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Shop Insurance Explained

Shop insurance is an important safeguard, but retail outlet owners need to know they have adequately covered as many risks as possible.

Shop insurance is specialist cover designed to suit the needs of retail outlets by safeguarding some vital aspects of the business, like:

  • Customers
  • Staff
  • Premises and stock
  • Income

Shop insurance combines four types of cover – public liability, employer liability, contents and business interruption – to provide this all-around protection.

Who Needs Shop Insurance?

Shop insurance is for any retail business running from commercial premises.

If you own a shop and rent the premises to a business, you may need building insurance, but the store owner is responsible for the rest of the cover.

Entrepreneurs running an online or pop-up business from home should investigate the cover provided by a domestic business policy.

What Does Shop Insurance Do?

Shop insurance is not a type of insurance but an umbrella term for a bundle of protection aimed at shopkeepers.

Sheltering under the umbrella means shop insurance has a single renewal date and a simplified application process, which can keep the cost down.

Now, let’s look at the four main types of shop insurance in more detail:

Public liability insurance

Busy shops have many customers, and the risk of one being injured from an incident inside the store rises as the business gets busier.

Public liability shop insurance protects the business from compensation claims by customers or other visitors to the premises, like delivery men or contractors.

Besides paying compensation, public liability also covers damage to someone’s property, legal expenses and expenses related to the claim, like expert witnesses or medical costs.

Employer liability insurance

Employer liability shop insurance does more or less the same as public liability cover with one main difference – the policy covers compensation claims from staff.

The term staff covers a broad remit – from paid workers to volunteers or interns working for free.

However, if you are the sole director of a company running your business or only work with close relatives, you may not need employer liability cover.

Shop insurance for premises and stock

If you have high-value stock, like wines, spirits, tobacco or jewellery, you are a target for walk-in thieves trying their luck or more determined burglars.

Stock insurance safeguards the items you need to sell to make a profit from accidental damage, like fire, flood, theft and other risks.

If you rent a shop, the landlord is responsible for insuring the premises; otherwise, you will need building insurance. If you are buying a shop with a mortgage, the lender will certainly want you to take out building cover as part of the loan terms.

Business interruption

One of the most overlooked but vital shop insurances is business interruption cover.

The policy pays when the business cannot open due to a serious incident, like a fire, flood, or cyber-attack. The policy typically covers additional costs due to the incident and income loss.

Other Shop Insurances To Consider

Depending on your shop type, you may want to consider one or more shop insurance add-on policies.

  • Product liability – This is often sold with public liability and covers any loss or injury to anyone outside the business due to the use of a defective product
  • Legal expenses cover – this is not generally part of a basic shop policy but an add-on at extra cost.
  • Glass cover – insures the storefront, including signage and window stickers, against damage, but may already be part of the landlord’s insurance.
  • Loss of liquor licence – If you sell beer, wines and spirits, this protects against losing your licence and the subsequent loss of income
  • Frozen stock loss – If a large part of your business involves selling frozen food, losing the stock can cost thousands, so it’s worth considering this extra cover
  • Professional indemnity – This add-on covers against giving customers poor advice or damaging items under repair, for example.
  • Cybercrime – This pays if your online business is hacked or locked in a denial of service
  • Equipment cover – This kicks in if equipment, like tools or computers, are damaged or stolen so your business can get up and running quickly after an incident
  • Goods in transit – If you deliver goods to customers, goods in transit cover protects the items from loss or damage while they are on the road

Is Shop Insurance Compulsory?

The only compulsory business insurance for shops is employer liability cover.

Still, any store facing a claim without a policy must find the money to fund the award, which can often run into tens of thousands of pounds and lead to ruin for the business.

Do I Need Shop Insurance?

If you answer yes to any of the following questions, you need to consider taking out shop insurance:

  • Do you keep stock for sale?
  • Do you repair goods for customers?
  • Do customers visit your shop?
  • Do you see customers at their homes or work?
  • Do you keep money in a shop?

How Much Does Shop Insurance Cost?

Quoting shop insurance is complicated because no two businesses are the same. Even similar businesses reading side-by-side have different insurance needs due to the value of the stock, the number of employees or the amount of cash going through the tills.

Insurers will tailor shop insurance to suit your business needs. According to industry research, the starting price for shop insurance is around £400 a year. This price offers £2 million for public liability, employer liability insurance and cover for contents and stock worth £50,000.


Do I need shop insurance for a home-based online store?

You should insure stock and business equipment and consider public and employer liability cover, but you will need specialist home cover rather than shop insurance.

I run a coffee bar, is that a shop?

Retail outlets come in many shapes, types and sizes, but what they have in common is a need for customised insurance. If customers come into your shop, buy goods or services and spend money, you need shop insurance.

What are package policies?

Package policies are bundles of specialist insurance designed to cater for a specific business type. For example, a shop package might offer extra stock cover at Christmas to cater to a toy shop’s busiest time.

Does my business need product liability cover?

If your business sells goods made by other businesses, you should not need product liability cover. The policy is designed for businesses that design, create and sell their own products.

Do I need personal accident insurance?

This add-on replaces income to help with bills for employees who cannot work due to an accident inside or outside work.

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