Finding an insurer who understands the mobile boutique business and can provide affordable coverage can be a challenge. To date, there is no single insurance policy that covers all the needs of a mobile retail setup. However, lots of mobile boutique owners have successfully insured their vehicles and businesses, so while you should be prepared for a bit of research and calling around, you should never feel like getting the right type of insurance for your truck is impossible.
When it comes to insuring your mobile boutique, remember that you're not just insuring a vehicle. You need to provide coverage for:
- Your vehicle, including your vehicle + trailer if you're towing a mobile retail unit
- The truck's contents — i.e. your inventory
- Commercial liability, which covers you in the event of an accident involving a shopper
To get some accurate information about how insurance coverage for fashion trucks and mobile boutiques works, we talked to Robert Ledesma from Berkeley Insurance & Financial Services, an Albany, California-based firm that's provided coverage for several Bay Area mobile boutiques, and Melissa Thum, from Thum Insurance Agency in Grand Rapids, Michigan, another insurance broker who has provided coverage for mobile businesses.
With his expert guidance, let's take a look at these three types of coverage in detail.
First and foremost, your vehicle should be insured against accidents, vandalism and theft. Keep mind mind that theft means theft of the vehicle, not necessarily the theft of vehicle contents, meaning your inventory. If you tow your shop, you need insurance for both your vehicle and the trailer separately.
Liability insurance in the case of vehicle coverage "only kicks in while the vehicle is being driven to and from locations," Robert says. "The liability portion does not extend to incidents which happen while the vehicle is parked."
Got that? These are the gaps we're talking about as we Frankenstein together an insurance policy to cover your entire mobile boutique setup.
Your inventory is covered by a separate policy. Robert recommends an inland marine policy to cover goods while in transit. To ensure that there are no gaps in coverage, you want to make sure to ask your insurance broker how your inventory is covered in the case of theft or accident of your vehicle while parked.
Melissa Thum from Thum Insurance recommends that if you've spent a considerable amount on wraps or graphics for your truck that you insure those, too. "If the graphics are damaged and the value isn’t accounted for you are not insuring your unit properly," she says. "Clients must include the value of the graphics with the value of the truck/mobile unit."
"There is a lot of liability exposure when it comes to mobile boutiques," Robert says. Commercial auto carriers, he adds, often exclude coverage if the automobile is parked and another vehicle collides with it because the general public is boarding the vehicle while shopping (read: not just motorists who are typically involved in an accident). For this reason, Robert says, it's important to ask your commercial auto insurer and the general liability insurer how shopper would be covered in case of an incident to ensure there are no gaps in coverage.
In order to find an insurer who will cover all three under the same or separate policies, your best bet is to find an agent or broker with experience in mobile businesses who can supply a policy for you.
"In my opinion most local agents do not know what mobile units are," says Melissa Thum. "If they haven’t written a mobile store, they aren’t the agent for you. It is best to find an expert in the field who has written mobile units, mobile stores, or mobile trailers and stick with them."
The advantage to working with an independent broker who has experience with mobile boutiques is that they can supply the right combination of policies with all the appropriate coverage.
"Most independent brokers have access to many carriers, and have the ability to seek new ones to tailor a program to fit your needs," says Robert Ledesma. "Being that the risks involved are different, a mobile boutique business owner should expect to take out multiple policies."
What information will I have to provide to the insurance agent?
When you're seeking an insurance policy for your mobile boutique, your basic business and personal information (name, address, date of birth, drivers license number, contact info) should be enough to get a quote started.
Estimated sales might also be a factor when rating, Robert says, so be prepared to provide them in the form of a business plan or spreadsheet. You should also know the value of your truck after alterations as well as the maximum inventory limit at any given time. This is a great reason to keep receipts and records of your entire build-out as well as any inventory you have on-hand.
Robert recommends that you do not increase the value of your truck or inventory on paper to increase the amount a claim could pay out. "Insurance," he says, "is about being helped to get back to normal, to the state you were at prior to the claim/loss."
"Mobile boutique insurance is not cheap," he adds, "so start with low anticipated sales and inventory until you really fine-tune the business after some time of operating."
No financial statements are required in order to procure insurance, unless the business owner is seeking coverage such as Employment Practice Liability or Professional Liability.
How much will insurance for a mobile boutique cost?
The cost to cover a fashion truck is based on the vehicle (gross weight), the driving history of the drivers listed and the amount of inventory. Commercial auto policies do not require a special driver license (depending on the weight and number of axles).
Robert says that in his experience, he's seen general liability policies in the $1,500-2,000 range and auto policies in the $2,000-4,000 range per year. Break that down and you get $292-500 per month for insurance.
Why so expensive?
"The amount of risk is very high in the eyes the carriers compared to something like a small office operation where the employees sit at desks and are not exposed to driving or setting up shop at an off-site location," Robert says. "The best way to price your future business is to acquire some estimates on the policies to include them in your startup costs."