It depends on who took it and how you found out it was gone. A break-in after closing, with a pried door and an empty rack, is the kind of theft commercial property insurance is built for, subject to the policy’s terms, limits and deductible; shoplifting rarely produces a payment, because property policies commonly exclude losses you can only show through an inventory count and a single provable theft usually sits under the deductible, and theft by your own employees is typically excluded from property coverage altogether and needs a separate kind of insurance called crime coverage.
Below, the common kinds of retail theft are sorted into what’s usually covered and what isn’t, followed by what to do the morning after a break-in. For the policies a shop usually carries, see insurance for retail shops.
Key takeaways
- Commercial property insurance typically covers stock, fixtures and equipment stolen or damaged in a break-in, minus your deductible.
- Shoplifting and shrink found at an inventory count are often excluded, and single incidents are usually small enough to sit under the deductible anyway.
- Employee theft is usually excluded from property policies, and crime insurance is the separate coverage built for it.
- Business income coverage can help replace lost income if break-in damage forces you to close, once the waiting period has passed.
- Good inventory records and a police report are what turn a break-in into a claim you can prove.
What’s usually covered, by type of theft
| What happened | Commercial property | What else may apply |
|---|---|---|
| Someone breaks in after hours and takes stock | Typically covered, minus the deductible | Business income if you have to close |
| Someone smashes the front door or window | Typically covered if the door or glass is yours to insure | Your landlord’s policy, if the lease makes the glass theirs |
| A robbery at the register during business hours | Stock and property typically covered, cash often limited | General liability if a customer is hurt, workers’ comp if an employee is |
| Shoplifting | Covered as theft only if you can prove it, and usually below the deductible | Prevention is the main tool |
| A shortage you find at the annual count | Often excluded as unexplained disappearance | Prevention is the main tool |
| An employee takes cash or stock | Usually excluded | Crime coverage, which is separate |
| A scam email diverts a supplier payment | Not covered by property | Some cyber policies respond, often only with a social engineering endorsement or sublimit |
All of this is subject to your policy’s terms, limits and exclusions. Notice, though, that the line between covered and not covered has very little to do with how much was taken, and a great deal to do with whether there’s evidence of how it was taken.
Shoplifting and shrink are mostly yours to absorb
It’s natural to assume theft is theft, and that a policy covering one kind covers the rest. An insurer sorts theft by the evidence, though, and shrink is the kind with the least.
Most property policies exclude losses that only show up as a difference between what your records say you have and what’s actually on the shelf. The policy language often calls it “unexplained disappearance” or “inventory shortage,” and the reasoning behind it is hard to argue with from the insurer’s side: a count alone can’t show whether the missing stock was stolen, miscounted, damaged in the back room, sold without being rung up or never delivered in the first place. Without a broken lock, a camera clip or a police report, there’s no event for the policy to attach to, only a number that’s lower than it should be.
Then there’s the deductible, which catches even the losses you can prove. Even when a shoplifting loss is provable, say a theft caught clearly on camera, a single incident is often smaller than your property deductible, so the policy wouldn’t pay anything even if the exclusion didn’t apply. Add the two together and shoplifting turns out to be a prevention problem far more than an insurance one, which is a frustrating answer, but an honest one.
So what can you actually do about it? Spend the money on the floor instead, where it can stop the loss before it happens. The measures shops commonly use:
- Clear sight lines from the register to the back of the store
- Cameras over high-value displays and the door
- Locked cases or tethers for small, expensive items
- Regular cycle counts of your best sellers, so a pattern shows up in weeks instead of at year-end
Break-ins: what property coverage typically pays
That example shows the three things that decide the amount. The first is that stock is usually valued at what it costs you to replace it, not at your retail price, so a dress you sell for $180 and buy for $70 is generally a $70 loss. The second is that cash has its own rules, since many property policies limit or exclude money and securities, which is why the NAIC suggests keeping only a small amount of cash on site and putting business cash and valuables in a safe. The third is ownership of the building parts: doors, glass and your build-out may belong to you or to your landlord, depending on the lease, and if you installed the storefront or the security grille, it’s likely yours to insure.
