Pop-up stores are becoming a go-to tool for the retail industry to “navigate the unknown,” according to Storefront’s “Retail Trends & the Rise of Pop-Up Stores in 2019” report. These short-term set-ups allow companies to experiment with products, as well as locations, tenant-mixes, and commercial agreements. However, just because pop-up shops are not full-blown brick and mortar locations that doesn’t mean they don’t have a wide range of insurance needs.
First of all, a brand needs to pinpoint their business operations and corporate culture – whether it’s risk-averse or risk-tolerant – so that they can start working with a broker on the method of risk transfer.
“When you look at your venue contracts, you have to consider the insurance requirements and often some things that get overlooked are licences and permits where the pop-ups are going to be taking place,” said Hollie Miller, senior account manager at NFP. “After that, you’re looking at your vendor contracts and what type of insurance is required – you need to get certificates of insurance from those vendors that you’re hiring.”
One coverage that brands will want to consider for their pop-ups is a special event liability policy, which can be customized to a specific event.
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“In a special event liability policy, there are multiple components – general liability, hired and non-owned auto liability if it’s needed, [and] liquor liability for your event. Do you need to insure business personal property or property of others that you have leased? Then you would need to look to inland marine coverage,” explained Miller. “In general, that liability policy is providing protection for third-party bodily injury and property damage arising out of that.
“If your event is outdoors and weather comes into play, you would also want to look into cancellation insurance or weather insurance to protect your revenue and expenses from a sudden, unforeseen event that causes your event to be cancelled, curtailed, or postponed due to circumstances beyond the brand’s control.”
If an event involves children, a brand putting on a pop-up might also want to think about purchasing abuse and molestation coverage.
“You can get optional sub-limits added to a quote for special event liability so it can actually be a package policy,” added Miller.
A brand’s own insurance requirements is not the only component they should be concerned with -reading vendors’ and subcontractors’ contracts is also important to understand indemnification.
“The brand should require that all vendors – that’s including exhibitors if they have them and subcontractors if they’re building temporary structures for them – carry their own insurance and name the brand as additional insured for the duration of the event, from set-up to teardown,” Miller told Insurance Business.
The other key takeaway is that pop-ups should have a contingency plan in place to address potential safety-related situations. For example, if a pop-up event involves serving alcohol, additional security might be required. A well-rounded approach to risk management and a tailored insurance purchase will together help pop-ups sidestep major risks.
“Insurance is going to protect the organization,” said Miller. “In the event of a lawsuit or something unfortunate happening, insurance will act as that risk transfer – transferring that risk in the event of a claim or loss to the insurance carrier policy, instead of having to pay out of pocket.”
