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September 9th, 2008

Some e-retailers have the notion that the absence of brick and mortar anywhere in their operation is reason enough to forgo commercial insurance.

Wrong.

Even in cases where your business consists of a computer in a corner of your bedroom and you store no at-risk inventories of goods, holding commercial insurance is a wise move simply because you do have potential liabilities.

Anyone who sells a good or a service to the public is at risk of being sued for damages. You can be sued for virtually any kind of misstep you might make. For example, if you are selling a doll made in China, you can count on being the target of a lawsuit when inspectors discover lead-based paint on the dolls’ faces, a toxic hazard. You didn’t know it was there, but that’s no defense against litigation and a big dollar judgment against you. Therefore, at minimum, you need product liability insurance for your business. Some retailers even consider it wise to carry umbrella coverage that covers them against a disastrous judgment.

Sellers who do own a brick and mortar establishment need, in addition to product liability coverage, general liability insurance to absorb the costs of such things as accidental falls by customers.

Next, protect your property against damage. If you lease, cover only damages to goods and fixtures you have brought into the building and let the owner cover the structure. However, some retailers who think they are safe by covering loss or damage to their goods and fixtures make the mistake of not thinking about what happens after the disaster. Until the building is rehabbed or you have moved new inventory into a new facility, you have no cash flow. Unless, that is, you have purchased commercial insurance that covers suspended operations.

Other coverages you need to consider depend upon the type of business you run and whether you have employees. There are special policies for franchisers and franchisees, automotive garage operators, restaurant owners, wholesalers, and many other kinds of operations, each of which has its own special risks. Should you have employees, you may want to cover yourself against employee dishonesty; you may also want to, or are legally required to by law, carry workman’s compensation insurance to handle injuries on the job.

Protect what you have worked hard to build by researching Commercial Liability policies, Business Auto and Workers Comp insurance. It is best to find a knowledgeable independent insurance agent who specializes in commercial risk. An independent agent represents several insurance companies, therefor competitive premiums can be offered.

When visiting a local insurance agent be prepared to answer in depth questions about your business including gross sales, projected sales, payroll and your overall business experience. Disclose all information about your business that way your agent can customize a policy to protect your financial future future!