How the policy values fixtures and equipment matters too. A policy that pays replacement cost covers the price to buy new, whereas actual cash value subtracts depreciation, and replacement cost vs. actual cash value shows how far apart those can land. Commercial property insurance can also help pay to fix the damage from the break-in itself, minus your deductible. If you sell jewelry, watches or furs, check the theft limitation as well, because property forms commonly cap theft of those items at a small amount unless they’re scheduled.
A robbery during business hours adds people to the picture. If a customer is hurt and claims your shop didn’t take reasonable steps to keep them safe, that claim typically goes to general liability, subject to its terms, and if an employee is hurt, it’s a workers’ comp claim under your state’s rules. Good lighting and working security devices won’t stop every robbery, but they’re also part of what you’d point to if someone claims the shop wasn’t reasonably safe.
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Employee theft needs its own policy
If you have staff handling cash or stock, our view is that you should at least price crime coverage, because nothing else you own is built for this loss.
Property policies commonly exclude dishonest acts by employees. The NAIC describes crime insurance as protection against burglary, theft and malicious damage, such as employee embezzlement, and a crime policy can be written to cover employee theft of money, stock and other property, sometimes with forgery and funds transfer fraud added. Corgi doesn’t offer crime insurance, so you’d buy it separately.
Controls help, though, whether you buy it or not:
- Have two people count the drawer at close, or have the closer count and a manager check it the next morning.
- Review voids, refunds and no-sale openings in your POS each week.
- Separate jobs where you can, so the person who receives deliveries isn’t the person who reconciles them.
- Give each employee their own POS login, so every transaction has a name on it.
Payment fraud is a different risk again, but it often gets lumped in with theft. If a scam email gets you to pay a fake invoice, property and general liability won’t help, though some cyber policies can respond, often with a sublimit; email scams and wire fraud covers that one.
When a break-in closes the shop
A break-in can do more than empty a rack. If the thieves wrecked the door, the display windows and the register counter, you may be closed while repairs are made, and rent, payroll and loan payments don’t pause while you wait for the glazier.
Business income coverage can help replace lost income and pay continuing expenses like rent and payroll when covered property damage forces you to close. Property pays to fix the door and the counter, and business income covers the net income you lose while that work is underway, which is why the NAIC describes the two as working in tandem.
There’s a catch in the timing, though. Coverage starts after a waiting period and lasts through the period of restoration, up to your limit, and the NAIC warns that coverage often doesn’t begin right away, so it suggests keeping enough cash to get through the first few days of a shutdown. In practice, that means a two-day closure may fall entirely inside the waiting period while a week-long one may not, and extra expense coverage can help pay to reopen sooner, through things like a rush board-up or temporary shelving. How business income claims are calculated works through an example.
What to do the morning after a break-in
- Make sure no one is inside, and call the police. Get the report number.
- Photograph and video everything before you clean up or move anything.
- Secure the shop. Property policies typically expect you to take reasonable steps to prevent further damage, so board up broken glass and change the locks, and keep the receipts.
- Pull your POS inventory and purchase invoices and build a list of what’s missing, at cost.
- Report the claim to your insurer promptly, with the police report number and your list.
With Corgi, one claims specialist handles your claim from the first call until it’s closed, and how to file a business insurance claim has the full process. Don’t let the cleanup run ahead of the claim, though, because the longer the shop sits half-cleaned, the harder it becomes to show which damage came from the break-in and which came later.
Frequently asked questions
Does business insurance cover shoplifting?
Usually not in a useful way. Property policies often exclude losses that only show up in an inventory count, and individual shoplifting incidents are usually smaller than the deductible, so shoplifting is mostly managed through store layout, cameras and regular counts.
Is cash stolen in a break-in covered?
Sometimes, but often only up to a small limit. Many property policies limit or exclude money and securities, so check your policy for a sublimit on cash, and keep only a small amount on site with the rest in a safe.
Does property insurance cover employee theft?
Usually not. Property policies commonly exclude dishonest acts by employees, and crime insurance, sometimes called employee dishonesty coverage, is the separate insurance designed for theft by your own staff. Corgi doesn’t offer it, so you’d buy it separately.
Will a break-in claim raise my premium?
It can. Claims history is one of the things insurers look at when pricing a policy, along with your location and your security, and the NAIC notes that insurers typically charge higher rates in high-traffic, high-theft locations.
