Manufacturing, Wholesale & Retail

Commercial liability packages (sometimes referred to as CPP's or BOP's) provide balance sheet protection in the form of financial reimbursement and liability protection in the form of coverage for defense costs and damages resulting from:

• Claims asserting bodily injury and/or property damage
• Product liability claims (unless excluded)
• Advertising Injury such as libel, slander and infringement related claims 
• Theft and property damage losses for inventory, business property, machinery, etc
• Loss of business income
• Equipment breakdown
• Key Broadening endorsements (Transit coverage, basic cyber, employee dishonesty, ERISA, basic EPLI, and more)

Due to the fact that endorsements can either broaden and extend coverage or limit/exclude coverage, policies should be carefully reviewed. Seemingly small endorsements such as “selling price” endorsements and business income coverage for dependent properties (such as suppliers, retailers and leaders) can provide substantial coverage enhancements. Due to the advertising risks faced by this sector, it is also often wise to seek coverage through a carrier that has a strong reputation for advertising coverage.

Depending on the type of retailer or products being sold, some businesses may find that locating a “standard” or “admitted” carrier is a challenge, or that product liability has been carved out due to the increased potential for litigation resulting from a product failure. Partnering with a broker that understands how to navigate the market can be helpful. While product liability policies are fairly standardized, there are still important coverage terms to consider, such as: occurence reporting vs claims made forms (and the implications of each), inclusion of coverage for completed operations and availability of extended reporting periods or discontinued operations. Coverage for claims related to product recalls or asserting financial damages resulting from a delay or failure to deliver product(s) require separate coverage under manufacturers’ errors and omissions and product recall coverage. Coverage should be evaluated carefully as policies may be written on an occurrence or claims made trigger which both react very differently.

Workers Compensation insurance is a mandatory coverage for companies with employees (including volunteers, uninsured independent contractors, leased or part time labor). It provides coverage for employees’ wages and medical payments resulting from injuries sustained while “on the job”. Coverages to consider include “broad form all states” coverage and foreign workers compensation coverage (especially important for employees traveling abroad for business). Additional employee related coverages that should be considered include: 

• EPLI/Employment liability (protection for the hiring/firing of employees and discrimination/harassment related claims)
• Employee benefits
• ERISA/Fiduciary coverage (for the administration of employee benefits)
• Long term disability
• Kidnap & Ransom (for employees traveling abroad for business)

Retail growth requires significant financing. Whether utilizing debt or equity or growing through careful acquisitions, that growth carries risk. Creditors and investors can claim financial damages resulting from misrepresentations, omitting critical information or asserting fraud. In addition to the risks associated with financing, claims can also be brought by competitors, regulators, customers and employees. The EPLI portion of a D&O policy provides protection against:

• Failure to hire
• Wrongful termination and lawsuits following downsizing
• Breach of employment contracts
• Retaliation claims
• Sexual harassment
• Wage and hour and overtime related claims 
• Violations of ADA (American’s with disabilities act) 
• Customers asserting discrimination or harassment

Directors & Officers insurance provides:

• Direct Protection for individual directors and officers
• Balance sheet protection in the form of reimbursement to the entity itself for indemnifiable claims
• Protection for claims asserted against the entity itself

The cyber threats affecting retailers today arise mainly from:

• Breaches affecting POS terminals exposing credit card information
• PCI fines related to improper printing of credit card digits
• Emerging liabilities imposed by new EMV chip technology which shifts the responsibility of credit card fraud onto the retailer
• Media liability related to website publishing and online advertisements 
• Viruses, malware and ransomware that cause websites to "crash", resulting in lost income

Cyber crimes are becoming increasing sophisticated, bypassing firewalls and exploiting internal and external vulnerabilities such as weak security controls, weak passwords and "holes" from outside vendors. Cyber insurance provides protection for retailers by providing coverage for:

• Damages resulting from a breach, intrusion or security event
• Lost Income
• Network restoration costs
• Fines and penalties
• Notification and credit monitoring costs
• Extortion demands
• And more

The threat of crime and “internal theft” differs from industry to industry. Financial institutions for example, face more severe threats from complex fraud and dishonest executives which have the potential to create a very large single loss. While retail companies may also encounter similar threats, they also face more frequent smaller scale threats such as warehouse and inventory theft to theft of cash from registers. While strong internal controls are the best defense, crime insurance serves as an important last line of defense, to protect your company’s balance sheet against larger losses. For retailers that also perform installation and work on clients’ premises, “theft of clients property” should also be considered. 

Ocean Cargo and inland transit insurance is a critical component for product businesses, providing protection for damage to products, goods and inventory during foreign transit overseas (via vessel or aircraft) and/or domestic transit in the US (via air, rail, truck, mail or common carrier). Damage can result from theft, physical losses (such as fire or water damage), spoilage, jettison, concealed damage, and more. Cargo policies also provide protection for products and inventory while in storage at the warehouse.

For companies considering securing coverage through their freight forwarder, there are numerous advantages to self controlled insurance policies such as:

• Generally broader coverage
• True "warehouse to warehouse" protection - eliminating any potential coverage gaps in between
• Insurance is not "pooled", meaning rates and premiums are not affected by other shippers in your "pool"
• Immediate certificate issuing minimizing potential shipping delays

Most retailers have minimal professional liability exposure. The only retailers that have an inherent need for errors & omissions insurance are:

• Manufacturers E&O: For retailers that also manufacture their own products
• Franchisors E&O: For franchised companies seeking protection against claims from their franchisee’s asserting financial damages 
• Miscellaneous E&O: For retailers that also provide professional services and employ professionals, such as pharmacists, beauticians, consultants, etc.