The liability insurance Jackson City Councilman Kenneth Stokes wants to require of convenience stores in the city that sell alcoholic beverages may make the premises safer from mishaps such as slip-and-falls.
But don’t look for it to lessen the likelihood of violent incidents – or to even cover customers injured by violence, insurance professionals say.
Ward 3’s Stokes has proposed an ordinance to require the stores to insure themselves as an alternative to forcing them to hire security guards if open from midnight until dawn.
His reasoning, he said, is that insurance providers will require the stores to make their stores safer for customers and employees alike, and in some instances would require security guards. “If they have insurance the insurance company is going to make sure they are safe,” Stokes said at a June 21 Finance Committee public hearing on an ordinance he proposed after a police officer shot and killed an unruly customer March 31 at the JASCO Mart on the corner of Woodrow Wilson Avenue and Martin Luther King Jr. Drive.
At one point, committee member Quentin Whitwell of Ward 1suggested $1 million in liability coverage would be a “reasonable amount.”
Insurers think Stokes could be right about insurance bringing increased safety measures. “That’s a strong possibility because businesses would face inspections,” said Roszell Gadson, a spokesman for State Farm’s regional headquarters in Atlanta.
State Farm would likely provide the coverage if the store adopted safety measures such as burglar alarms, a panic button and adequate lighting throughout the building and grounds, he said.
“We do conduct a complete safety inspection,” Gadson said. “Obviously, our goal is to make the business as safe as possible, not only for the owner but for the customers who come there.
“Coverage includes the building, contents and — of course — a liability policy,” he added, but noted liability would not extend to random acts of violence.
That’s far different from someone slipping on a wet floor inside the store, Gadson said
But some stores are not even insuring against accidental injuries, Stokes said.
“If someone takes a step outside and breaks a leg, how are they going to take care of this?”
Many insurers are reluctant to insure late night convenience stores and put those policies in the “surplus lines” category in which an out-of-state insurance carrier is willing to take on a larger-than-customary risk. Being out of state and free from regulatory constraints of the insured-store’s state, the surplus-lines carriers have more flexibility to design and price their policies, the Mississippi Surplus Lines Association says.
“Free of rate and form, they can write a policy to conform to the need of the insured ” and accept a higher level of risk, said Peggy Dronet, the association’s executive director.
But even these carriers are likely to insert an “assault-and-battery” exclusion, said Hank Aiken, VP of R.W. Aiken Insurance Agency, a six-decade old Jackson commercial insurance firm.
“It might be impossible to get,” Aiken said.
“You might get it, but it is going to cost” more than many store owners would be willing or able to pay, he said.
“I have had apartment complexes (in Jackson) that just couldn’t buy it.”
The ordinance may be an over-reach, Aiken said. “When you read about a violent act every month in the Bailey Avenue area… it is going to be very difficult to insure something that happens every month. That’s the problem with the city requiring it.”
Stokes said he wants to hold an additional public hearing before taking his proposal to the full council for a vote. He acknowledged he was unaware that liability coverage would not extend to violence and assault on a store’s premises. He will weigh that factor in deciding any changes to the measure, he said. “We’ll look at all aspects of it.”
He said that when he meets with the merchants he will ask for details on the differences between the insurance they currently carry and the insurance that would be necessary to meet terms of the ordinance.
Several store owners queried before introduction of the ordinance said they had no insurance at all on their stores, according to Stokes.
In visits by the Mississippi Business Journal to two convenience stores on Woodrow Wilson, including the JASCO Mart where the police shooting occurred, store personnel said the stores carried insurance. The owner of the J.D. Food Mart at the corner of West Capitol and Galvez streets where a customer was shot in a car-jacking on June 28 says he carries coverage as well.
All three noted that selling alcoholic beverages requires them to pay extra on premiums.
Aiken, the Aiken Agency VP, said even most of the independent convenience stores carry some coverage. “They have something to insure,” he said. “They have capital at stake.”
Some that are just starting up and watching every dime may not get coverage but eventually they do, Aiken said. “Once they get to the point they have some capital at risk they buy it.”
Generally, the premium is based on the square-footage of the premises, according to Aiken. “If they sell gasoline you actually have to calculate the gallons of gasoline they sell.”
Having a security officer at the stores could help lower the costs – provided the guard is unarmed, Aiken said. “There’s a balance there. If you have armed security the insurance agent is going to run away. If you have your own security guard un-armed, that’s a little better.”
The arrangement most likely to find favor with the carrier is a guard from an established security agency– one that is trained to diffuse tensions and can quickly alert law enforcement to impending trouble, Aiken said.
An off-duty police officer is not always a good solution because the jurisdiction for which the officer works can be held liable for any mistakes the officer makes on the outside job, he added.
The heads of two organizations whose members include Jackson convenience stores that sell alcoholic beverages want Stokes to drop his proposal, calling the measure an undue burden on business.
The state does not require the insurance and neither should Jackson, said Ron Aldridge, state director of the National Federation of Independent Businesses.
“We’d certainly be fighting something like that.”
To zero-in on a certain kind of business and require it to have liability insurance is unfair, he said. “A business can take on as much exposure as think they can bear.
“There is no significant danger” at convenience stores, he added.
Aldridge does not like the alternative of requiring security guards any better. “We already have security guards – they are called police.”
Phillip A. Chamblee, Aldridge’s counterpart at the Mississippi Petroleum Marketers and Convenience Store Association, said the association would oppose any additional expenses placed on store owners.
Chamblee questioned why Stokes is signaling out the stores. He cited FBI statistics that show robberies of convenience stores in 2009 accounted for 5.4 percent of the total; filling station robberies accounted for 2.4 percent.
Most robberies – 42.8 percent – occurred on the street and the second highest total, 16.9 percent, in homes, according to FBI statistics compiled by Athena Research Corp.
Without prompting, Chamblee addressed the suggestion of a security guard requirement with a paraphrase of Aldridge: “We already have it – it is called police.”
Normally, the police are there or nearby, Stokes said. But the stores “want the police to become their own private security…. These officers have to cover a wide area.”