Michigan Consignment Store Insurance Policy Information
Michigan Consignment Store Insurance. Consignment stores have a unique business model, in which the store sells merchandise on behalf of a third party, taking a sizable commission in the process.
Consignment shops accept items from individuals called consignors on a contract basis. The shop displays the items for a specified amount of time. If an item sells, the shop pays the consignor the agreed-upon percentage of the proceeds.
If an item does not sell, the shop either returns it to the owner or donates it to charity as specified in the consignment agreement. The store owner does not take ownership of the item at any time.
While the most common consignment items are used clothing, particularly specialty women's, bridal gowns, maternity wear, and children's clothing, other items such as antiques, CDs or DVDs, computer games, furniture, household goods, musical instruments, or sporting goods, may also be consigned.
The shop may also sell a limited variety of new items.
Although many consumers believe consignment stores to be very similar to thrift stores, the main two differences between the two are that consignment stores operate on a for-profit basis, and that the commodities on sale at these stores are in new condition.
Consignment stores selling diverse types of goods can become very successful, but they do face a multitude of risks as well.
Investing in excellent insurance coverage is a key part of your overall risk management strategy as a business owner, so what should you know about the types of Michigan consignment store insurance you will need? Discover more in this brief guide.
Michigan consignment store insurance protects your shop from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Why Do MI Consignment Stores Need Insurance?
Similar to other businesses, consignment stores can, at virtually any time, be impacted by circumstances beyond their control - sometimes with devastating financial consequences.
Consignment stores face significant hazards unique to their business model in addition to the universal risks almost any commercial venture has to consider.
Like other businesses, consignment stores may be confronted with acts of nature - ranging from lightning strikes to earthquakes and hurricanes. They may be saddled with unexpected costs due to theft, vandalism, or robbery, and of course, accidents that cause fires or floods may also cause severe property damage.
Like other businesses, consignment stores may face lawsuits from customers or employees who are injured on the premises.
Unique risks are associated with the fact that MI consignment stores warehouse and sell commodities that are not owned by them, but instead by the merchants on whose behalf the consignment store is acting.
The products may be faulty in some way, or your own store's activities could inadvertently damage goods you are selling. In both cases, you could face massive costs if claims are filed against your consignment store.
Not only are certain types of insurance obligatory, carrying Michigan consignment store insurance coverage is one of the best and easiest ways to protect your business in the event that shop is struck by any type of major peril.
What Type Of Insurance Do Michigan Consignment Stores Need?
The consignment store's location, its size, the types of goods it sells, and its number of employees are just some of the factors that determine what types of insurance you should invest in, as well how high your premiums will be.
Because each consignment store has unique insurance needs, it is vital to consult a skilled commercial insurance broker who understands the nature of your business. With that in mind, the following types of Michigan consignment store insurance are important:
- Commercial Property - This kind of coverage safeguards your store from financial losses if the facility is hit by perils that include acts of nature, burglary, vandalism, and fire. It will cover your property damage up to a predefined limit. You should, however, be aware that flood insurance needs to be purchased separately in most cases.
- Commercial General Liability - Consignment stores host so many customers that it is only a matter of time before someone is injured at the store. Likewise, your company's activities may cause accidental damage to third party property. If you find yourself facing a personal injury or property damage claim, this form of insurance will help you cover your legal costs.
- Product Liability - This form of Michigan consignment store insurance coverage instead relates to the products you sell; if a consumer were to be injured or face property loss after contact with a commodity you sold, product liability insurance covers the expenses.
- Workers Compensation - When you carry workers comp insurance, you will never have to worry about unexpected expenses if an employee is injured in the workplace, as this coverage takes care of such employees' medical costs as well as any lost income arising from the injury.
you will likely require further types of Michigan consignment store insurance not covered here. For this reason, it is crucial to direct your questions to a commercial insurance agent familiar with your field.
MI Consignment Store's Risks & Exposures
Premises liability exposure is high due to the number of visitors to the store. To prevent slips and falls, there should be good lighting and adequate aisle space. All goods should be kept on easily reached shelves so customers do not pull items down on themselves.
The stock dropped on floors by customers must be retrieved promptly. Floor coverings must be in good condition with no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked.
Sufficient exits must be provided and be well marked, with backup lighting systems in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the business is open after dark, there should be adequate lighting and appropriate security for the area. There should be a disaster plan in place for unexpected emergencies.
Consignment contracts must specify the procedure for buying and selling, whether price negotiations are permitted, how proceeds will be distributed, and how unsold items will be handled. Clear marking to identify ownership of the consigned items is important as well as tracking payments.
