A couple years ago, I had an epiphany. While I was talking to a friend who owned a bike shop about insurance (I know, I know, but I do it for a living, so bear with me), I realized there wasn’t an insurance product available that provided him with the protection he really needed. He, like most bicycle retailers, just bought a standard Business Owners Policy (BOP). While there’s nothing wrong with these, they just aren’t cut out for a bicycle shop.
Traditional Business Owners Policies are cookie cutter contracts used to insure a variety of retail type businesses. In essence, if you buy a BOP for your bike shop, you get the same policy (and same protections) as an arts and crafts retailer would purchase. As you know, a retail bicycle business is drastically different from one selling yarn and popsicle sticks. So are the risks. So why should the insurance policy be the same? It shouldn’t.
I saw a way for me to combine my passion with my career. I would build a better mousetrap, and develop an insurance program that provides realistic and equitable protection for the risks shop owners really face. I created an advisory team to help craft the insurance program and coverage specs. The team consisted of a few key bicycle retailers and a few insurance gurus. At the end of the process, we had a coverage template (or wish list).
Some of the coverages that we thought were needed and missing were:
- Coverage for Shop-Sponsored Rides: Most insurance carriers were unaware of this coverage and many excluded it. There is huge exposure for shop owners to host events, which is a common business development tool.
- Coverage for Bicycle Rentals: Some carriers covered rental, but most are not comfortable with the exposure and would exclude it.
- Coverage for Voluntary Property Departure/Fraud: What the heck is that? This is insurance lingo for a situation where a "customer" gives the shop employee a fake ID and/or fake credit card to test ride a bike and, believe it or not, doesn’t return the bicycle. Carriers do NOT consider this theft because you gave them the bike and it isn't covered under standard insurance. You’ve likely even experienced this yourself because it happens a LOT. Without this extra coverage, you won’t have coverage.
Thanks to the relationships we have with insurance carriers, we were able to basically build a bike shop insurance policy from the ground up that included the good things common in BOPs, but also included additional protection for those risks, listed above, shop owners actually face.
Obviously, we still have underwriting guidelines to work with, but they are realistic and equitable. We’ve even negotiated to allow coverage for shops that do limited frame building and limited guiding. These are activities that, under standard insurance, can leave you open to tremendous liability if something bad happens.
Before you renew your insurance, be sure you’re getting the protection that covers the activities that actually expose you to risk. Ask your agent about these specific coverage lines to find out if you’d be protected.
The cookie cutter BOP policies are great for cookie cutter retail shops. You’re not one of those. There’s no need to expose yourself, your employees and your business to additional risk.