Opening a shop lets you follow your passion or place yourself at the heart of the community. This fulfilling venture showcases your business and customer service skills, tapping into your creative and marketing potential. Whether you sell beautiful bouquets or prize-winning pork sausages, the right insurance can keep you and your shop safe when the unexpected happens. Our complete retail insurance guide will teach you everything you need to know about insuring your shop.
Why do I need insurance for a shop?
You put your heart and soul into running your shop. From the early starts and long hours to significant financial investment, there’s a lot at stake when you own a shop. Taking out insurance for a shop safeguards your stock and premises and protects you against claims made by customers or members of the public and members of staff.
If you fail to take out insurance and your shop business is faced with a claim, suffers from stolen, lost, or damaged stock, or the premises is physically damaged by flood, fire or vandalism, you could face a crippling financial burden that could send your business to the wall. Shop insurance offers the financial safety net you need.
Which type of shop needs insurance?
If your shop deals with customers or members of the public face-to-face, if you hold stock, and/or employ staff, then you could benefit from insurance. Whether your stock is edible, wearable, technological, luxurious, essential, or designed for pets, and whether your shop is in a sleepy village or a city centre, retail shop insurance could be right for you. Shops covered by our extensive retail insurance cover include:
- Antiques shops
- Arts and crafts supplies shops
- Bakeries
- Beauty and cosmetics shops
- Book shops
- Butcher’s shops
- Cheesemongers
- Clothes shops
- DIY shops
- Florists
- Furniture stores
- General stores
- Gift shops
- Greengrocers
- Jewellers
- Health stores
- Homeware shops
- Newsagents
- Pet shops
- Shoe shops
- Stationers
Do shops have to hold insurance?
Interestingly, retail store insurance isn’t always a legal requirement. If you work alone, hire no staff, and own your shop premises outright, there is no legal requirement to hold insurance, although we would strongly advise to you take out cover! If you hire any staff, this changes, and by law, you must hold at least £5 million of employers’ liability insurance. If you have a mortgage on your shop premises, your bank requires you to hold commercial building cover as well as public liability insurance.
What does insurance cover?
Shop or retail insurance is an umbrella term for a collection of covers that reflect the risks faced by a shop. Not every shop will need all of the covers discussed below, so when it comes to securing your insurance, it’s a good idea to talk to the team at Park Insurance who can tailor a bespoke policy package to suit your exact needs. We’ll make sure you don’t over or under-insure your business.
Under a shop insurance policy, you could include the following cover:
Public liability
Public liability is used to deal with claims made against your shop by customers (or other members of the public) for injury or damage to personal property. It’s an essential cover to have because claims for injuries can be very costly, both in terms of the compensation and medical costs, and the legal fees.
If a customer slips on a spillage on your shop floor or trips over a loose floor tile, they could claim injury compensation. If a member of staff accidentally spills cleaning fluid on a customer’s designer handbag, again, you could be left footing the bill for damage to personal property. Public liability helps you defend such claims and covers any costs you are found liable to cover.
Employers’ liability
If you hire staff, it is a legal requirement to hold employers’ liability cover. You may only hire one part-time member of staff to cover your days off – but you still need this cover by law. Failure to have employers’ liability could result in a fine of up to £2,500 per day.
You’ll need this cover if an employee makes a claim against you for illness or injury that they claim is attributable to your shop.
Building cover
If you own your shop premises, commercial building cover helps protect your bricks and mortar against fire, flood, storm damage and other natural disasters, broken windows. You may like to include additional cover for vandalism too.
Stock cover
Without stock, you have no means of making a profit. If your stock room floods or fire damages the shop floor, stock cover helps to compensate for your losses. You can discuss with your insurer how to protect stock that is more likely to be the target of theft, such as jewellery or alcohol.
It’s common for shops to hold more stock at certain times of year, such as Christmas or peak tourist seasons. An insurer can tailor your policy to reflect these fluctuations and ensure you have enough cover all year round.
Business interruption
When an insured loss such as a flood or fire affects your shop, you may be covered for the building repairs and loss of stock – but what about the loss of income you incur daily while you wait for your shop to get up and running again? Business interruption cover protects your finances by compensating for your loss of earnings while repairs you are unable to trade normally.
Personal accident cover
If you’re the main driving force in your shop, clocking up the majority of the hours on the shop floor, an accident that leaves you unable to work could spell disaster for your business. Personal accident cover offers a financial cushion if an injury keeps you away from work for more than two weeks.
