Retailers shouldn’t save money on Black Friday with their insurance

24 November 2016: With Black Friday upon us, experts have predicted that retailers will see record breaking sales surges this year. Retailers are also warned that the risk of thefts and possible damage could be significantly higher. This according to Annelie Smith, Corporate Executive at Risk Benefit Solutions (RBS), who notes that while standard policies take high risk times like Black Friday and the Festive Season into account, retailers still need to make sure that their insurance is up to date.

“The risk of theft increases substantially in these periods, and while retailers with full asset policies would be covered, many businesses try to save on premiums by rather taking out multi-peril policies.  They usually only opt to cover risks like fire and loss of income, while excluding some of the smaller potential losses. If retailers haven’t opted for theft cover, they will most likely lose substantially during this time,” Smith says.

Smith suggests that retailers get in touch with their brokers to make sure that their policies are in order. “Policyholders need to be sure that they have the right cover for this period, and most importantly, they need to understand everything in their policies,” she adds.

Smith notes that risk mitigation is also important during this time. “If a retailer wants to begin selling higher value products, like a jeweler, an insurer will expect that the business also puts the correct risk mitigation and security measures in place. If something happens and it is found that the retailer cut corners with risk mitigation, the insurer could have grounds for repudiating the claim,” she states.

Gillian Wolman, Head of Litigation Risk at RBS notes that shops would be covered for most liability instances under their liability policies. “Retailers should already have liability policies that cover injuries that customers might suffer from things like falling shelves. There is essentially no need for retailers to take out extra policies to cover possible incidents during peak times but should at all times ensure that adequate cover is in place,” she says.

Wolman adds however that retailers need to be vigilant during times of increased foot traffic through their stores. “Determining legal responsibility can be complicated but in most cases rests on whether someone was careless or “negligent”. With that said, retailers need to have adequate risk mitigation / management measures in place in order to avoid any accusations of negligence especially when expecting high volumes of consumers. It is important to ensure that the right amount of security are place and that the store is not packed over capacity. We have seen some retailers even spreading Black Friday over multiple days as a means of easing the massive rush of customers.”

Wrongful arrest is another risk that businesses need to beware of, according to Smith. “There was a recent case where a car dealer had a customer arrested because they had mistaken him for a thief that had previously stolen from them. The customer has since taken the dealer to court and the business is being held liable for damages.”

“On high traffic days like Black Friday, this can happen in any store. It is important to make sure that security staff are well trained. Mistakes can happen if there is chaos in a store and a retailer needs to be able to trust that security staff are able to make the right calls in these situations,” she says.

“Finally, policyholders need to make sure that they are covered for the right replacement values for assets. Many businesses try to save money on premiums by not insuring their assets for their full value, or they simply do not keep up to date with the new replacement values of certain assets. This once again places a business under unnecessary risk,” Smith concludes.