Shop Insurance

What is shop insurance?

Shop insurance is a type of business insurance that protects your business against claims and damage. It is not a single policy but a package you tailor to your shop, which can include cover for commercial premises, employers' liability, public liability, stock and business interruption.

It may be suitable for everyone from high street retailers and hairdressers to bookshops and local newsagents. Retail premises are busy places, and a shop with high foot traffic has a greater chance of someone having an accident or damaging your property. Every shop is different, so the right policy is the one that matches the risks your particular business faces.

Why do I need shop insurance?

You need shop insurance because, as a shop owner, you have a responsibility to protect your customers, your staff and your business activities, and insurance is the way to provide that protection when something goes wrong.

A shop insurance policy can protect your stock against damage or theft, your premises from vandalism, and your business from the legal expenses that result from claims by customers. Whether you run a large high street retail business or a small independent store, you can tailor the policy so the cover matches your own specific needs rather than paying for a one-size-fits-all package.

Is shop insurance a legal requirement?

Only employers' liability insurance is a legal requirement; the rest of shop insurance is strongly recommended but optional. As soon as you become an employer and start hiring staff, you must have employers' liability cover in place, and you can be fined £2,500 for every day you are not adequately covered.

The requirement applies however your staff are engaged. It includes full-time workers, part-timers, labour-only subcontractors and bona fide subcontractors, so an online store that only uses part-time or contract workers still needs it. The cover protects you if an employee makes a claim against you for an injury suffered while doing their job.

Going without the other covers is not illegal, but the consequences of an uninsured loss can be far more serious for your business and your livelihood than a fine.

What does shop insurance cover?

Shop insurance covers the main risks a retail business faces, and most shops should consider the following elements to cover the major bases.

• Contents insurance protects your stock, shelves, displays and other equipment from theft and damage. In short, it covers the interior contents of your shop.
• Public liability insurance covers legal costs and compensation if a customer injures themselves or suffers property damage on your premises. With daily customer visits, it is a top priority for most shops.
• Employers' liability insurance is required by law if you have employees and protects you if a member of staff is injured while working for you.
• Buildings insurance is needed if you own the building your shop trades from. It covers the cost of repairing accidental damage or vandalism.
• Product liability insurance covers damage, injury or illness caused to a customer by a product you sell. You can be held liable even if you did not manufacture it.
• Business interruption insurance covers lost sales, wages and even rent if a break-in, burst pipe, fire or similar event stops you opening your doors.
• Vehicles are not covered by a shop policy. If you run several work vehicles, you may want to arrange fleet insurance separately.

No two shops are the same, so include as many or as few of these as your business actually needs.

What add-ons can I include in a shop insurance policy?

Add-ons let you cover risks that a standard shop policy leaves out, and while each one can push up the price, some may be vital for your particular store.

• Stock away from the premises is relevant if you also sell online or hold stock in a warehouse.
• Flood cover if your store is in a high flood-risk area.
• Loss of licence cover if you sell alcohol and would lose business if the licence were taken away.
• Terrorism cover for shops located in areas considered high risk, covering losses from a terror attack.
• Goods in transit and hire and reward cover if your business makes deliveries to customers.

Online shops are not exempt. An online business faces many of the same risks as a physical store and may need legal expenses cover for claims from customers or employees, plus cover for stock held in a warehouse.

How much does shop insurance cost?

There is no single price for shop insurance; the cost depends on what you decide to cover, where your premises are based and how much risk the insurer is taking on. The main factors are:

• The size of your business: larger companies are usually more costly to insure.
• The location of your premises: a shop in a high-risk area will usually pay more.
• The type of products you stock: high-value items or expensive equipment increase the cost.
• The number of employees: more staff means more potential for claims.

Because the price is so specific to your shop, the practical way to find out what you would pay is to run a comparison and look at tailored quotes for your own business.

How can I get cheaper shop insurance?

The most effective way to get cheaper shop insurance is to compare quotes from several insurers rather than accept the first price you are offered. Beyond that, there are a few steps that can help bring the premium down.

• Pay annually. Monthly payments help cash flow, but an annual payment avoids the interest added to the premium.
• Keep the premises secure. Security measures that protect your stock and equipment reduce the risk the insurer is pricing.
• Avoid liability claims. Training staff in workplace safety and enforcing clear policies helps prevent the legal costs that follow a claim.
• Get the cover right. Avoid paying for cover you do not need, but do not underinsure either. Being underinsured can leave you facing large out-of-pocket compensation costs that outweigh any saving on the premium.

How do I compare shop insurance quotes?

Fill in one short form with details about you and your shop, and you can then compare live quotes online from a panel of UK business insurers. Once you have found a policy that suits your shop, you buy it directly from the insurer you prefer.

Before you start, have a clear idea of which covers your shop needs, roughly what your stock and contents are worth, whether you own the building and how many people you employ. That way the quotes you compare reflect the cover you actually want rather than a generic package.