Record stores are back in style due to the resurgence of vinyl records. And if you're a small business owner that owns a brick-and-mortar store, you face certain risks online businesses don't. Whether your record store deals in vintage or rare records, CDs, and other "retro" music, there are certain things you need to make sure you have in place to protect your business. One of those things is business insurance.
Why Record Stores Need Business Insurance
You may think your record store doesn't really need insurance. Here are a few reasons why we think you should reconsider:
- Example #1: Your record store buys used records and resells them. In some cases, you also accept vintage records for consignment. Unfortunately, some of the vinyl records that a customer dropped off were damaged when your pipes burst. Luckily, your commercial property insurance will cover the cost to replace or compensate them for their records.
- Example #2: One of your employees mopped the shop floor. As they were putting out the "wet floor" sign, a customer slipped and crashed into a shelf, resulting in a gash on their head. Your general liability insurance policy will cover the customer's medical bills and your legal fees if the customer sues your record store for the industry.
- Example #3: One of your employees is working on a ladder restocking a shelf when they fall and break their arm. If you had workers' compensation insurance coverage, your insurance company would pay for their medical expenses.
Unexpected events like these happen more often than you would think. So where do you start with business insurance?
Consider a Business Owners' Policy
A business owner's policy (BOP) is a package of insurances that usually includes general liability insurance, commercial property insurance, and business interruption insurance. The best part? A business owners' policy is usually offered to small businesses at a discounted i.e. more affordable rate.
Commercial General Liability Insurance
General liability insurance is one of the insurance coverages we highly recommend to protect your record store. General liability insurance policies cover third-party bodily injury, third-party property damage, and advertising injury (libel and slander).
Your general liability insurance will protect you if a customer slips or falls in your shop or is otherwise injured while in your establishment. When you have this insurance coverage, your insurance company will help pay the injured party's medical bills. If the injured person decides to sue you, this insurance will help cover the legal fees for you your legal defense, court costs, and settlements or judgments up to the limits of your policy.
Commercial Property Insurance
Commercial property insurance is designed to protect your property, including your building and its contents (furniture, inventory, valuable papers, etc.). Theft, vandalism, storms or "acts of God," fire, are considered covered perils on your average policy. If you live in an area prone to flooding, you'll want to consider flood insurance as it's typically excluded from most property insurance coverage.
Business Interruption Insurance
Business interruption insurance—also referred to as business income and extra expense—helps you keep your business afloat if it's being rebuilt or repaired after damage from a covered peril. This business insurance will help cover payroll, lost profits, taxes, rent, and other operating expenses until you're back up and running.
Other Record Store Business Insurance Options
There are a few other business insurance options that you might want to include in your record store insurance package.
Workers' Compensation Insurance
If you have employees, you will need to get workers' compensation insurance (it is legally required in most states). If one of your workers is injured in a work-related accident or becomes ill due to an exposure, workers' compensation will help pay for their lost wages and medical bills until they're able to return to work.
Workers' comp also protects your business from legal action if your employee decides to sue your record store for the injury or exposure. Workers' comp can also take care of disability payments for disabled workers who qualify and can cover funeral expenses for that employee, and arrange support payments to the survivors of a deceased employee.
Commercial Umbrella Insurance
Commercial umbrella insurance is designed to help you cover claims that exceed the limits of an underlying policy, such as general liability insurance. Why wouldn't you just raise the coverage limits of your general liability? The cost to do so is typically far more than the cost of purchasing umbrella coverage for your record store.
Employee Dishonesty Coverage
We get it, business owners don't want to believe that their employees could ever harm their business by stealing from them. Sadly, it does happen. Employee dishonesty coverage protects your business from:
- Theft of money or money securities
- Loss of business property
- Forgery and alterations
- Fraud and embezzlement
- Unauthorized electronic fund transfers
- Computer fraud
This coverage is especially important if you deal in rare items or antiques. You need to make sure you're adequately protecting your assets.
Employment Practices Liability Insurance
Employment practices liability insurance (or EPLI) will protect you and other managers listed on the policy if a current or former employee accuses you of discrimination, sexual harassment, ageism, wrongful termination, and more. This specific type of liability insurance will help cover the cost of a legal defense and a settlement if necessary.
Cyber Liability Insurance
For any record stores that store customer information (name, phone number, address, credit card information, etc.) cyber liability insurance is a necessity. Cyber liability insurance will provide protection for your business if you were hacked or the subject of a cyberattack. Most insurance companies will help cover the cost to notify impacted customers and provide them with free credit monitoring.
Product Liability Insurance
Anytime a business sells products to customers, they run the risk of being accused of the product causing harm. If you sell a record player that malfunctions and starts a fire, a customer could sue you for the ensuing property damage and bodily injury—even if you didn't manufacture the product. An experienced insurance agent can help you determine if product liability insurance is an insurance your record store needs.
How Much Does Record Store Insurance Cost?
The average cost record stores spend on general liability insurance typically falls between $300 and $600 for a basic $1 million liability policy. Once you layer in other business insurance your record store may need, the cost of your premium(s) will increase. Insurance companies will take some of these factors into account:
- The location of your business
- The number of employees you hire
- The deductible and policy limit you choose
- The different types of insurance you need
- The services your store offers
- The value of your inventory/assets
An insurance company may consider other factors as well as they determine cost for coverage. A business owner's policy can be a great way to bundle insurance you need at a cost that's more affordable. An insurance agent can help you determine what business insurance you need and help you build customized coverage for your record store.
Get a Free Record Store Insurance Quote
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