Understanding Computer Retail Store Insurance
A computer retail store or a computer parts wholesaler sells numerous types of computer systems, accessories, connectors, parts, and disks. Claims of property damage when they occur—a customer’s phone gets pushed out of their hand and breaks as a result of getting accidentally bumped by men moving heavy equipment at the store, or a claim of negligence is raised when a computer refuses to start after being ‘delivered’ as repaired. These are threats the business is exposed to and arises out of the uncertainty of the handling of such merchandise on a daily basis.
The global computer hardware market is expected to reach US $1036.6 billion in 2023. These are products with delicate circuitry and low tolerance to rough handling. So, the role of insurance in this industry is especially significant. We provide coverage for the unique risks associated with computer retail stores, which allows them to stay in business. We customize policies to protect the business assets and client relationships:
Business and Professional Risks
Computer stores may follow risk management procedures. These actions can minimize the incidence of such risks, but no workplace can be incident-free. It could result in financial damages if negligence occurs despite the best of intentions. The computer store owner considers insurance to assess and cover exposures unique to their business.
- Example 1: Property damage – From a fire caused by a lightning strike during a storm
- Example 2: False advertising, slander, or libel – A store employee has mistakenly used a copyrighted image from a competitor’s campaign for the billboard. This implicates the computer store in a case of alleged false advertising.
- Example 3: Customer bodily injury – A server is kept carelessly on a store shelf. It falls on a customer’s foot and fractures it.
- Example 4: Theft by an employee – An employee is caught on camera stealing a laptop.
Recommended Policies
The computer store owner deals with multiple exposures, but there are computer store insurance policies that can mitigate its risks while the owner focuses on running the business. Insurance policies with particular relevance to computer retail stores are:
- General Liability Insurance
- Commercial Auto Insurance
- Workers’ Compensation Insurance
- Commercial Property Insurance
- Commercial Crime Insurance
- Cyber Insurance
General Liability Insurance
Many people visit the business establishment, making this an important coverage for the store. The safety of the computer retail store is undeniable as it follows the risk mitigation protocols laid down by the industry. And yet, uncertainties need to be covered. In case of accidents, third-party property damage, advertisement injury, bodily injury, and personal injury must be covered. If a client sustains unintentional bodily harm or damage to his property, General Liability Insurance will protect the business against his claim.
- Scenario 1: Completed operations – The store provides repair services, and something goes wrong with the repaired computer afterward, and it causes a fire, damaging the customer’s property. The claim will be covered by the Completed Operations coverage, a part of General Liability Insurance.
- Scenario 2: Premises Liability – The business is a computer parts distributor. Any bodily injuries sustained by the client in the store will be covered by the premises liability section of the General Liability Policy.
Product Liability Insurance
Product Liability is also part of the General Liability policy. It provides coverage when a client claims bodily injury or property damage from a malfunctioning product sold by the business. This coverage protects the store by paying for the legal fees or settlement amount if court awarded, arising from the accident.
- Scenario: The store sells a customer some computer accessories, one when used, causes him burn injuries. The computer store's product liability policy protects it.
Commercial Auto Insurance
The computer store transports computers and related merchandise from its premises to customer locations. If the store owns or leases vehicles or if the store’s employees use their own vehicles for business transportation, the computer store needs commercial auto insurance.
- Scenario: The business is a computer distributor. While driving a van from its premises to a delivery location, one of its employees accidentally runs a stop sign and hits another vehicle. The store’s Commercial Auto Insurance would pay for the bodily injury and property damages sustained by the other party.
Workers’ Compensation Insurance
Medical expenses of employees are covered as well as a percentage of their lost income, in case they suffer some injury while working at the store and are unable to perform duties. Workers’ compensation also provides financial benefits for an employee’s dependents if they lose their life while working for the establishment.
- Scenario: An employee suffers a back injury while lifting a heavy carton at the computer store. The store’s Workers’ Compensation Insurance would compensate them for the lost wages and pay the medical bills until they return to work.
Business Owner’s Policy or BOP
BOP combines general liability, property, business interruption, and extra expense coverage. Commercial Property Insurance and Business Interruption coverage are insured for similar perils that cause property damage and temporarily stall the store’s operations. The extra expense coverage pays for a company's extraordinary expenses after a disruptive event. Smaller computer retail stores, in particular, prefer this cost-effective policy.
- Scenario: Business disruption – A computer store suffers severe roof damage at its business premises in the server section. The owner is unable to continue its operations for a month. During this period, ten exclusive computer monitors are stolen from the business premises. The BOP covers the repair expenses and the store’s exposure to theft as well, while it replaces income so the establishment’s rent and other expenses can be paid until it reopens. Note, two separate deductibles would apply to each loss here.
Commercial Property Insurance
Commercial Property Insurance protects the owned structure, contents, and equipment. If the location is rented and the lease requires the store to insure the building, then the store tenant can insure it. Property insurance covers the computer store’s assets in the case of a disaster like a fire that destroys the computer shop.
- Scenario: Water damage occurs after a tornado rips off the roof and destroys nearly all the store’s inventory, equipment, and building. The business’s Commercial Property Insurance will kick in.
Commercial Crime Insurance
This insurance covers the business from crimes such as employee theft, robbery, forgery, burglary, and fraud.
- Scenario: Discrepancies in the store’s cash register reveal that one of the employees has stolen money. Commercial Crime Insurance will provide the requisite protection.
Cyber Insurance
The software of the business needs to be protected from cybercrimes. The risk is particularly high if the store sells products online.
- Scenario: If a virus attack brings the computer store’s website down or it is a victim of fraud, Cyber Insurance can provide financial and legal protection.
Comprehensive Insurance costs
Computer stores, owing to the delicate nature of the products they sell and the number of people visiting their premises, have unique insurance needs. Deciding on the right plans to cover the computer retail store is a consideration of the size of the business, the number of people it employs, its location, the sizes and number of outlets it has, and its claims history. What the store’s policies will cost will be a function of this mix.
Who Benefits?
A safe functioning of the computer store is ultimately in the interest of the public, the business establishment, and the employees running the stores, and customers who visit the premises to make purchases. A good computer retail store insurance program benefits all the stakeholders of the store.