Small Business and Retail Coverage You Should Consider this Holiday Season


If you’re the owner of a small business, Black Friday is a critical profit-making day that looms on your calendar all year long. You prepare everything in your store to maximize this chance to generate sales and spike your revenue enough to put you “in the black” for the year. You double up on your normal inventory levels, staff up on sales associates, and get ready to move some serious product.

But what if something goes wrong? Are you protected?

Suppose all this inventory – twice the amount you usually carry – gets completely ruined. Maybe a faulty sprinkler goes off after hours and sprays the storeroom all night long, or someone leaves a window open and the season’s first blizzard blows in. Whatever the catastrophic event, you’ve stretched yourself way too thin stocking up, and now the entire storeroom full of holiday inventory is useless.

Seasonal Increase Endorsement

You and your spouse own the building and have a standard business owner’s policy (BOP) on the retail store. This policy covers your typical inventory levels, but not the 2X levels you bumped them up to in anticipation of Black Friday. There is an inflation guard under your Personal Property coverage section - usually 4 percent per year. And there’s also a seasonal increase, but it’s tiny – only about 10 percent.  It’s not nearly enough to cover all the inventory that stands ruined in your storeroom.

The lesson from this scenario: endorse your BOP for additional “seasonal increase” coverage. You can add this endorsement for the one uptick a year at holiday-time. It gives you coverage for catastrophic events like the one described above, and it has an appealing benefit: you don’t have to pay a higher limit all year long to get this one-time increase.

Selling Price Endorsement

Even if you selected the Seasonal Increase endorsement, there is more you should do to protect yourself and your business. If your inventory is ruined, as described above, your standard BOP will require you to provide all kinds of sales data to prove what you would have sold during Black Friday. This data is based on past performance and requires a detailed analysis to put you back in the position you would have enjoyed.

Well, what if you could find a buyer for all that ruined inventory? Guess what: the insurance company can be that buyer.

This can happen only if you endorse your policy to value your inventory at selling price, rather than at cost (which is what you will get under the typical BOP). With this Selling Price Endorsement in your BOP, the insurance company will pay you as if they were the customer for that damaged inventory.

So, not only does the insurance company pay you for the cost of your damaged inventory, it also pays you for the PROFIT you would have earned from successfully selling that inventory.

Pretty good, huh?

The Selling Price Endorsement buys you time – time you would have spent assembling a business interruption claim.  You can now use that time to get your store back open, resume operations, and begin selling again – and you won’t have to sit around worrying about reconstruction and length of time for repairs.

If your small business amps up for the holiday shopping season, think about what kind of coverage you have to protect you against catastrophic events. Call us at SMW to get some advice – we’re happy to help!

If you’ve had a fire, flood or other property loss resulting in an insurance claim, and need a public insurance adjuster in Massachusetts, New Hampshire, Rhode Island, New England or anywhere in the U.S. or Caribbean, call Swerling Milton Winnick. We are the oldest and largest public adjusting firm in New England, and our team of experts will give you personalized, 24/7 attention to successfully resolve your residential or business insurance claim.