Pawn Shop Insurance

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Pawn Shop Insurance Policy Information

Pawn Shop Insurance

Pawn Shop Insurance. Being the owner and operator of a pawn shop can be an exciting endeavor. You have the opportunity to work with a diverse clientele, sell unique items, and even provide your customers with the extra cash they may need to get them out of a financial bind.

Pawn shops offer secured loans to clients, accepting items of value, such as cameras, collectibles, coins, electronics, jewelry, musical instruments, power tools, sporting goods, or watches, as collateral. A receipt or ticket is given to the client for the item being used as collateral.

The pawn shop retains the customer's item until the loan is repaid. If the loan is not repaid within a specified period of time, the item is sold, and the pawn shop retains the proceeds. The loan agreement must spell out who is responsible for insuring the items held as collateral.

Pawn shops may purchase items directly from clients for resale, or trade existing inventory for other items. Many are licensed to receive and resell firearms and ammunition. Procedures must be in place to verify the identity of the client and the ownership of items purchased or used as collateral as thieves may attempt to use the pawn shop to fence stolen goods.

Some pawn shops may repair or recondition items for sale. Pawn shops must be licensed at a state and/or local level. The licensing requirements enable law enforcement agencies to review the items held to make sure the shop is operating in a legal manner.

Regardless of how exciting your business may be, there are risks associated with owning and operating a pawn shop. If something does go wrong, you are liable. In order to protect yourself from the possible financial repercussions that could be associated with problems that may arise, you need to make sure you have the right pawn shop insurance.

What kind of commercial insurance do pawn shop owners need? Read on to find out how to properly protect your business, yourself, and the people you serve.

Pawn shop insurance protects your store from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked pawn shop insurance questions:


How Much Does Pawn Shop Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small pawn shops ranges from $37 to $59 per month based on location, revenue, claims, experience and more.

Why Do Pawn Shops Need Insurance?

Pawn Shop

Pawn shop owners and operators are exposed to many of the same risks that business owners in all industries face; a customer could be injured while visiting your shop or your pawn shop could be damaged in a fire, for example. You also face risks that are unique to your specific industry.

For instance, someone could file a lawsuit against you claiming that you sold them a defective product or that the amount of money you offered for an item you bought was significantly lower than the actual value of the item.

If something does go wrong, as the owner and operator of your pawn shop, you are legally liable for all of the associated expenses. Imagine how much money you could potentially end up having to pay out if a client were to file a lawsuit against you or your shop were to be damaged in a storm?

To protect yourself from serious monetary losses, investing in the right type of pawn shop insurance coverage is vital. If you're insured, instead of having to pay the expenses out of your own pocket, your carrier will cover them for you.

Furthermore, insurance is compulsory for pawn shops; if you aren't properly insured, you could be looking at serious fines and may even lose your business.

What Type Of Insurance Do Pawn Shops Need?

The specific kinds of pawn shop insurance coverage that you'll need depend on several factors; where you're operation is located, the size of your shop, and the specific products you handle, for example.

However, regardless of the specifics of your business, there are certain types of coverages that all pawn shop owners should invest in. Examples include:

  • General Liability - This policy covers any third-party accident or injury claims that may be filed against you. Should a customer trip on something while browsing your inventory, hit their head, suffer a concussion, and file a lawsuit against you for the medical care they require, as well as damages for pain and suffering. Premises liability insurance would help to cover the costs that are associated with this type of situation.
  • Product Liability - If a product you sell injures or sickens a customer, they may be liable for their medical care and any other related damages. Product liability insurance will help to pay for your legal defense fees, as well as any expenses and compensation that you a court may find you responsible for.
  • Completed Operations - Part of a general liability policy, if you offer temporary loans to your clients - you hold their valuables in exchange for providing them with a monetary loan until they can repay it or sell their items if they fail to repay the loan within a specified timeframe - and the clients file a claim stating that you sold their property before the agreed upon timeframe was over, completed operations insurance would help to pay for the related expenses.
  • Workers' Compensation -If you employ a staff, you'll also need to carry workers' compensation insurance. In the event that an employee is injured on the job, workers' comp would pay for any medical care that they may need. It would also compensate them for any lost wages if they are unable to work as a result of said injury.
  • Commercial Property - This policy protects the physical structure of your pawn shop and the items it contains from acts of nature, theft, and vandalism. If someone breaks into your pawn shop and steals merchandise, this policy would help to pay for the necessary repairs, as well as compensate you for the stolen merchandise.

