectly. In any of these cases—even when you don’t manufacture your product—you could be named in a lawsuit.
If you own a fireworks store, consider all of the risk exposures that you have:
- Damage to your store or inventory by some type of fire or explosion or from something like a lightning strike, a tornado, and even theft or vandalism
- Customer injuries as a result of shopping in your store (trip and fall incidents)
- Customer injuries as a result of purchasing one of your product (faulty product, improper use, improper labeling)
- Employee injuries
In order to protect your business, your employees, your customers, and the general public, you need fireworks store insurance.
What Does Fireworks Store Insurance Cover?
Because of the many risks involved in selling consumer fireworks, business insurance may be more difficult to acquire for a fireworks store than it is for other small businesses. But with the help of an independent insurance agent, you can find an insurance company that specializes in the fireworks and pyrotechnics industry.
Coverage for fireworks stores usually includes general liability insurance, commercial property insurance, commercial auto insurance, and workers’ compensation insurance.
If you transport fireworks in any way, your commercial auto insurance becomes a much more complicated matter because you are transporting hazardous materials.
Keep in mind that there is no typical fireworks store insurance program because coverage requirements and legal requirements vary greatly depending on your state and municipality. This is a very regulated industry with multiple government agencies involved, and every situation is unique.
You must also be aware of and compliant with all requirements set forth by the Department of Alcohol, Tobacco, and Firearms (ATF) and the CPSC.
What Insurance Policies Do You Need for Your Fireworks Store?
The business insurance policies that are typically purchased by a year-round brick and mortar fireworks store are as described below. If you occasionally open a temporary fireworks stand in addition to your permanent location, you must ensure that all of these policies extend to those temporary operations where applicable.
Commercial general liability insurance is for occasions where your business is negligent and causes third-party bodily injury or property damage.
This can be as simple as a customer tripping on an upturned rug in your store, but also includes coverage for more serious incidents such as a customer losing a hand or a limb because of a malfunctioning firework that you sold.
A CGL policy protects you if an injured party sues you. It provides coverage for attorney fees, court costs, settlements, and judgments up to the limits of your policy.
In general, most states require consumer fireworks stores to have general liability insurance that is sufficient to cover all potential claims at a minimum. Your insurance agent and your insurance company can help you determine the appropriate amount of coverage you need to cover your liability risk.
Commercial property insurance offers financial protection if any kind of event destroys your business property and you have to make repairs, replace lost or damaged items, and perhaps even rebuild an entire structure.
Commercial property insurance covers your inventory, fixtures, office equipment and machinery, computers, and more if a fire, vandalism, smoke, theft or some other unforeseen event damages or destroys the physical aspects of your business.
Business property insurance policies usually include business interruption coverage which protects your earnings and helps pay ongoing expenses if your business is unable to operate because of damage caused by some type of covered disruption (e.g., a fire).
Commercial auto insurance covers your business-owned vehicles and drivers if they cause an accident on the road. If you use your commercial autos only to run errands or perform other business-related activities, a typical commercial auto insurance policy is sufficient.
If you transport fireworks in any way, you’ll need to purchase auto liability insurance that is compliant with state and federal guidelines for transporters of hazardous materials.
Liability insurance requirements vary depending on the weight of the vehicle, the nature of what you are hauling, and whether or not you cross state lines.
Workers’ compensation insurance protects you when employees are injured on the job. If an employee accidentally ignites a pallet of fireworks, serious injuries and even death can result. And even an employee who only works the floor of your store can be injured by tripping and falling or lifting a heavy box.
Workers’ compensation insurance compensates employees for their work-related medical expenses and replaces some of their income if they need time off to recover.
Why Is Product Liability Insurance Important for Fireworks Stores?
Consumer fireworks stores likely obtain their inventory from a variety of manufacturers and suppliers. But no matter how much care you take in ensuring that your suppliers are providing safe, high quality products, fireworks are inherently dangerous and misuse and injuries are all too common.
Any business along the supply chain can be sued when a consumer product causes an injury, death, property damage, or an illness. If you’ve participated in bringing to market a firework that is improperly labeled and includes confusing or wrong instructions, is faulty, or causes an injury or property damage for some other reason, you can be sued for negligence right along with the manufacturer.
If you are negligent, you can be required to pay for medical costs, compensatory damages, attorney fees, court costs, and more. In some states, a fireworks store could be considered negligent simply because it engages in an activity that is inherently dangerous, regardless of how or why an accident or injury occurred.
Product liability insurance covers your financial responsibility for losses or injuries to a user, buyer, or bystander caused by a defect or malfunction of your product.
Some product liability coverage may be included in your standard commercial general liability policy, but in the case of a fireworks store, it’s important to discuss your risks with your insurance agent and insurance company and make sure you have the appropriate coverage. This may involve purchasing excess liability coverage that far exceeds the limits of your CGL policy.
An agent who has experience working with hard-to-place exposures and can help you determine how much and what type of product liability coverage you need.
What Other Fireworks Store Insurance Policies Do You Need?
You might need additional coverage to adequately cover your fireworks store. Some coverage may be acquired by adding an endorsement (coverage add-on) to an existing policy. And in some cases you might need to purchase a separate policy. Talk to your independent insurance agent about your need for:
- Cyber liability insurance
- Inland marine insurance
- Equipment breakdown coverage
- Employment practices liability insurance
- Environmental liability insurance
- Crime coverage
- Utility interruption coverage
How Much Does Fireworks Store Insurance Cost?
If you want to own a fireworks store, you already understand that you need fireworks store insurance. You should also understand that fireworks store insurance is difficult to get, and it is not cheap.
Part of obtaining coverage at all—let alone affordable coverage—will be ensuring that your fireworks store operates under a set of extreme and tangible safety standards.
In order to provide a quote and offer coverage, an insurance company will want you to quantify your efforts to protect the safety of your customers, employees, and the general of public.
When you do receive a quote for fireworks store insurance, it will be based on a variety of factors including:
- Size and location of your building
- Number of employees
- Number and type of trucks or other vehicles that you own (if applicable)
- The types and amounts of coverage that you need
Your fireworks store insurance will likely include a series of explicit coverage exclusions because of the very high level of risk you present to the insurance company. It’s important that you understand what is and is not covered and how to best mitigate all of your risks.
Find and Compare Quotes
An independent insurance agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right fireworks store insurance. They’ll walk you through the handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get, but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can omit important coverage that will leave you devastated if something unexpected happens. And they can leave out cost saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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