Many tobacco store owners have a challenging time getting business insurance, making them question whether they need it at all.
Unfortunately, theft and robbery at specialty retail stores are on the rise. There’s also been a surge in legal action for product defects like exploding vape pens — not to mention the general risks that come with selling high-risk items.
In other words, it might be time to consider tobacco store insurance for your business.
Business insurance can help put smoke shop owners’ minds at ease with the knowledge that a single incident won’t shut their doors. However, there are a staggering number of choices out there for tobacco shop insurance.
In this article, we’ll discuss the basics of business insurance and provide recommendations for a few top providers.
What Types of Coverage Do Tobacco Stores Need?
Most retailers carry general liability insurance. Do you need to add other types of coverage? It depends on your business needs.
- General liability: General liability is a must for most retail businesses and covers things like customer injuries, property damage, and advertising injuries.
- Theft protection: Many tobacco stores sell items with high profit margins, such as vape pens and cigars, and a total loss from the theft of high-value items can be devastating for a small business.
- Product liability: After a few high-profile incidents due to faulty products, many smoke shops are adding product liability to their insurance coverage to cover any harm caused by defective items. Depending on the policy, some general liability coverage might also include product liability.
- Commercial property: Commercial property insurance covers damage to your property and assets as a result of a fire, natural disaster, theft, or civil disturbance.
- Workers’ compensation: Almost every state requires workers’ comp if you have employees. It covers the medical costs resulting from workplace injuries.
- Cybersecurity coverage: As more businesses collect customer data and sell products online, owners face additional risks from data breaches and cyberattacks. Cybersecurity coverage helps cover the losses resulting from such attacks.
If you’re interested in getting more than general liability insurance, you should consider a Business Owner’s Policy (BOP). A BOP combines general liability and other types of coverage into a single policy, saving you money compared to buying separate policies for each.
Tobacco Store Insurance: Top 8 Providers
You’re ready to insure your tobacco store and wondering which provider is right for you. Unfortunately, there’s no one right answer.
Not all insurance companies are willing to cover tobacco and e-cigarette shops — and policies change all the time. Contact any prospective insurers to make sure they can address coverage needs in your area.
With that being said, here are our recommendations for providers (and a few agencies) to help get you started:
1. Farmers Insurance
Farmers Insurance is one of the biggest names in the industry. It offers comprehensive and customized insurance plans for retailers of all sizes. It also offers “cheat sheets” that give recommendations for the best types of coverage based on specific industries.
At the time of writing, Famers do not have restrictions on coverage for tobacco stores but are only available in 36 states.
Coverage
Farmers offer a variety of flexible plans that cover general liability, property, auto, cyber, workers’ compensation, crime, loss control, and more. Policies can’t be created online — but claims can be filed digitally — so you’ll need to go into a local office or give them a call to get started.
2. Nationwide
Nationwide is another well-established name in insurance and offers customized insurance plans to a wide variety of businesses. Like the other larger insurance companies on the list, it’s a reliable choice that also offers more up-to-date coverage for things like cyber liability if you sell products online.
Coverage
Nationwide offers insurance for general liability, commercial property, auto, workers’ comp, crime, cyber, income (to replace lost income when you’re forced to close temporarily), and more. They also offer a BOP to combine and personalize coverage to your needs.
H3: 3. Allstate
Allstate is the last of our big-name recommendations but can be a great option for smoke shop owners looking for more comprehensive coverage. Allstate is available in most states but notably does not offer standalone general liability policies.
Coverage
Allstate business insurance lets you customize a BOP to include general liability, data breach coverage, property, workers’ compensation, professional liability, business interruption coverage, and more.
4. Hiscox
Hiscox is an insurance provider that specifically caters to small businesses, including smoke shops. They offer tailored coverage for specific industry risks and flexible payment options to help small businesses maintain cash flow.
Coverage
Hiscox offers a wide variety of coverage options including general liability, professional liability, cyber, workers’ comp, short-term liability, and more. It also offers a BOP to bundle the various insurance types into a single policy.
5. Cigar Insurance USA
Cigar Insurance USA is a leading insurance provider for cigar and tobacconist shops in the U.S. While it’s a smaller organization than some of the big-name players on this list, it specializes in smoke shop operations.
Coverage
Cigar Insurance USA offers liability, property, auto, and workers’ comp policies. It also offers specialty coverage such as product liability, spoilage coverage, and specific insurance for cigar lounges.
6. Breckenridge Insurance
Breckenridge Insurance is a group that works with a network of insurance providers and brokers to tailor programs to specific business types. It offers a smoke and vape shop program, making it an easy choice for smoke shop owners who need help figuring out where to start.
Coverage
Breckenridge offers insurance to all types of smoke shops as long as they are under 7,500 square feet and have gross receipts of less than $5 million per location. Its package includes coverage for general liability, property, loss of income, and personal and advertising injury. Breckenridge also offers product liability in several states.
7. CCS Insurance
CCS Insurance is another company that helps business owners find the right insurance by offering multiple quotes. Their agents have experience working with cigar and tobacco stores, meaning you won’t have to wade through quotes from other insurance companies just to figure out that they don’t cover tobacco stores.
Coverage
CCS does not directly provide coverage, as it works through other insurance companies. However, it recommends general liability, fire liability, product liability, building insurance, and contents insurance for tobacco stores.
8. Insureon
Insureon is an independent and online agency that provides insurance for small businesses. It’s licensed to work in all 50 states and with leading insurance companies (including some that are on this list) to craft a plan that fits your business. It also specifically covers smoke and vape shops, so will know which policies to look for in your state.
Coverage
Insureon offers insurance for general liability, workers’ comp, customer property damage, product liability, advertising injury, and more. They only offer a BOP for businesses in low-risk industries, however, giving you less chance to bundle and save on policies.
Note: Choosing the right business insurance is just one of the major decisions you’ll face when running a successful tobacco shop. Like all big choices, we recommend taking your time. Make sure you’re not pressured into coverage you don’t need, or neglect coverage that could be vital.
In other words, what’s right for your business might not be right for others. So do your research and follow your gut.
Improving Processes and Reducing Shrinkage Risk With a Smoke Shop POS System
Carrying business insurance can help insulate your tobacco store from financial risk — but it’s not your only way to reduce risk.
Leveraging the right technology can help maintain compliance and protect your business against loss and shrinkage. A tobacco store point of sale (POS) system includes features like:
- Real-time inventory tracking: Gain full visibility of your inventory in real time to help you spot sources of shrinkage and avoid spoilage.
- Employee management: See which transactions each employee processes and limit access to certain systems. This helps minimize your risk of employee theft or abuse.
- Age verification: Ensure your store stays in legal compliance with I.D. scanning and other modern age verification techniques.
While insurance is great to have when something goes wrong, utilizing your POS system can help proactively prevent risk.
Cigars POS is specifically built to help protect tobacco store owners while improving the customer experience. Schedule a free demo today to learn how Cigars POS can help reduce your risk.
