Skate Shop Insurance – cost and types of policies
Every retailer should make sure that they are prepared with good insurance for any possible event.
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Some unique things going with your specific business make skate shop insurance an essential part of your business plan for owners or operators of skate shops.
All parts of skating activity have been growing over the past decade, including such perennial favorites as roller skating and ice skating, and now spreading into skateboarding, power skates and many other new and exciting actions.
Many signs indicate that the popularity of skateboarding is growing all the time for nearly every age group.
Parks are more crowded than they have been before.
Some cities, like San Francisco, CA, even have their own periodical ( the Thrasher), highlighting the sport’s popularity around the bay.
In a typical skate shop, owners offer a wide range of different products from multiple brands.
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Usually, the products include:
- Rollerblades and roller skates
- Kick scooters and electric scooters
- Electric skateboards
- Protective equipment
- Spare parts and accessories
In some cooler states during winter months, shops sell Nordic skis, Alpine skis, poles, boots, helmets, gloves, waxes, and accessories.
What risks should a skate shop retailer insure against?
Ultimately, the success of any business depends on your own hard work.
Still, things can go wrong for reasons outside of your own control, and this is where retail insurance helps you by protecting all of that effort and the money you’ve invested in your business.
All businesses share some common insurance needs. These are:
- Protections against liability
- Property damage
- Business interruption
- Digital security
- Workers’ compensation
As soon as you opened your skate shop, you became subject to laws and regulations that make you liable to being sued for many possible occurrences.
With proper insurance, you can make your handling of any such claims much more straightforward. In the end, you will not have to pay out any settlement or legal bills even if you were at fault.
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General liability insurance is designed to cover your business in cases where some person claims that they were injured while visiting your skate shop, or something of theirs, like clothing or equipment, was damaged.
Examples of such claims included events like someone tripping over a skateboard that was left lying around without being correctly stored on the racks.
Another case was where a pot of wax was tipped over, and a customer slipped and fell. Damage to their property could mean someone testing a spray can and accidentally staining a customer’s expensive wet diving suit.
General liability insurance covers you only where the person suing you is defined as a “third party”, in other words, not a friend, family member or employee.
Professional liability insurance will protect you if a customer buys a product from you based on your advice and then alleges that the advice was flawed, wrongful or malicious.
Professional liability claims are hard to prove, so you maybe feel this insurance is unnecessary, but a claim is also complex and expensive to defend.
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By having the fairly cheap insurance already prepared, you will be able to rest knowing that all aspects of the defense are organized and paid for by the insurance company – win, lose or draw.
Product liability insurance is probably just as crucial for stores like skate shops.
Because you are selling speciality products, it’s pretty often the case that the product doesn’t do exactly what the customer expected.
They can come back and blame you, as the vendor, for defaults or flaws in the goods.
Unless you make every customer sign a disclaimer that they accept the products at their own risk (which may cost you the sale), you have to accept that sometime, somewhere, a customer may sue you.
Like the other two liability covers, it’s good to know that your entire legal defense will be organized and paid for by the insurer.
Some special add-ons that skate shops need to protect themselves
Brand-name merchandise can be costly, and many stores take it in on a “sale-or-return” basis, not as inventory.
In such a case, if something like smoke or fire damage ruined this merchandise, you may not be covered by the standard Inventory policy.
Theft and shoplifting
Criminals are becoming much craftier when it comes to stealing things like skateboards and skates that they can easily sell for cash.
Shoplifting is an unfortunate risk skate shopkeepers face, due to the profile of their typical shoppers.
The latter come in in groups and insist on handling the merchandise.
It’s not easy to put a direct figure on such losses, and most policies don’t cover shoplifting, but if you have proper insurance, as well as monitoring activity in the store (video surveillance), you should be able to claim at least some of the losses from theft and shoplifting.
When you own or lease physical premises, you need to insure them thoroughly with a commercial property policy against damage.
Damage can take many forms, like fire or weather events, floods, earthquakes and more. This can destroy buildings and contents.
In some cases, your business may not be able to operate fully for a period.
