Congratulations, you’ve been accepted to one of the largest online retailers in the US! Target has stores in all 50 states, with 75% of the population living within 10 miles of a target location. The third-party Target+ marketplace is fully integrated with their online store, giving vendors the validity and reliability customers have come to expect from the Target brand. Additionally, it can be a key stepping stone to getting your products on the physical shelves. To be accepted as a Target vendor, you had to beat out steep competition and prove that your products could live up to the brand. Now you have one final requirement: provide a certificate of insurance that meets the insurance requirements in your Target Vendor contract.
In this article, you’ll learn about the insurance that Target requires, what it covers, and how to quickly obtain a certificate of insurance that meets all of your requirements.
Target Insurance Requirements
This is the technical insurance requirement in your contract. Like most retailers, Target’s insurance requirements are long, complicated, and full of legal jargon. In the next section, we’ll unpack this into the Coverages, Limits and Endorsements you’ll need on your certificate of insurance.
“Vendor shall maintain in full force and effect minimum insurance of the following kinds and amounts and meeting such other requirements as set forth below.
Workers’ Compensation and Employer’s Liability Insurance.
Workers’ compensation insurance, affording statutory coverage and containing statutory limits for the state(s) in which Vendor is conducting business related to the Contract, and employer’s liability insurance in the amount of $1,000,000 each accident for bodily injury, $1,000,000 each employee for bodily injury by disease, and $1,000,000 policy limit for bodily injury by disease.
Commercial General Liability Insurance.
Commercial general liability (“CGL”) insurance, including product liability coverage, with minimum limits of coverage of not less than $5,000,000 per occurrence for bodily injury and property damage, which shall include the following additional coverages: products and completed operations, contractual liability for liabilities assumed by Vendor under the Contract, and personal and advertising injury liability. Vendor’s CGL insurance shall: (i) designate “Target Corporation and its subsidiaries” as additional insureds, including with respect to third party claims or actions brought directly against Purchaser or against Purchaser and Vendor as co-defendants and arising out of the Contract, (ii) provide for a severability of interests, and (iii) have an additional insured endorsement of CG2015, CG2026, or equivalent. Coverage shall also include a waiver of subrogation.
Vendor shall evidence to Purchaser the required insurance for a continuous period of not less than three years from the receipt of Goods.
Vendor must provide insurance for the life of Goods covering claims occurring or brought by third parties, including after Purchaser discontinues sale of Goods.
Automobile Liability Insurance.
Automobile Liability insurance including coverage for owned, hired and non-owned vehicles) with minimum limits of not less than $1,000,000 per occurrence combined single limit for personal injury, including bodily injury, death and property damage.
Network Security and Privacy Liability.
Vendor, if applicable, shall comply with the following requirements for network security coverage and the requirements set forth in the Insurance section of POL (or any successor section thereto). Network Security and Privacy Liability (“NSPL”) insurance means insurance with minimum limits of coverage of not less than $5,000,000 per claim, covering all acts, errors, omissions, network security and privacy risks (including but not limited to unauthorized access to data or systems, failure of security, breach of privacy, wrongful collection, and disclosure or other mishandling of Confidential Information), as well as coverage for related regulatory defense and penalties. Vendor’s NSPL insurance: (i) may be provided on a “claims made” basis provided such coverage remains in effect for three (3) years following Target’s receipt of the Goods; and (ii) shall designate “Target Corporation and its subsidiaries” as additional insureds.
General Insurance Requirements.
Insurer Stability and Size. All coverage required under this section shall be procured from a company or companies possessing an A.M. Best rating of A-:VII or better.
Insurer Qualification. All coverage required under this section shall be obtained from a company or companies that are authorized to do business under the laws of the state(s) in which Vendor is conducting business related to the Contract.
Occurrence Basis. Except as expressly noted above, all coverage required under this section shall be written on an occurrence basis.
Vendor Insurance is Primary. Vendor’s insurance shall be primary and non-contributory, and required to respond to and pay prior to any other available coverage of Purchaser.
Certificate of Insurance. Vendor shall provide Purchaser with a certificate(s) of insurance evidencing the required coverage before shipping Goods and upon each renewal of such policies. The Certificates of Insurance shall include a clause that obligates the insurer(s) to give Purchaser at least 30 days prior written notice of any material change or cancellation of such policies.
Self-Insurance. Vendor shall not self-insure its coverage required under this section without the prior written consent of Purchaser.
Territory. All such policies shall include a worldwide coverage territory and cover claims brought worldwide.