Cyber and data cover
If your bricks-and-mortar store is complemented by an online shop, or if you store customer details on a digital database, you might like the peace of mind that comes with cyber and data cover. This can be used to deal with the financial fallout of a data breach or a cyber attack – both of which continue to be pressing issues for modern businesses.
What isn’t covered by insurance for a shop?
You’ve looked at the type of cover that can be included as standard under a retail insurance policy, but it’s important to know what isn’t covered as standard. You don’t want to get a nasty surprise when mice destroy a shelf of stock or your DIY shelving collapses, damaging the walls, only to find that you’re not covered by your insurance.
Commonly, pest damage isn’t covered by retail shop insurance. So vermin or insect infestations should be dealt with swiftly using your own finances.
You will not be covered for substandard work carried out in your shop. That means you must pay due diligence when hiring builders, to ensure they work to a high standard.
From the premises themselves to the fixtures and fittings, natural wear and tear will occur over time. You can’t claim for issues attributable to wear and tear, so a ten-year-old, rusted unit of shelving that collapses won’t be replaced as new by your insurer.
Do I need insurance? Questions to ask yourself
When you’re setting up your shop there are endless outlays, from the fixtures, fittings, and sign writing to the stock and retail equipment like tills and card readers. Then, once your shop is up and running, there are ongoing costs like wages, rent, and utilities. This could leave you asking whether you really want to spend money on retail insurance on top of everything else.
Though you may keep your shop well-maintained and be on top of health and safety, accidents can and do happen. You may not notice that your staff member has left the vacuum cable trailing across the shop floor during the post-close clean-up. If a supplier comes in with a delivery, trips on the cable, and breaks a bone, you could face a claim.
If you know that you wouldn’t be able to personally afford third-party claims or any of the other unexpected costs that arise when you’re in charge of a business and its premises, then retail shop insurance should be high on your list of priorities.
How much does retail shop insurance cost?
When you weigh up the financial impact of not holding insurance, the annual premium suddenly seems very affordable, and there is usually the option to pay monthly.
The cost of the policy will vary according to the number of different types of cover you include and the levels of cover you set. An insurer will also base your premium upon the value of the stock you hold, the type of business, the size of your premises and its location, and the number of staff you hire.
You can bring your premium down by installing excellent security in your shop, including cameras, alarms, and anti-theft devices, and by paying annually rather than monthly.
Finding the best policy
Insurance for a shop that sells high-end jewellery may be different from insurance for a small village grocer, notably in terms of the different levels of cover that need to be set. A shop that runs from a leased commercial premise will have different needs from a shop owned outright by the proprietor.
To find the right policy for your shop, consider the following:
What are your unique risks?
For most shops, the biggest financial risks faced are those relating to customers, staff, and stock. If you have high numbers of customers frequenting your shop, employ a large team of staff, and hold high-value stock, your risks increase. If you own the shop building, that’s also an increased risk because of the potential damage and cost of rebuilding.
When you’re organising your insurance, you will be asked to drill down into your key risk areas to ascertain where insurance can offer the best protection, and at what level.
How much cover do I need?
Though employers’ liability cover of £5 million is compulsory, some shops choose to take out a higher level (such as £10 million). Likewise, you have options to set your public liability from as low as £2 million to over £10 million.
Underinsuring your shop can be highly problematic, especially in the event of a serious accident or a total loss of your premises and stock. Think very carefully about your level of cover and though it may make your premium higher, in the long run, it could be the best decision you make for your business.
Remember, if you’re underinsured or failed to take out cover relating to the specific risk encountered, your insurer cannot retrospectively raise cover or add cover. You will be liable to pay out on any uninsured risks.
Consider a specialist package
Retail insurance package policies allow you to handpick the cover you need and avoid those you don’t. This allows you to channel your insurance budget to those areas that need it most. A retail insurance portfolio makes it easier to assess and monitor your coverage, making it easier to change when you need to increase a cover or add coverage to address a new risk. A bespoke package can also save you money on your annual premium.
Find the right insurer
When you’ve spent time, money, and effort getting a shop up and running, you want an insurer that understands your sector and, importantly, understands your unique business. Turning to an insurer with a background in specialist policies gives you the reassurance that your shop business is receiving retail policy that accurately addresses your unique needs.
From retail nuances like seasonal stock fluctuations and staff numbers to supplier issues and shoplifting, the right insurer will work in partnership with you to keep your shop safe.
Park Insurance has over 30 years of experience supporting the UK’s hardworking small business owners with comprehensive insurance policies. Fill in our contact form or give us a call today to discover how we take a bespoke approach to tailoring insurance for a shop.