Insurance for Consignment Stores: Why You Need It

Insurance 101 for Consignment and Resale Stores

Whether your shop is just opening or a local favorite, insurance is not a luxury it is protection for your business, finances, and community relationships. From customer accidents to natural disasters, being unprepared can be a fatal mistake. Getting the right coverage keeps your doors open when the unexpected strikes.

What Types of Insurance Does a Consignment Shop Need?

General Liability Insurance
Covers bodily injury and accidental damage claims. For instance, if a customer slips and is hurt in your store, this insurance pays for medical costs and legal fees.
Business Property Insurance
Protects the building, signs, equipment, and fixtures from fire, theft, vandalism, or storms. Some policies also cover lost income if you must close temporarily due to covered damage.
Coverage for Consigned Goods
Important but often overlooked. Standard property insurance only covers what you own. Ask for a policy or rider that covers consigned inventory belonging to your sellers.
Workers’ Compensation Insurance
Needed if you have employees. Covers workplace injuries and related medical expenses. Required by most states for even part-time help.
Business Interruption Coverage
Pays for lost revenue and expenses if a fire, weather event, or forced closure prevents you from serving the public.
Cyber Liability Insurance
Consider this if you handle online sales, digital payouts, or keep customer data. Cyber coverage helps recover from data breaches, fraud, or hacks.

Why Insurance Coverage Is Non-Negotiable

Shops handle property that does not belong to them. Without the right protection, you could owe consignors for loss or damage, even if it was not your fault.
Even one lawsuit or severe weather event could bankrupt your shop. Retailers in every industry are exposed to accidents and acts of nature.
Some landlords, lenders, or local ordinances require evidence of insurance before letting you sign a lease, apply for a loan, or operate on main street.

How to Shop for Consignment Store Insurance

Contact several insurance agents or companies and ask for quotes for “retail AND consignment inventory.”
Be clear about the estimated value of consigned goods on hand, your annual sales, and if you do online business as well.
Request separate riders or endorsements for consigned inventory to be sure claims are covered.
Store and share proof of insurance with your landlord, bookkeeper, and consignors if needed.

FAQ: Insurance for Resale and Consignment Shops

Does my home or landlord’s insurance cover consignment shop inventory?

No. Your personal home insurance will specifically exclude business activity. Your building landlord only covers their building, not your business or inventory consigned or otherwise.

Are consignors responsible for insuring their items?

Usually not, unless stated in your agreement. It is best practice for shops to either clearly disclaim liability or carry “consigned goods” insurance to protect both the shop and consignors.

What should my insurance agreement say about consigned items?

Your policy or contract should specify whether your insurance covers goods owned by others and what happens after a claim. Ask your agent to explain all details.

How much does consignment shop insurance cost?

Premiums vary by location, store size, coverage needs, and claims history. Expect to pay from $500 to $2,000 annually for basic retail coverage; adding coverage for consigned goods may increase the quote, but is worth it for peace of mind.

Is insurance needed for an online-only consignment business?

Theft, damage, and data breaches happen even without a physical storefront. Online businesses should consider coverage for inventory held, cyber liability, and general business risk.

Summary for New Owners and Operators

Never open a retail or consignment shop without insurance
Include consigned inventory in your policy or clarify with a special rider
Shop around for the best quotes and coverage; do not settle for a generic policy
Ask for proof of insurance, keep records, and update coverage as your shop grows

Next Steps

Review your current or planned shop’s risks with an agent
Update your consignment agreement to clarify who carries risk and insurance
Keep your software updated so inventory records are always accurate for claims or audits

Best Consignment Shop Software: Trusted Since 2002

Want simple, accurate inventory records for insurance and peace of mind? Best Consignment Shop Software makes it possible. Pay once and use the software for life, with no forced monthly payments or required support prepayments. All your consignor data, inventory, and payout records in one place, plus direct support if you have questions. Shops have counted on us since 2002 for easy, durable solutions. Do not trust your livelihood to paper or generic spreadsheets: make tracking and insurance claims effortless with BCSS.

Get your free demo and more insurance-friendly tips here