What is Smoke Shop Insurance?

Every business owner must consider insurance to protect their company and themselves. At a minimum, most states require worker's compensation insurance if you have employees. Smoke shops are not exempt from this and may require additional insurance because of unique liabilities. Smoke shop insurance protects retailers from liability resulting from lawsuits, medical bills and more. Read on to understand what types of insurance you might need for your smoke shop.

Understanding Smoke Shop Insurance

Smoke shop insurance protects your shop. With each customer at your smoke shop, there's a risk of injury or theft. Much of smoke shop insurance is similar to other types of business insurance. It can cover everything from unexpected slip-and-fall injuries to product lawsuits, fire damage and theft. 

Most states require workers' comp by law, but additional insurance for smoke shops, from commercial liability insurance to a business owner's policy, can help ensure you're covered, whatever comes your way. Various insurance options include cyber insurance, crime insurance and employment practice insurance. 

You may be able to find a specialized type of commercial insurance designed specifically for businesses that sell tobacco products, smoking accessories and other related items, called smoke shop insurance. This insurance typically includes a combination of general liability, product liability, property and theft insurance. 

More commonly, you can build customized general business insurance for your smoke shop based on specific needs. Ten types of insurance you may need for your smoke shop business are discussed below. 

Why Do Smoke Shops Need Insurance?

The advantages and benefits of getting smoke shop insurance are wide-ranging. You might get smoke shop insurance to:

• Protect your assets
• Protect your business from liability
• Help ensure your asset value is retained even in case of a natural disaster
• Give you peace of mind 

What Types of Coverage Do Smoke Shops Need?

The types of coverage a smoke shop needs are unique, although most smoke shops will require a combination of standard business insurance coverage. Here are the options to consider.  

Commercial General Liability Insurance 

Commercial general liability (CGL) insurance protects a business's products and property liabilities. It is a general policy that covers a business for bodily injury, personal injury and property damage. 

General liability insurance covers damage caused by the business’s operations, products or injuries that happen on the business’s premises. This includes product and property liabilities. A general liability policy covers most common smoke shop risks, like a customer with an injury at your store.

Business Owner’s Policy 

A business owner's policy, commonly abbreviated BOP, bundles commercial property coverage and general liability insurance into a single plan. BOP plans are designed for small to medium-sized businesses. 

BOP provides comprehensive protection against common risks, such as lawsuits, property damage, slip-and-fall injuries and income loss resulting from unforeseen events like natural disasters. It is often the most cost-effective type of commercial insurance for a small smoke shop.

Product Liability 

Product liability insurance is especially important for smoke shops because most products sold in a smoke shop can harm customers' long-term health. It covers your business's cost of compensating anyone injured by a faulty product that your business sells, manufactures or designs.

Workers’ Compensation Insurance

Workers' compensation insurance provides cash benefits or medical care for workers injured or who become ill as a result of their job. Texas is the only state that doesn't mandate businesses to purchase workers' compensation insurance. 

Employment Practice Liability Insurance (EPLI)

EPLI protects your business against claims from employees. Unlike worker's compensation, which covers injury or illness, EPLI covers employment practices like hiring, new employee training, employee performance reviews and other employee practices. EPLI protects against many kinds of employee lawsuits, such as claims of:

• Discrimination
• Wrongful termination
• Negligent evaluation
• Failure to employ or promote
• Sexual harassment
• Breach of employment contract
• Wrongful discipline
• Deprivation of career opportunity
• Wrongful infliction of emotional distress
• Mismanagement of employee benefit plans

Commercial Auto or Transit Insurance

Commercial auto or transit insurance is a type of coverage that offers similar protections to private auto insurance but usually with higher limits. You will need commercial auto insurance if you have vehicles used to transport goods or equipment as part of your smoke shop business.

Business Income Protection 

Business income protection coverage can help protect your business in case of certain unexpected profit losses. For example, if damage to your shop forces you to close the business, business income protection can cover the profits that would be earned during that time. Business income protection will cover the normal continuing operating expenses, such as electrical costs and other utilities, while the business is forced to remain closed.

Cyber Insurance 

Cyber insurance is specialized insurance becoming increasingly popular for businesses with increased cyber threats. If your smoke shop operates primarily online, this specialty insurance product can be essential. Cyber insurance is intended to protect businesses from internet-based threats and risks relating to information technology infrastructure and activities.

Crime Insurance

Crime insurance is another specialty insurance that can protect your smoke shop from loss of money, securities, inventory or other property resulting from fraud events. While similar to general liability insurance or cyber crime insurance, it covers the direct loss from dishonest or fraudulent acts committed by third parties or your employees.

Commercial Umbrella Insurance 

Commercial umbrella insurance is like an additional safety net. It covers costs that go beyond the liability protection of other types of insurance. Commercial umbrella insurance is not primary coverage. Instead, it complements your other liability coverage. It will take over (up to plan limits) when your other liability coverage limits have been reached.

How Much Does Smoke Insurance Shop Cost? 

How much smoke insurance shop costs varies by the type of coverage and the amount of coverage. You might face additional fees if you have additional risk factors, such as living in an area with increased risk for natural disasters such as hurricanes or earthquakes. It also depends on how many coverage options you choose. 

According to the National Academy of Social Insurance, the average cost of workers' compensation insurance is around $1.19 per $100 of payroll. That means, for example, a company paying $100,000 on payroll would pay $119 for workers' compensation insurance. 

General liability insurance for small businesses costs an average of $42 per month or about $500 annually. According to reports from Insurgeon, 29% of business clients pay less than $30, and 41% pay between $30 and $60 per month. For BOP policies, small businesses pay an average of $57 per month or about $684 annually. 

Of course, those figures vary widely by the size of the business and individual coverage criteria. Smoke shop insurance shouldn't cost hundreds of dollars monthly for most small to medium-sized businesses. However, shopping around and comparing rates is essential to find the best coverage and prices for your smoke shop. 

How to Get Smoke Shop Insurance?

The step-by-step process of getting smoke shop insurance is similar to other insurance applications. If you already have business insurance, you can contact your insurer to inquire about additional insurance needs. If you're starting now, here are the steps to get smoke shop insurance:

• Coverage: Decide on the type of coverage you need.
• Rates: Compare rates and coverage to select the best available plans
• Choose an agent: Apply with one or more insurers or choose an insurance agent to work with.
• Supply requested paperwork: This may include details on the business registration, the number of employees, estimated business revenue, contact information, the work your business does and its risks, the business’s location, information about your business premises and documentation showing how long you’ve owned your business.
• Compare offers: Double-check offers, coverage amount, exclusions and total costs before deciding on the best plan.
• Choose an offer and sign: The final step is to sign the paperwork and make the first payment.

With that, you can relax knowing your business is covered and that, in case the unexpected happens, your profits are secure. 

Find the Best Smoke Shop Insurance from Benzinga's Top Providers 

Benzinga's top providers offer excellent insurance options. They can guide you through the application process to protect your company and assets. 

Do You Need Smoke Shop Insurance?

The short answer is yes, you need smoke shop insurance. Whether you get a business owner's policy for overall coverage or only opt for worker's compensation insurance is up to you. Many additional insurance options, from cyber or crime insurance to commercial umbrella insurance, can protect your assets and prove valuable, depending on your business location and type of operations. Getting an excellent insurance policy for your smoke shop doesn't have to be expensive. To get started, check out the best business insurance, hazard insurance or cannabis insurance. 

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