Understanding Business Insurance for Toy Store
Toy stores cater to a profusion of tastes and bring new entertainment to children’s lives. Toys are trendy in the US, and toy stores are known for their product quality and customer commitment.
Since many of the products are not manufactured by the toy stores, they depend partly on the reputation of other companies for their product sales. However, vouching for one’s product or service quality is easier than vouching for another’s product quality. So toy store insurance plays a vital role in the risk transfer process. It’s also a gesture of a toy store's proof of commitment to their customers.
In 2021, the market size of the US toy store sector was approximately $38.19 billion. Insurance coverage gives toy store businesses more confidence to focus on their operations because they have insurance policies that can protect them from various situations.
Toy store insurance protects businesses from its many exposures. Let’s look at some of them:
- Example 1: Crowd control – Security personnel for crowd control is needed when special price cuts are offered, like on Black Friday, at the beginning of the holiday shopping season. In addition, non-slip flooring, proper ventilation, and adequate, well-lit exit passageways are required; otherwise, there could be injuries and property damage.
- Example 2: Damaged property – if backup power generation equipment is damaged during a lightning storm because of the absence of functioning security systems, there could be looting of merchandise. Harassment of shoppers could lead to crime in the area and at the toy store by unruly people or civil commotion.
- Example 3: Covered building damage – A toy store sits in the path of a twister in a tornado-prone area, leaving the toy store roofless. The losses incurred from damage to the building and contents and the loss of revenue can potentially put the business at risk of survival without insurance.
Some policies protect a toy store from several exposures, including those connected to a store’s retail space frequented daily by shoppers and visitors. These policies cover the business for liability claims or lawsuits, inventory damage, business income, and employee injuries, allowing him to expand his product range and business assets:
- General liability insurance
- Property Insurance
- Commercial Auto
- Workers Compensation
- Cyber insurance
General Liability Insurance
The policy protects against third-party bodily injuries and property damages that a store owner might face. It secures the toy store from potential financial liabilities that arise from accidents that might occur in the store. If such accidents cause bodily injury or property damage sustained by a customer, this policy protects the toy shop if they are found to be legally liable.
Example 1: A young mother and her toddler arrive at a toy store to buy a gift. Almost immediately, the toddler gets busy exploring his environment. A large showpiece, a wooden dinosaur, gets dislodged by the toddler’s explorations and falls on his head. The general liability protection will respond to a claim or lawsuit alleging the store's negligence for not having the dinosaur secured. General liability insurance would cover awarded judgment for the child's medical bills, expenses incurred, and the legal defense costs for the toy store.
Example 2: An employee moves a display shelf of recently acquired, expensive remote-controlled robotic toys. It accidentally topples, damaging the toys. The special form property policy would respond to an inventory damage claim.
Example 3: Unexpected disaster – A toy store owner is backing out of a store parking space just as a teenager riding a bike, speeds into the parking lot and passes directly behind the store owner's car. The car rams into the bike and rider. The business auto policy, more specifically, the auto liability insurance, would address the claim.
Product Liability Insurance
Product liability is included under the General Liability policy. Injuries or property damage can harm customers who purchased products sold at the store or manufactured by it. The product liability policy protects against customer injury or property damage. For some high-risk products, a standalone product liability policy may be necessary. Still, usually, it is part of the general liability policy. This policy will pay for liability lawsuit defense and related costs such as economic and financial damages on covered claims.
Example: The operating instructions on a toy duck read - "The duck walks around after it is charged and switched on." There’s no mention that the toy can be operated at three speeds, and neither are the three speeds marked on the product. A toddler, seated on a high chair with a parent in attendance, is being fed soup while watching the duck intently. The toy is switched on at the highest of the three speeds. It rushes at the toddler, who reflexively reaches for his parent. The soup falls over him, and, in the commotion, he falls off the high chair and hurts his head. The toy store is sued for incorrect labeling and instructions. The store's product liability policy will respond to the claim while it looks to subrogate against the manufacturer for the liability lawsuit.
A toy store might use motor vehicles to pick up merchandise and deliver it to the end consumer. Commercial vehicle insurance protects against at-fault accidents that might occur during trips, causing bodily injury or property damage to others.
Example: An employee driver doses off at the wheel during delivery and hits another's vehicle. The toy store's employee is cited for the accident. The damage to the company-owned vehicle would be taken care of if comprehensive and collision coverage were purchased on the policy, and the other driver's car and injuries are taken care of by the auto property damage and bodily injury liability coverage.
This protection is extended to workers who sustain injuries while on the job.
Example: While restocking shelves at a toy store, an employee takes a tumble from a ladder and breaks her rib. The workers’ compensation policy will pick up the medical expenses and pay a percentage of her pay until she returns to work.
Cybercrimes threaten a business's network security, private information, operations, services, and revenue. The frequency of internet attacks can only increase in the future; most are aimed at small businesses. Most small businesses lack the security protocols to protect their email, operating system, and websites.
Example: Network Security – A harmful computer virus spreads in the company’s network, from an opened email, and data is lost. The virus also gets transmitted to your client’s network via an email. The client files a lawsuit and the cyber insurance kicks in.
Comprehensive Insurance Costs
To decide on the right set of insurance to protect a business establishment, one looks at a mix of the business's revenue, the number of people it employs, its location, the number of outlets it has, and its claims history. What the business's policies will cost will be a calculation based on these factors. Any misstatements or omissions of relevant information by the client can lead to price variation or even declination or rescission of coverage. Insurance coverage can begin only by a licensed agency staff member binding coverage with the insurance company .
A safely functioning business is ultimately in the interest of the public, the business establishment, the employees running the business, and the customers who visit the premises to make purchases. A good toy shop insurance benefits the stakeholders of the store.