Personal injury exposures include allegations of discrimination, invasion of privacy in dressing rooms, and from apprehending and detaining shoplifters, which may result in claims of assault and battery, false arrest or detention, unauthorized or intrusive searches, or wrongful ejection from the premises.
Shoplifting procedures must be fully understood and utilized by all employees.
Products liability exposure is generally low. If the shop consigns children's items, any flammability standards must be met and clearly indicated on the item. The shop should be sure there are no jagged edges on glassware or furniture, and attach labels warning of possible lead exposure to cloisonne jewelry, ceramics, pewter or silver-plated items, and painted toys.
Old baby cribs or bassinets that do not meet current standards pose dangers to infants or toddlers. The store owner may be unaware that an item held for sale is imported, and could be held liable as a product manufacturer.
Workers compensation exposure is moderate due to employees standing for long hours, the use of computers, and stocking which requires lifting and placing items on clothing rods or shelves for display. Continual standing can result in musculoskeletal disorders of the back, legs, or feet. Trips, slips, and falls are common.
When work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including carpal tunnel syndrome. Lifting can cause back injury, hernias, sprains, and strains. Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting.
Employees picking up items or delivering items to customers will encounter road exposures. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. In any retail business, hold-ups may occur so employees should be trained to respond in a prescribed manner.
Property exposure is moderate since ignition sources are limited to electrical wiring and heating and cooling systems. These should be maintained and meet current codes for the occupancy. Should a fire occur, the consigned items provide a combustible fire load that may be highly susceptible to water and smoke damage.
As the owner does not take possession of consigned items, the business personal property is generally limited to the racks and other items to display the property, new items for sale, and office equipment. The consignment agreement should clearly spell out who is responsible for insuring the consigned goods. If the shop owner assumes this responsibility, coverage can be on the property form as the personal property of others or can be written on an inland marine bailee customers form.
Individual items may be shoplifted. High-value items may be stolen in larger quantities after hours. Appropriate security measures should be in place including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department.
Valuation can be a problem if the shop owner is responsible for covering consigned items. Accurate records should be kept of the description and cost of each item consigned in order to verify the actual cash value of missing, damaged, or destroyed items after a loss.
Business interruption exposures are moderate. While backup facilities are readily available, replacement stock may be difficult to obtain quickly.
Crime exposures are from employee dishonesty and theft of money and securities either from holdup or safe burglary. Background checks should be conducted on all employees handling money. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.
Money should be regularly collected from cash drawers and moved away from the collection area, preferably to a safe on premises. Bank drops should be made throughout the day to prevent a buildup of cash on the premises.
Inland marine exposures are from accounts receivable if the store offers credit, computers to transact sales and monitor inventory, and valuable papers and records for consignees' information. Backup copies of all records, including computer files, should be made and stored off premises. Coverage for customers' goods may be written on a property form or a bailees customers form.
Business auto exposure is generally limited to hired and non-owned for employees running errands. If the store picks up items to be consigned or delivers sold items to customers, any driver must have a valid license and acceptable MVR. Vehicles must be regularly maintained with records kept.
Michigan Consignment Store Insurance - The Bottom Line
To discover the exact types of Michigan consignment store insurance policies you'll need, how much coverage you should carry and the cost, consult with a reputable broker that is experienced in commercial insurance.
Michigan Economic Data And Business Insurance Requirements
Business owners who are interested in establishing operations Michigan must have a thorough understanding of the state's economy. They should also familiarize themselves with any regulations and limits that state may have in place for commercial insurance.
Any entrepreneur who is thinking about starting a business in the Great Lake State first needs to determine if it's a feasible location for business operations. As such, it's important to have a keen understanding of pertinent details regarding the economy of Michigan, in addition to the types of insurance coverage that are mandatory for corporations that operate within the state.
Economic Trends for Businesses In Michigan
After a long period of stagnant job growth in the early part of the 21st century, MI has been experiencing a steady increase in employment gains. Between 2009 and 2018, the state has enjoyed a period of uninterrupted job growth; the longest stretch of job growth since World War II. According to economists at the University of Michigan. While there has been a slight decline in the rate of job growth, job creation continues and forecasters say will continue for the next two years, into 2021.
In 2018, an estimated 55,200 jobs were created; in 2019, it's expected that 35,800 jobs will be created, and in 2020, economists believe that there will be a total of 39,300 jobs created in Michigan. While that rate of growth is 1.9 percent slower than the job growth rate between 2011 and 2016, it is still a steady increase overall. In total, approximate 683,200 jobs will be created in MI between 2099 and 2020; almost four out of the five jobs that were lost during the early part of the 21st century will be recovered.
