Large chains like Target, Starbucks and Apple use their deep pockets to buy sophisticated policies that cover the entire chain for losses stretching into the millions of dollars, according to Janet Ruiz, director of strategic communication at the Insurance Information Institute.
But for smaller businesses, the amount of coverage can vary widely in terms of deductibles and dollar limits, depending on the type of business, the value of the inventory and the depth of an owner's pockets. Since not all landlords require businesses to insure their inventory and equipment against loss, some local owners will end up having to cover all of the losses and repair costs on their own.
For those who are insured, a general cost estimate is about $1,200 a year for a small business with up to 100 employees and $5 million revenue, Ruiz said, adding that "it depends on how much they are willing to spend if they have a loss."
Restaurants, whose kitchens pose fire risks, may have to pay for insurance covering their equipment at a higher rate than retail stores where customers peruse racks of clothes.
The losses suffered by business due to the pandemic are excluded from typical business policies, though some carriers started offering them following the SARS pandemic in 2003, she said.
"There were companies that crafted them, and they didn't sell," Ruiz said of such policies. "It's expensive."
Fraser Ross, owner of the Kitson chain of clothing and gift boutiques on Robertson Boulevard in West Hollywood, recorded video from across the street as people moved on from burglarizing the MedMen store nearby, smashed the windows of his outlet store and started hauling out clothes, accessories and what cash was in the register. He estimates that $300,000 of merchandise was stolen but believes all of it will be covered by his insurance, though he still needs to check with his lawyer.
"In 2002 we were robbed at gunpoint for $35,000 in watches," Ross said. "Everything was covered."
After the citywide coronavirus lockdown forced Ross to close his doors in late March, he said, the only expenses he kept paying were for his Shopify online store, basic utilities and his insurance policy. He fears some of his neighbors in the shopping district might have canceled their insurance policies during the lockdown.
In normal circumstances, Ross says, he would not be on the hook for replacing the windows -- many insurance companies offer plate glass coverage as a rider on their policies. But since he was technically between leases with his landlord, Ross is likely going to have to pay for repairs.