Vendor shall obtain such insurance prior to shipping any Goods. The insurance obligations of Vendor herein shall survive the completion or termination of any Purchase Order under the Contract. The purchase of insurance and furnishing of any certificates shall not limit Vendor’s obligations hereunder. Vendor further agrees to insure, at its sole cost and expense, for their full and true retail value, any Goods which by the terms of the Contract, or any other agreement between Purchaser and Vendor, are to be stored at other than Purchaser’s facilities.
Vendor Services, Vendor Equipment and Vendor Personnel. The insurance required to be obtained and maintained by Vendor pursuant to the Contract shall provide coverage with respect to Vendor Services and Vendor Equipment, and coverage for claims alleging that the Vendor Personnel are employees or joint employees of Purchaser and claims for injuries suffered by Vendor Personnel.
Decoding Target’s Insurance Requirements
Alright, now let’s break that down into the Coverages, Limits Endorsements, and additional details that Target requires.
General Liability: $5M
General Liability insurance covers third party injury and property damage. For example, if a customer injured themself on your product, general liability would help pay out the claim. Your general liability policy should include:
- Product Liability Coverage
- Bodily Injury & Property Damage
- Contractual Liability
- Personal & Advertising Injury
- Products and Completed Operations
- Severability of Interests
To ensure that your general liability policy includes each of these elements, list them to the agent you’re speaking with. Or, you can purchase a pre-made Target Vendor Policy with all of the detailed requirements built in.
Target requires you to meet your statutory workers’ compensation requirement. This means, you have to meet the legal requirement determined by your state. If you don’t have any employees, you likely won’t need to purchase workers’ compensation. Check your state’s requirement to see what you need.
Auto liability covers damages that take place while you or your merchandise are en-route to a warehouse or delivery. Hired and Non-Owned auto expands the coverage to include vehicles that you don’t personally own, like delivery trucks.
These are part of a Cyber Liability policy, which covers damages due to lost or stolen data. Target requires this coverage when applicable, meaning you’ll likely need it if you’re in any way interacting with customer data. Target will allow you to purchase this on a Claims Made basis, as long as your policy stays in place for at least 3 years.
Insurance 101: Claims Made v. Occurrence
Claims Made means that the insurance will only cover you if the policy is still active when a claim is made. Occurrence means that the insurance only had to be in place when the incident occurred.
For example, let’s say a hacker steals customer data from your computer in 2020, but they don’t use it until the next year. You have since cancelled your policy. A customer realizes that their bank account has been accessed, and you file a claim with your insurance company to help pay for the damages in 2021.
If you have an occurrence policy, you’ll be covered because the hacker stole the data from you while you were covered. However, a claims made policy would not cover you, because you did not have insurance when the claim was made.
Adding Target as an Additional Insured means that your policy covers them as well. It’s important that your certificate has the exact additional insured language in your contract. Target requires a CG2015, CG2026 or equivalent endorsement, listing “Target Corporation and its subsidiaries” as additional insured.
Primary and Non-Contributory Language
This endorsement specifies that if there is a claim that could be covered by your insurance and Target’s insurance, yours will pay first. It also states that your insurance can not request contribution from Target’s insurance.
A waiver of subrogation means that your insurance company can not try to recoup any losses claim from Target’s insurance company down the road.
- Your insurance carrier must have an A.M. Best rating of A-, VII or better. If you’re already insured, you can search your carrier on A.M. Best to find their rating
- The insurance company must be licensed in your state
- All coverage must be on an Occurrence Basis (with the exception of the Cyber policy, as we discussed above)
- You must provide your Certificate of insurance before you can ship anything
- Your insurance company must provide Target 30 days prior notice if you change or cancel your policy
- Your policy must provide worldwide coverage
- You must insure any products that you are not storing at Target’s facilities
- If you intend to self-insure, you need prior approval from Target
- Your General Liability policy has to stay in place for 3 consecutive years
- Your General Liability policy must remain active for the Life of Goods. In other words, you need to have coverage in place even after you discontinue selling a product if customers are still using it.
How to Meet your Target Insurance Requirement
Make sure you get covered in time
Target will not let you ship any products until you have a certificate of insurance that meets their requirement. With all of the details and endorsements, it can be difficult to get it right on the first try. Vendors often spend weeks going back and forth with Target and their insurance agent before they can start selling.
The Target Vendor Policy
The best way to quickly get a certificate of insurance that meets Target’s insurance requirement is to purchase a pre-made Policy. The Target Vendor policy has all of the required details built in, including language and endorsements. It also comes with a Live COI, which you can update, download, and share whenever you get a new contract. Click below, and fill out a quick (5 minute) application. A licensed insurance advisor will reach out to ensure that you have everything you need for your specific business (in as little as 1 day).
If you already have an agent or broker, be specific about your requirements and your products. If you have any questions, Bunker’s team of advisors is here for you! Reach out to email@example.com, or give us a call at (877) 968-9108.