Seasonal Businesses and Insurance: What to Consider for Coverage

Seasonal businesses only open for part of the year, making it critical for these months to be smooth sailing. Pop-up shops, summer camps, event stores, ski resorts, and other seasonal businesses can benefit from specialized insurance policies. Sufficient insurance can protect businesses from millions of dollars in losses.

Choosing the right insurance policies can be challenging. Let’s go over how to assess your seasonal business risks and choose the right insurance coverage.

Types of Seasonal Businesses

Seasonal businesses face risks depending on their industry and type of operations. Here are common seasonal businesses and their challenges.

Ski resorts

People enjoy skiing, snowboarding, tubing, and other winter sports at ski resorts. Ski resort operations usually last from late fall to early spring.

Winter sports come with high risks of broken bones, lacerations, other injuries, and even death. Due to the significant risk of bodily injuries, ski resorts are vulnerable to liability lawsuits. Injured guests may sue both the ski resort for negligence and other guests for their injuries.

Equipment and property damage can be expensive. Commercial property insurance is essential for ski resorts since it covers not just the resort building, but also valuable assets such as equipment and furniture.

Poor snowfall can also hurt business, leading to business disruption. You may be able to obtain a snow protection plan. It can give you a payment in case there is too little snow during what should have been a peak ski period.

Beach rentals

Beach rentals include properties like cottages and houses that get rented out during the summer months. Rentals often also include boats, jet skis, surfboards, and other equipment. Beach rental businesses face risks such as:

Natural disasters: Floods, storms, and hurricanes can cause severe property damage, wiping out your business’ valuable assets overnight. Having the right natural disaster insurance coverage can help you better recover from natural disaster damages.

Accidents: Bodily injuries are common when guests play in the water. This can result in liability claims against your beach rental.

Vandalism and theft: Beach rental properties are vulnerable to theft and vandalism both during the holidays and off-season when the properties are vacant.

Holiday shops

Holiday shops specialize in selling Halloween costumes, Christmas decorations, Independence Day fireworks, and other seasonal products. They are often vulnerable to risks such as:

Inventory overstock: It can be tricky to judge demand from year to year. If a seasonal shop misjudges demand, it can result in overstocking and financial loss. This inventory will need to be stored for sale next year, which can result in frustrating expenses.

Fire hazards: Holiday lights, fireworks, and other seasonal goods often pose serious fire hazards. Fires can cause smoke damage require property to be replaced or repaired. If a fire breaks out in the store and hurts a customer, they may also sue you for the damages or injuries.

Theft and vandalism: It’s common for high-value seasonal inventory to become a target of theft. During holiday season, vandalism and property crimes also rise. These risks can lead to sizable, variable losses every year.

Product liability: If any product you sell or produce causes injuries, death, or property damage, your business can be sued for liability. Legal defense and settlement costs can be expensive depending on the situation.

Key Insurance Considerations

General Liability Insurance

General liability insurance is key for any business. It provides protection to your seasonal business against claims of bodily injury, property damage, and advertising injuries that occur while on your business premises.

Commercial Property Insurance

Businesses need commercial property insurance to cover damages to their physical assets, such as buildings, equipment, and inventory.

Commonly covered perils include:

• Fire
• Theft
• Burst pipes
• Explosions
• Vandalism

If you store or sell seasonal products, such as fireworks or Christmas trees, these are great fire risks. Consider raising your commercial property coverage limit.

Product liability insurance

If you sell seasonal products, such as winter sports gear, it’s important to obtain solid product liability insurance. This type of policy covers product liability claims against you, which can arise if products you distribute or manufacture result in third-party bodily injuries, property damage, and even death.

Novelty items, seasonal sports gear, and seasonal products often come with higher product liability risks due to injuries occuring more frequently during the holiday season. Make sure you have sufficient product liability insurance.

Business Interruption Insurance

When a business gets interrupted for a covered reason, business interruption insurance can cover operating costs, lost income, payroll, lease payments, and other expenses.

Business interruption can help immensely in the off-season or if your business faces unexpected closure during a busy season.

Workers' Compensation Insurance

Workers’ compensation covers medical expenses, lost wages, ongoing care, funeral costs, and disability benefits in case an employee gets injured or ill on the job. Most states require you to carry workers’ compensation, and you will need to comply with your state’s workers’ comp regulations.

It’s important for seasonal businesses to meet workers’ compensation requirements and carry adequate workers’ comp for their seasonal employees.

Commercial Auto Insurance

If your seasonal company uses any vehicles during business operations, you will need commercial auto insurance. This covers damages and medical expenses that are caused by company vehicles, such as when an employee drives to transport goods and services.

Specialized Coverage

Marine insurance: Offers great coverage for summer businesses that have watercraft, mobile equipment, and liability risks. Marine business owner’s policies tend to cover liability, hull protection, and equipment damages.

Snow plow insurance: Crucial for snow removal businesses. Snow plow insurance is generally required by law, so make sure your snow removal business meets the state insurance minimums.

Flood insurance: If your seasonal business operates in an area with high flood risks, you might need to obtain a special flood insurance policy or add-on. This ensures that damages caused by flooding can be covered by the insurer.

