Shop insurance: What you need to know
When you've spent time and money on opening your own retail business you’ll want to make sure that it’s properly protected with shop insurance. But when you’re working hard to make your dreams of being a business owner come true, sorting out your insurance can be quite daunting.
After all, how do you decide which insurance your business really needs to safeguard you from liability and manage risks? How much cover do you need to protect you without paying over the odds? The questions you have may be as long as your stock list.
Before you become too overwhelmed, rest assured that buying shop insurance doesn't have to be complicated or stressful. Understanding what you need and why you need it will help to take away much of the uncertainty that surrounds insurance and make your journey a straightforward one.
So, before you begin your search, here’s all you need to know about shop insurance.
There are a number of different insurance types which will enable you to do this, some of which are described below:
Public liability insurance
This offers protection in the event of a customer making a claim, with the cost of compensation and legal fees being covered. Although this important insurance isn’t a legal requirement, should a customer or supplier get injured or their property is damaged while in your shop, it'll be invaluable.
Employers’ liability insurance
If you have staff that help you run your shop, even if they’re employed on a casual or temporary basis, you’re required by law to take out employers’ liability insurance. Most businesses with employees must have the insurance in place to cover any claims from staff members who’ve been harmed as a result of working for you.
Your stock is essential to the success of your business and so buying insurance to protect it is an easy decision to make. You can choose to cover any seasonal stock increases at busy times of the year such as Christmas so that you’re not left out of pocket during your most profitable periods. If you also sell goods that could be deemed as attractive to prospective thieves, you can insure target stock including tobacco, wines and spirits and jewellery.
It’s often overlooked, but if an event occurs that means your shop is unable to open, it's not only a massive inconvenience for your customers but could have disastrous consequences for your business too. Business interruption will cover you for additional costs incurred and a reduction or loss of income caused as a result of an insured loss such as a fire or a flood.
If you own the shop you trade from then you will need Buildings insurance. It is designed to cover the rebuild and associated costs incurred following a claim. It will also cover any permanent fixtures and fittings if they were to become damaged following and insured incident such as a fire or a flood.
You’d never get on a bicycle if you thought you were going to fall off but you still wear a helmet…just in case.
And with shop insurance, it’s the same.
When you run a business which relies on people visiting your premises, it’s your responsibility to have public liability insurance in place. Even if you’re the most careful of shop owners, accidents can and do happen.
So, if a customer claims that they’ve suffered some kind of injury or their possessions have been damaged whilst in your shop, you may be liable to provide compensation. Due to the nature of public liability claims, the cost of compensating loss of income and medical expenses, as well as funding the legal fees associated with defending the claim, can be huge.
And whilst public liability insurance isn’t a legal requirement, having at least £5million of employers’ liability in place if you have staff is a legal requirement, however most insurers offer £10 million of cover as standard. The Health and Safety Executive (HSE) enforce the law and may ask you to show proof of your insurance at any time. If you’re found not to have suitable insurance in place, you can be fined up to £2,500 a day suitable.
Once you get your employers liability insurance make sure you display the certificate of insurance where employees can see it. This doesn’t have to be a physical copy, it can be electronic, but it must be easily accessible for staff. If you don’t do this you could end up being fined.
Don’t forget to also consider other covers such as stock cover and business interruption cover. Without being properly protected, you risk the safety of your customers and your employees and your business could be financially ruined.
Retail outlets come in all shapes and sizes but they all have one thing in common – the need for shop insurance. From florists to fishmongers and everything in between, if you run a shop then it’s very likely that you have a need for insurance.
The types of businesses that will benefit from shop insurance are:
- Jewellery shops
- Toy shops
- Shoe shops
- Clothes shops
- DIY stores
- Stationary shops
- Book shops
- Pet shops
- Corner shops
- Electrical shops
- Furniture shops
- Arts and craft shops
- Sports equipment shops
Obviously this is far from an exhaustive list but it demonstrates that a diverse number of shops have a need for the same type of insurance, even if the cover within the policy is slightly different.
To decide if shop insurance is right for you, then ask yourself the following questions:
- Do you have stock for sale?
- Do you repair goods for your customers?
- Do customers visit your shop?
- Do you visit customers at their homes or place of work?
- Do you keep money in your shop?
If the answer to any of these questions is yes, then you should put getting insurance in place at the top of your priority list.
The insurance that you’ll need to protect your business may differ from the shop next door to you or even another retailer that sells the same product as you. This is because the type of policy you need depends on other factors such as the amount of money you make and how many employees you have. Your shop insurance needs to be tailored to the individual needs of your business as one size doesn’t always fit all.
Five top tips to make sure that you get the cover you need.
1. Understand your risks
It took guts to start your own business and so by nature you may be a risk taker. But not having insurance in place could be taking a risk too many. As a shop owner, you need to be aware of the risks facing your business so that you can cover yourself in case these ever become reality.
In retail, some of the biggest risks that need to be covered include theft of stock, property damage, and injury to employees or customers. Your risks, and therefore the amount of insurance you need, increases if you own the building that your shop is situated in, you have employees, a high number of customers or expensive stock.
Insurance should be a key component of every business plan. By understanding your business risks, you can take preventative measures to protect what’s valuable to you if or when disaster strikes.
2. Don’t under insure
It’s natural to want to keep the costs down when you’re just starting your business but this can end up costing more in the long run. If you’re not properly protected, your insurance won’t offer you the cover you need if you ever need to claim.
Instead once you’ve understood your risks, it’s better to look for the best deal that you can get based on the cover you need rather than choosing not to include essential covers. If in doubt, it’s better to be over insured than under insured. This way you can have peace of mind that you haven’t left any significant risks exposed.
3. Place the importance of cover over cost
Shop insurance is a necessity, not a luxury, if your retail business is to be a success. It can be tempting to seek out the cheapest business insurance policy, but this may not give you all the protection you need. Finding a policy that offers the right cover for the best cost is a balancing act that’s important to get right.
4. Consider a shop insurance package
Most providers have shop insurance packages available which bundles the coverages a shop owner will need into one policy. Shop insurance policies tend to be made up of core and optional covers so that you can choose to only pay for what you need resulting in a more cost-effective solution.
For this reason, you’ll find that most shop insurance packages include public liability, contents and stock cover as standard. You can then choose to add buildings, employers’ liability and business interruption if you need the additional cover.
5. Shop around
Or even better, let Lloyds Bank Business Insurance take the pain out of shopping around for you. We’ve chosen to partner with Arthur J. Gallagher Insurance Brokers so that you can benefit from the services that an insurance broker can offer.
You only have to provide the details of your business once and you’ll get to choose from a range of quotes from well-known insurance providers. All the advantages of shopping around with none of the hassle.
Don’t worry, you don’t have to figure things out by yourself. If you need any help to decide on the right cover for your business, a team of experienced advisers are on hand to make buying your insurance as straightforward as possible.
Are you ready to protect the business you’ve worked so hard to build?
Here at Lloyds Bank Business Insurance Services, we understand the unique risks of your retail business, and with the support of Arthur J. Gallagher, we can take the guesswork out of finding a policy that’s right for you. Ready to get started?
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278. Telephone: 020 7626 1500
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Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS). Please note that due to FSCS and FOS eligibility criteria not all business customers will be covered.
Insurance covers are subject to the individual terms, conditions and exclusions of the of the insurer providing them. Always review the policy documentation supplied during during the quote process to ensure you have the cover you need.