Description of operations: Convenience stores sell perishable staples such as milk and bread and immediate need products such as aspirin or tobacco to customers who are in a hurry and want to avoid the inconvenience of larger retail stores. Convenience stores generally also stock newspapers, snacks, nonprescription drugs, novelty items, and some canned, frozen or packaged foods. Many offer deli-type foods, such as sandwiches, pizza, and beverages to go. Most have extended hours, with many open on a 24-7 basis.

Other services may include gasoline, diesel fuel, kerosene, car washes, fuel oils, and, where legally permitted, beer and wine. In states where allowed, lottery tickets are high sales items.

Common Insurance Terms

Property exposure is from electrical wiring, equipment and refrigeration units. The wiring must be current and up to code. If there is cooking on premises, the cooking and heating equipment may overload. Refrigeration equipment may overheat, or ammonia may explode. All equipment, especially refrigeration units, should be well maintained and in good condition. Smoking can be a serious problem and should be prohibited on premises. If there are gasoline sales, there is the additional exposure to the fumes and potential for explosion. Spoilage exposure is very high. A small fire or power outage of even moderate duration can render all fresh and frozen goods to be condemned as unfit for consumption or sale. Alarms and warning devices should be in place to alert the operation when there is a loss of power. Backup power, such as a generator, should be available. Theft is a concern. Appropriate security measures should be in place, such as keeping more expensive items behind the counter and inaccessible to customers and having security mirrors prominently displayed throughout the store. Premises alarms should report to a central stations or police department after hours.

Equipment breakdown exposures are high as operations are dependent on refrigeration equipment, cooking equipment, and fuel pumps if fuel is sold.

Crime exposure is extreme for both employee dishonesty and theft of money and securities. The 24-hour or even late night/early morning hours, extensive number of cash transactions, plus attractive locations close to major thoroughfares and interstates, make convenience stores a target for holdup. A bulletproof cashier’s cage may be necessary in high-crime areas. Employee dishonesty is controlled through background screening of employees, inventory monitoring, control of the cash register, and disciplined controls. All ordering, billing and disbursements must be handled as separate duties. To prevent theft of money and securities, money should be regularly stripped from the cash drawers and places in a safe away from the front door. Irregular drops should be made to the bank during the day if there is substantial accumulation of cash on the premises.

Inland marine exposures include accounts receivables from customers who are allowed to buy on credit, computers for cash registers and tracking inventory, signs, and valuable papers and records for employee and suppliers information.

Premises liability exposure is very high due to public access to the premises and the type of operation. Trips, slips, and falls are major concerns, especially during inclement weather when customers track snow, mud, and water into the facility. Housekeeping should be excellent and spills must be cleaned up 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.

There should be well marked sufficient exits 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 slip and falls. Customers can be injured or killed during a robbery. Security of visitors in parking areas is rapidly becoming the responsibility of the owner or operator of the premises. Outdoor security and lighting must be consistent with the area.

Products liability exposure results from food poisoning, contamination and allergic reactions. Monitoring the quality of food received, posting lists of ingredients, and maintaining proper storage temperature can reduce this exposure. Accurate records must be kept of products and batches to monitor for recalls. There should be controls in place to prevent all types of contamination from chemicals such as insecticides and pesticides used for pest control. Stock should be regularly rotated so older stock is sold first. Out of date stock must be removed on a regular basis and discarded.

Liquor liability exposures are mostly from selling liquor to underage individuals and those already intoxicated. Any failure to comply with state and federal regulations can result in the loss of a liquor permit. There must be a set procedure to check ages of anyone attempting to purchase alcohol. Employees must be trained to recognize signs of intoxication. Consumption of alcoholic beverages on premises should be prohibited.

Automobile exposure generally is limited to hired or nonownership liability exposures from employees running errands.

Workers compensation exposures are high due to lifting that can cause back injury, hernias, sprain, and strains. Floors may become slick, resulting in slips and falls. Employees should be provided with safety equipment, trained on proper handling techniques, and have conveying devices available to assist with heavy lifting. Injury or death during holdup is a major cause of loss. Employees should be trained to respond in a prescribed manner. Other workers compensation concerns may result from unskilled labor, high turnover, and language problems. Workers must also be able to deal with unruly customers who are refused the purchase they desire.

Refrigerant leaks can be a potential cause of injury. The injury potential is determined by the type of refrigerant used and the reason for the leak.

Minimum recommended coverage:

Business Personal Property, Spoilage, Business Income and Extra Expense, Equipment Breakdown, Employee Dishonesty, Money and Securities, Computers, Signs, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonownership Auto, Workers Compensation

Other coverages to consider:

Building, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Forgery, Accounts Receivable, Cyberliability, Employment-related Practices, Environmental Impairment, Liquor Liability, Business Auto Liability and Physical Damage, Stop Gap Liability

Reprinted with permission from the Rough Note’s Company copyrighted content.