While the unemployment rate has steadily improved, it is still above the national average. In March of 2019, the national unemployment rate was 3.8 percent, while in the state of Michigan, it was 4.0 percent. Mid-Michigan has experienced the largest growth rate in the state, and according to forecasters, it looks like that trend will continue, moving forward. Industries that are expected to see the most growth include:
- Energy, due largely to research and development in clean energy
- Food and agriculture
- Transportation and mobility
- Healthcare industry
- Information and technology
In the state of MI, business owners are not legally required to carry liability insurance; but most entrepreneurs opt to invest in a General Liability or Business Owner's Policy (BOP). A commercial auto insurance policy is also required for any businesses that use motor vehicles to conduct any aspect of their business operations. Workers' compensation insurance is also required for any businesses with non-owner employees. While the following forms of coverage are not required, depending on the type of business you operate, they are recommended:
- Data breach insurance
- Business income insurance
- Commercial Umbrella insurance
Additional Resources Retail Insurance
Read valuable small business retail insurance policy information. In a retail business, you need to have the right type of commercial insurance coverage so that your store, employees, and inventory are protected.
- Adult Novelty
- Antique Dealers
- Appliance & Electronics Store
- Army Navy Surplus Stores
- Art Dealers
- Art Gallery
- Arts & Crafts Supply Stores
- Bicycle Shop
- Boat Dealers
- Book Store
- Bridal Shop
- Candy Confectionery Store
- Carpet Store
- Cell Phone Stores
- Clothing Store
- Collectibles Memorabilia Store
- Consignment Stores
- Convenience Store
- Cosmetics Store
- Costume Stores
- Dry Cleaning
- Embroidery Services
- Equipment Rental
- Fabric Stores
- Fish Markets
- Flea Markets
- Funeral Home
- Furniture Store
- Gift Store
- Greeting Card Stores
- Hardware Store
- Harness & Saddle Shops
- Home Improvement Store
- Infant, Baby & Children's Clothing Stores
- Jewelry Store
- Lamp Stores
- Lingerie Store
- Luggage Store
- Meat Market & Butcher Shop
- Men's Clothing Stores
- Music Store
- Office Supply Store
- Paint & Wallpaper Store
- Pawn Shop
- Pet Store
- Pharmacy Liability
- Plumbing Supplies Fixtures Store
- Poultry Dealers
- Rent To Own Stores
- Scrap Metal Dealers
- Sewing Store
- Shoe Store
- Sporting Goods Store
- Stationary Store
- Thrift Store
- Ticket Agency
- Tire Store
- Tobacco Store
- Toy Store
- Travel Agency
- Trophy Stores
- Tuxedo And Formal Wear Rental Store
- Vending Machine Operators
- Wig Store
- Women's Clothing Stores
Retail stores are susceptible to premises liability claims because of customer traffic, but large department and specialty stores are more susceptible than most.
All retail stores have significant property exposures. The on-hand stock represents a considerable investment, but the amount on hand fluctuates seasonally. For this reason, physical damage insurance on this property must be arranged carefully. When the insured occupies a non-owned building, insurance coverage must be arranged for the insured's interest in extensive improvements and betterments made to the premises.
Crime insurance, in the form of employee theft and money and securities coverage, is also very important.
The businessowners policy was designed with retail exposures and operations in mind. For this reason alone, it should always be the first type of package coverage to consider. However, for those risks not eligible for the business owners policy program, the commercial package policy (CPP) is a practical and convenient way to combine a number of coverages into one policy.
Retail businesses generate income through interaction with customers. This interaction is also how a customer can sustain an injury and then sue the retailer for damages. Hazards, exposures and operations both on premises and off are important and must be covered, but liability the retailer may incur because of the merchandise sold must also be considered and insurance protection arranged.
Inventory or stock is the major property exposure for most retail operations. Because stock values tend to fluctuate or have significant peaks at certain times of the year, value reporting or peak season valuation options should be considered. Business income coverage, including business income from dependent properties coverage, may mean the difference between a retail operation staying in business or being forced into bankruptcy following a loss.
When the insured occupies a non-owned building, insurance coverage must be arranged for the insured’s interest in extensive improvements and betterments made to the premises.
Most retail businesses offer endless opportunities for a variety of criminal activities. For this reason, the coverages needed must be carefully evaluated. Holdup and robbery losses may be the most obvious concerns but employee theft, fraud and counterfeit money losses are also serious issues that cannot be dismissed.
Retail businesses are gaining greater exposure to international issues because of the growth in sales via the internet. As these sales increase, the added exposures faced by these retailers must be evaluated. While their operating horizons are expanding so are their potential loss exposures.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Equipment Breakdown, Employee Dishonesty, Money and Securities, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Forgery, Bailees Customers, Goods in Transit, Jewelers Block, Cyber Liability, Employment-related Practices, Business Auto Liability and Physical Damage and Stop Gap Liability.
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