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Pawn Shop Insurance

If you run a pawn shop, it is essential that you take out a comprehensive insurance policy to protect your business. Purchasing a pawn shop insurance policy will help you to protect your business against losses that may occur due to theft, damage, or other losses. It will also provide you with liability coverage in case someone is injured in your shop. 

A typical policy will cover the cost of replacement or repair of any stolen items, as well as any legal fees associated with defending any claims made against your business. It is important to ensure that you are adequately covered for all of the risks your pawn shop may face so that you can have peace of mind that your business is protected

Who Needs Pawn Shop Insurance?

All businesses that operate a pawn shop are required to have a valid pawn shop insurance policy in place. This includes businesses that buy, sell, or loan money against items such as jewelry, electronics, tools, antiques, collectibles, or any other items of value. 

Without a policy in place, businesses are vulnerable to financial losses in the event of theft, damage, or other losses. Therefore, it is vital that pawn shop owners purchase an insurance policy to protect their business from any potential losses.

Types of Insurance Needed by Pawn Shops

There are several types of insurance that pawn shop owners should consider, including:

1. Property Insurance: This type of policy covers the physical assets of the pawn shop, including the building, equipment, and inventory. 

2. Liability Insurance: This policy provides protection for the pawn shop in the event of a lawsuit or claims for damages. 

3. Crime Insurance: This policy covers the pawn shop against losses resulting from theft, embezzlement, or other criminal activities. 

4. Employment Practices Liability Insurance: This policy provides protection for the pawn shop if it faces a lawsuit due to an employee’s actions. 

5. Fidelity Bond: This policy covers the pawn shop against losses due to employees’ dishonest acts. 

6. Business Interruption Insurance: This policy covers pawn shop losses due to a disruption or interruption in business operations due to a covered event. 

7. Workers’ Compensation Insurance: This policy provides coverage for medical expenses and lost wages for employees who are injured or become ill while on the job.

How Much Does Pawn Shop Insurance Cost?

The cost of pawn shop insurance varies depending on the type and amount of coverage needed. Generally, the average cost of a $1,000,000/$2,000,000 General Liability Insurance policy for small pawn shops ranges from $37 to $59 per month. However, some policies may offer discounts or special coverages for specific customers. 

Pawn Shop’s Risks and Exposures

Pawn shops can face a variety of risks and exposures that can lead to lawsuits or claims. Some of the most common risks include:

  • Premises liability exposure is high due to the number of visitors to the store. To prevent slips and falls, there should be good lighting and adequate aisle space. All goods should be kept on easily reached shelves, so customers do not pull items down on themselves.
  • Personal injury exposures include allegations of discrimination, invasion of privacy should confidential financial information be revealed to others, and from apprehending and detaining shoplifters and handling of unruly customers.
  • Product liability exposure depends upon the type of product, its age, condition, and use. The dealer should attach labels warning of possible lead exposure to cloisonne jewelry, ceramics, or pewter or silver-plated items. 
  • Workers’ compensation exposures are moderate due to employees standing for long hours, the use of computers, and stocking which requires lifting and placing items on floors or shelves for display. Continual standing can result in musculoskeletal disorders of the back, legs, or feet. Trips, slips, and falls are common.

Commercial Insurance and Business Industry Classification

  • SIC CODE:  5932 Used Merchandise Stores
  • NAICS CODE:  522298 All Other Nondepository Credit Intermediations
  • Suggested Workers Compensation Code(s):  8017 Store – Retail NOC

Pawn Shop Insurance – The Bottom Line

Pawn shop insurance covers a variety of risks associated with running a pawn shop business. Specific coverages vary by policy, but may include property insurance, liability insurance, crime insurance, business interruption insurance, mechanical breakdown insurance, and employer’s liability insurance.

It is important for pawnbrokers to shop around and compare quotes to find the best coverage for their shop.

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