Are You in a Co-Retail Relationship?

by | Commercial Insurance | 1 comment

Co-Retailing Liability Risk BC

You’re certainly familiar with ride-sharing and home-sharing services. They have forever changed the scope of the transportation and hospitality industries. The retail sector took notice, as businesses realized they could capitalize on cost savings by sharing the lease on a property while gaining access to one another’s consumer foot traffic. A rising tide raises all ships, and all of that.

The concept is called co-retailing, and consumers love it. Bakeries are pairing with coffee shops, barbers with bars, vintage wares with clothing retailers, and more. In some cases more than two sellers and service providers share the lease in a single commercial space.

Despite the benefits and trendiness, the co-retailing relationship is riddled with liability risk. If you do anything that compromises the seller adjacent to you, they could conceivably file a claim against you. To reduce this risk, please heed the following.

3 Steps to Mitigating Your Commercial Liability Risk When Involved in a Shared Retail Space Relationship

I. Always Consider How Your Action (or Inaction) May Affect Them

A co-retailing relationship is like a cohabiting relationship in many ways. You may have verbally agreed to share “chores”, but invariably someone neglects to pull their weight. The consequences in a co-retailer scenario however, are much more dire. For instance, if a roomie or common law companion didn’t do their chore and sweep the floor, it can be an irritation that strains the relationship. But when the same occurs with two co-retailers, a customer slip and fall may ensue. If injured, the customer may sue YOU.

There are innumerable situations that could play out and increase your liability risk. Let’s say you decide to remain open during extreme weather, and your shared retailer does not. In doing so, you will have put their space, products, and materials at risk should the weather event cause damage that could have been avoided if you kept closed. Or, let’s say your respective hours-of-operation differ, and you left the shared space for a minute to use the restroom and didn’t lock up. If during that brief period someone came into the space and stole a co-retailer’s merchandise, you could be held liable.

As we said, the scenarios are seemingly limitless. Before you take any action, or inaction, ask yourself if you’re putting your co-retailer/s at risk.

II. Define Roles and Responsibilities in a Contractual Agreement

The analogy above about chores speaks to co-retailer roles and responsibilities. While your commercial lease agreement may define some of these as they apply to rental payments and such, there is too much room for interpretation when it comes to the rest. Define it all in a separate contractual agreement.

The agreement should delineate everything from interior/exterior upkeep and shared WiFi (which has cybersecurity implications) to shared customer interactions and the types of promotional activities allowed on-premises such as product launch parties or Black Friday sales. Leave no stone unturned when creating this contractual agreement.

III. Go See a Commercial Insurance Broker, Together

A a business owner you have secured some form of business insurance coverage. The retailer/s sharing the space with you does too. But is it enough to protect you from all that can happen in this unique co-retailing scenario? We can almost guarantee that it does not. Come in together (you and all retailers who share the same space and customer flow) to see an independent insurance broker who can assess each of your policies. From here, the broker can recommend individual policies to ensure more comprehensive commercial liability protection. If located in BC, book this consultation with Park Insurance today. The longer you wait, the greater the risk.

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