Insurance advice for retailers and SMEs

Whether you’re a tenant or building owner, “property coverage is second only to liability coverage as the most important coverage for a c-store,” says Paul Vaccarello, CEO at Tripemco Insurance Group in Stoney Creek, Ont., which provides customized insurance programs, including for c-stores.

Property coverage protects your building and a lot of its contents from insured perils like fires, floods, vandalism and thefts. A well-rounded insurance package should also encompass “Equipment Breakdown Coverage” (sometimes called Boiler and Machinery or Machinery Breakdown coverage). “This coverage is often misunderstood, but is a key component within a c-store policy,” explains Vaccarello. “It fills the gap in coverage of property insurance wording relating to ‘exclusion: damaged caused to miscellaneous electrical apparatuses.’”

Think freezers, refrigerators, generators and computers, to which damage is “common as a direct result of weather conditions causing power outages/power surges,” says Vaccarello. “This coverage also protects against spoilage of goods in the freezers and other refrigeration. Equipment Breakdown coverage really should be considered a mandatory coverage extension.”

Matthew Friesen, VP, central sales at Western Financial Group, gives a strong recommendation to Business Interruption coverage. “If something were to go wrong, it’s just as important to make your store whole from a revenue generation perspective while you’re closed to replace damaged property or equipment,” he says. “Have a discussion with your broker to make sure your Business Interruption coverage covers you for enough time, so you can continue getting paid for lost income until you’re able to open your doors again.”    

Cyber exposure

While there are a variety of other ancillary coverages a convenience store should purchase, “a particularly important and growing trend is related to cyber,” says Friesen. “A store is far more likely to have a cyber attack than a general liability claim (for instance, from a slip and fall), yet not many small businesses purchase this coverage. I can’t stress enough the importance of carrying the coverage, as many think it will never happen to them.”

According to the Insurance Bureau of Canada’s (IBC) 2023 Cyber Security Survey, 60% of small businesses believe their business is too small to be targeted by cyber criminals. Yet 98% of cyber incidents reported between 2018 and 2022 were from small businesses, according to the NetDiligence’ Cyber Claims Study 2023 Report. And, in the U.S. last year, 41% of small businesses fell victim to a cyber attack, versus just 22% in 2021. 

Rob Page, North American management liability team leader at CFC Underwriting Ltd., says “as the world becomes more digitally connected, every business has increasing cyber exposure.”

In addition to covering the financial loss of system downtime, “some cyber policies will also cover future loss of profit caused by customers choosing to go elsewhere because of the reputational damage,” explains Page. “Customers go to the brands they trust, and so if there’s been a cyber incident, the reputational fallout for a retailer can be significant.” 

Beverage alcohol  = added exposure 

Ontario c-stores planning to introduce alcohol sales need to review and update their insurance policies, as alcohol creates added exposure in terms of product theft, liability and more.

"C-store liability coverage has traditionally excluded coverage relating to alcohol stock and any third-party related claims,” says Vaccarello. “Stores must report the new exposure to the insurer based upon the anticipated percentage of sales during the policy period for Liability Insurance rating.” Failure to do so, he warns, “would result in zero coverage.”

Given alcohol is a high-target item, he says theft insurance is a good idea, but that you need to have a security system set up. “It has become an understood requirement to most, if not all, insurers,” he says. “Fortunately, the cost associated with maintaining a security system is far less expensive than 10 years ago.”

To lower premiums, Vaccarello advises owners to “outline the day-to-day security they have in place” relating to the sale and storage of alcohol, as well as store practices, such as limiting cash kept on-premises.

Page notes going through the process of working with an insurance broker can be a great process “because it gets you thinking about the protections you have—or don’t have—in place. It might be that a retailer can’t get insurance until they implement certain measures, so it can help owners improve and better protect their business before even deciding on insurance.”

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