You need to cover your own inventory, any customer’s goods, like boards you may be repairing, and all other assets.
Business interruption insurance
Another problem skate retailers face is when they are located in a shopping center and the center or another store experiences an event such as a fire, as a result of which you are unable to open until the center is reopened.
Proper hazard insurance protects you when this happens.
To keep your business going until the damage is repaired, you need to be able to pay wages, meet regular utility and bank payments and all the other outgoings while your store doesn’t have its steady income.
There are also covers for any event where your store can’t access power or water utilities for some period, for example, if a storm nearby interrupts electricity.
If your business is running skateboard repairs and construction, then without power you could suffer lost sales or even be sued by customers if you fail to meet promised deliveries.
Insuring your cash
Specific insurance policies are available to protect cash (notes, cheques, and postal orders) up to a certain amount against theft or loss (such as in a fire).
So, if you are unable to get your money banked regularly, or if you have to keep large amounts of cash on hand for activities like trade-ins, buy-backs etc., then it’s worth having a limited cover policy, bearing in mind that most cash cover is expensive, and you would have a large deductible before the insurance kicks in.
Data breach and digital theft
Suppose your skate shop is working through internet marketing as well as in a physical store.
In that case, you may be experiencing some newer kinds of risk, which is known as online shopping fraud.
Criminals target skate shops with scams to get unsuspecting employees or customers to reveal credit card details. They can steal customers’ credit details, your banking data and much more that can damage your operations.
Cybercriminals can even target the computerized POS systems inside your shop by hacking into your network.
Cyber liability insurance protects your skate shop business and covers your losses in the event of a data breach.
Some customers will not use their credit cards unless you can prove that you have proper cyber insurance, and you may lose sales if you don’t have it.
Commercial vehicle insurance
If you use your personal vehicle, whether it’s a car or van or truck, for any business activity, then remember that the private insurance policy does not cover you in case of theft or accident.
You need to either take out separate commercial auto insurance, or at the very least have the policy amended with a clause that permits your use of the vehicle for commercial activity.
Workers compensation insurance
By law in almost every state, workers compensation insurance is required for businesses with multiple employees.
It protects both you and your full-time, temporary and casual workers if they sustain injuries on the job.
Recommended levels of insurance for small and medium-size skate shops
Your skate shop business is unique, which means that we cannot tell you precisely what insurance you need and what it will cost.
We always recommend talking to qualified insurance brokers and agents, or to insurance companies that operate in your location.
However, the table below gives some guidelines on the levels you should be seeking, and approximately what the premiums would be.
|Subject||Level of cover||Likely average cost per year|
|Public liability||$2 million per year, maximum $1 million single claim||$800 – $1100|
|Professional liability||$50,000 full year, $25,000 single claim||$250 – $400|
|Product liability||$1 million||$250 – $400|
|Property damage||Per $500,000 value||$125 – $345|
|Theft and shoplifting||Per $10,000 value||$120 – $250|
|Auto||Based on value||$1200 – $3000|
|Data security||$5,000 for the full year, $2,000 per single claim||$150 – $200|
|Workers compensation||Rate is set in each state||Generally around $1 per $100 salary|
Why should a skate shop take out Product Liability insurance?
When you are selling products, there is always the chance that defects can cause injury or property damage to customers.
Especially, suppose you are modifying any of the products you are selling “out-of-the-box”.
In that case, you may be voiding the manufacturer’s own liability, in which case you become responsible not only for your own changes, but also for any defects inherent in the product.
That’s why all skate shops need to have product liability cover.
Where can you negotiate the best deal for insurance?
The insurance market is highly competitive today, so by shopping around, you should quickly find out where the best deals are coming from.
Professional insurance agents and brokers can give you a “one-stop” experience, covering all the bases.
Alternatively, you can shop around between insurance companies.
Still, in this case, you may have to go to many companies because they may be specializing in different areas of insurance.
You will have to locate the right companies to cover all the bases yourself.
It’s a question of whether you have the time and experience to do it yourself, or will you trust an agent or broker to do the right thing on your behalf.