Earthquake insurance: Earthquakes are often excluded from standard commercial insurance policies. If you operate in an area with earthquake risks, consider obtaining an earthquake insurance policy to protect your business property.

Factors Influencing Insurance Needs

Duration of the season

What season is your business open? Are you open year-round, but receive an influx of customers during a busy season? Assess the duration and time of your season before obtaining insurance. Make sure to obtain insurance coverage ahead of time so that it is activated during your busy season. Many insurance policies come with a waiting period of a month during which incidents won’t be covered.

Geographic location

Where your business operates can greatly affect your insurance needs. Seasonal weather patterns, customer traffic fluctuations, natural disaster risks, and insurance premiums can all factor into what policies suit your seasonal business best.

If your business is located in a flood, hurricane, or earthquake region, make sure the commercial property insurance policies you obtain can be customized to cover those natural disasters. For example, if your seasonal business happens to sell products or services during Florida’s hurricane season, make sure your insurance adequately protects your assets by adding a hurricane insurance rider.

Risk Management Strategies

Like year-round businesses, seasonal companies should plan for risk management. Risk assessment can mitigate the harmful effects of risks that are out of your control.

Implementing safety protocols can help your employees and business adapt and recover in case of an incident. Train your employees on workplace safety and ensure everyone knows what to do in case of an accident, whether it involves employees, guests, or both.

Choosing the Right Insurance Provider

Comparing insurance

It’s important to research insurance providers who are experienced with insuring seasonal businesses. Here are the essential elements to consider when obtaining seasonal business insurance.

Premium: The premium is how much you have to pay for an insurance policy every month. Each business insurance policy or bundle you purchase will have its own premium, which can vary depending on your industry, risk factors, and number of employees. Businesses usually pay over $300 a month for liability, property, and workers’ comp insurance policies.

Claims process: Businesses that rely on a few months of business a year can benefit from choosing an insurer with a smooth and streamlined claims process. Incidents quickly being resolved can enable you to proceed with operations smoothly, which is critical if you are a seasonal business.

Coverage type: General liability, commercial property, workers’ compensation, and business interruption are just a few examples of business insurance types. Business owners need to consider industry-specific insurance. For example, you might need specialized hospitality industry insurance policies if your business profits off of tourism.

Coverage limit: Most commercial insurance policies for small businesses cap at $1,000,000 coverage limit per occurrence and $2,000,000 aggregate for each policy period. The coverage limits are high because liability claims for bodily injuries and death can be financially catastrophic for seasonal businesses. Choose a higher coverage limit if necessary.

Risk tolerance: Different business owners have varying degrees of risk tolerance. Carefully evaluate your risks, how much coverage gives you peace of mind, and what policies you need.

Best seasonal insurance providers

A good seasonal insurance provider can provide you with optimal, affordable coverage during the busy season when you need coverage the most. Here are some of the best business insurance providers to consider.

• Hiscox: An established insurance carrier since 1901. Fast quotes and quick claims process have made it a trusted choice for 400k+ businesses.

• Tivly: Helps you find suitable business insurance quotes in minutes. Matches you to one of 200+ reliable, in-network insurance companies.

• Simply Business: Gives you fast and transparent quotes within minutes. Great for small businesses that want to find tailored protection. Comes with a top-rated customer service team.

• The Hartford: Rated the #1 Digital Small Business Insurance Company in 2022. Offers an immediate assistance service through call requests or digital chats.

When purchasing commercial insurance products for seasonal businesses, it’s a good idea to consult with an insurance professional or agent to see what policies align best with your budget and needs.

Case Studies

Case Study 1: Ski Resort

A New York ski resort welcomes thousands of visitors every year during the winter season. Skiers, snowboarders, and other people who want to enjoy the snow come to spend time at the ski resort. Unfortunately, a guest got injured in the resort area, breaking a leg.

The ski injury claim limit is $1,000,000 against ski resorts. The injured guest filed a lawsuit against the ski resort for the medical expenses and lost income due to his broken leg.

Ultimately, the ski resort’s liability insurance helps them pay for legal defense fees and the ultimate compensatory costs of $30,000. The proper liability insurance coverage helped the ski resort mitigate losses, especially since these claims are frequent.

Case Study 2: Halloween costume store

A popular Halloween brand in Virginia sells spooky-themed props, accessories, wigs, masks, and costumes around October every year. However, they always find themselves a target of theft, losing thousands of dollars across their locations.

After filing the relevant commercial property claims with their insurance provider, the Halloween store was able to recoup a significant amount of their losses to theft.

Summary

Seasonal businesses face revenue fluctuations and unique operational challenges from year to year. From weather dependency to high liability risks, seasonal businesses need to cover all their bases. When choosing insurance, it’s important to consider:

• Suitable coverage limits
• General liability and product liability insurance
• Commercial property and auto insurance
• Specialized policies and add-ons
• Workers’ compensation
• Risk tolerance v.s. cost

Make sure to reassess your risks every year to keep your insurance protection updated. A proactive approach to insurance is essential for a seasonal business’ long-term success and sustainability.

---