These are just a few examples of the pawn shop insurance coverage available.

Pawn Shop's Risks & Exposures

Pawn Shop Sign

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. Enough 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.

Personal injury exposures include allegations of discrimination, invasion of privacy should confidential financial information be revealed to others, and from apprehending and detaining shoplifters and handling of unruly customers, which may result in claims of assault and battery, false arrest or detention, unauthorized or intrusive searches, or wrongful ejection from the premises. All employees must be trained in dealing with these issues appropriately.

Products liability exposure depends upon the type of product, its age, condition, and use. The dealer should attach labels warning of possible lead exposure to cloisonne jewelry, ceramics, or pewter or silver-plated items. If the pawn shop repairs or reconditions items, the exposure increases.

Workers compensation exposures are moderate due to employees standing for long hours, the use of computers, and stocking which requires lifting and placing items on floors 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. Shelves should be easily accessible for storage. Stepladders should be available.

Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals.

Due to the cash-oriented nature of the business and the value of items handled, all employees should be trained to deal appropriately with hold-ups and unruly customers. Security may be required to protect employees.

Property exposure is moderate as ignition sources are limited to electrical wiring and heating and cooling systems. These should be maintained and meet current codes for the occupancy. Malfunctioning wiring on used electrical equipment may short or spark when tested by customers. Should a fire occur, substantial fire and water damage may result to stock.

Goods held as collateral should be kept separated from goods held for sale. Ammunition should be stored away from combustibles. Theft and crime can be very high as many of the items are small but expensive, such as coins, jewelry, or watches. Smaller items should be kept in locked showcases inaccessible to customers to prevent shoplifting. 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. If there is more than $2,500 in jewels, a jewelers block policy should be purchased due to most property policy theft limitations.

Valuation can be a problem due to the age and rarity of some items held as collateral. The shop should keep accurate records of the description and cost of each item 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 will be difficult to obtain quickly.

Crime exposures are from employee dishonesty and loss 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.

Pawn shops conduct much of their business in cash. 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, bailees customers for pawned items, computers to transact sales and monitor inventory, jewelers block if there is more than $2,500 in jewels, and valuable papers and records for vendors' and customers' information.

Backup copies of all records, including computer files, should be made and stored off premises. Fine arts coverage should be considered if the store stocks particularly valuable items. If the shop picks up or delivers items, there will be goods in transit.

Commercial auto exposure is generally limited to hired or non-owned liability for employees running errands. If the shop picks up or delivers items, all drivers must have a valid license and acceptable MVR. Vehicles should have regular maintenance with records kept.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 5932 Used Merchandise Stores
  • NAICS CODE: 522298 All Other Nondepository Credit Intermediations
  • Suggested ISO General Liability Code(s): 18437
  • Suggested Workers Compensation Code(s): 8017

Description for 5932: Used Merchandise Stores

Division G: Retail Trade | Major Group 59: Miscellaneous Retail | Industry Group 593: Used Merchandise Stores

5932 Used Merchandise Stores: This industry includes stores primarily engaged in the retail sale of used merchandise, antiques, and secondhand goods, such as clothing and shoes; furniture; books and rare manuscripts; musical instruments; office furniture; phonographs and phonograph records; and store fixtures and equipment. This industry also includes pawnshops.

  • Antique stores-retail
  • Book stores, secondhand-retail
  • Building materials, used-retail
  • Clothing stores, secondhand-retail
  • Furniture stores, secondhand-retail
  • Furniture, antique-retail
  • Glassware, antique-retail
  • Home furnishing stores, secondhand-retail
  • Home furnishings, antique-retail
  • Manuscripts, rare-retail
  • Musical instrument stores, second-hand-retail
  • Objects of art, antique-retail
  • Pawnshops
  • Phonograph and phonograph record stores, secondhand-retail
  • Shoe stores, secondhand-retail

Pawn Shop Insurance - The Bottom Line

For more information on pawn shop insurance, speak with an experienced broker who specializes in commercial insurance and understands the unique risks that pawn shops face.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

Additional Resources For 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.


Retail Insurance

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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