Shop Insurance Explained

Our guide explains the features and exclusions of shop and retail insurance. Because no two shops are ever the same we want you to understand the things you need to know to best protect your business.

What is shop insurance?

A shop has three important aspects that any good insurance policy should keep at its heart. Those three things are your premises and stock (buildings and contents insurance), your customers (public liability insurance) and protection of outgoing costs should you have to stop trading (business interruption insurance). Get these things in place and anything else is down to the specifics of your business, your preference and of course your budget.

Do I need shop insurance?

Shop insurance is primarily focused on retail businesses that are run from a commercial property. If you have a pub, hotel, restaurant or own a commercial property which you rent out to other businesses you may well want a policy more specified to your risk (see related products at the bottom of this guide).

The basic types of cover we talked about above are standard across all retail shops. They all have a premises, products or services and customers. This makes building the basics of your policy quite straight forward. Having said this, no two shops are the same, some make deliveries, some sell alcohol, some employ staff to install products in customers’ homes – the list is endless. Understanding your specific risks and tailoring a policy to meet those is the job of a specialist insurer, and vital for your piece of mind.

Shop Insurance Features

Public Liability - This is to protect you and your customers. As the owner you are responsible for making your shop as risk free as possible but accidents can still happen. Public liability insurance will cover loss, damage or injury to a third party on your premises. For example – if a customer were to trip on a ladder left out after reaching a high shelf and injure themselves, your PL cover would pay out if a law suit were to arise.

Shop buildings insurance - If you rent the property the buildings cover should be held (and paid for) by the property owner (your landlord).

The Rebuild Cost - Should the worst happen and your property becomes damaged or is destroyed your building insurance will cover you to repair or rebuild. The rebuild cost is the amount you should insure for – should you need to completely re-build from the ground up.

Business Interruption - Business interruption insurance pays the outgoings such as over heads, wages or increased cost of working expenses if something happened that stopped your business trading. If buildings and contents insurance cover your assets, business interruption is the life support that sees you through while those things are being fixed or replaced.

Shop Contents Insurance - A great way to differentiate between what is ‘building’ and what is ‘contents’ for insurance purposes is to imagine turning the whole property upside down. Anything that would drop to the ceiling (now the floor) is contents. This means your cash register is contents but windows and doors are buildings. If you rent the property your landlord should have their own policy covering the contents that belong to them.

Shop Insurance Optional Cover

Shop Insurance Exclusions

Manual work away exclusion - A shop is defined as a business based from a specific commercial premises – your shop. A policy is usually designed to cover you for the business you do there and sometimes extended to cover you for collection and delivery outside this property. But take for example a kitchen show room… Kitchens are sold from the shop but some of the profit and business may come from installation on the customer’s property. The manual work away exclusion states that this type of business needs extra cover, simply because it faces a different type of risk. If the balance tips towards the external work, you may even be advised to switch to a ‘commercial combined’ insurance policy which might be better suited your business model. An experienced advisor can talk through this with you and explain the benefits of both.

Accident Damage This cover allows you to claim for damages not caused by any other features such as fire, theft, flood etc. This doesn’t always come as standard so if you want accidental cover to be included in your policy make sure you let your adviser know early on to help them source you the best policy. As with any insurance feature there will be some exclusions. Make sure you read your policy documents thoroughly to understand what you are responsible for and what your insurance company is responsible for. Insurers want to protect themselves from claims that are ‘too risky’ or ‘inevitable damage’ such as wear and tear but you must also be happy that they are agreeing to cover the things that are important for you.

Theft by violence/forced entry - This is an optional cover that protects against theft and break-ins via a forced entry. Insurers generally won’t cover you for a theft that occurs through an unlocked door and will stipulate what security measures you need to have in place before you can be covered. This will have extended to public entrances, back doors, windows, out buildings, delivery hatches and service entrances. Make sure you are aware of what the security requirements are for your policy.

Commercial kitchens/serving food - If you do a high level of cooking and have a frying range, this could add a few stipulations to your policy, or maybe make you ineligible entirely! This is due to the much increased fire risk a frying range is deemed to add. Its key that this is highlighted and covered adequately so if you have any uncertainty its best to check with one of our advisors.

Shop Insurance Security Requirements

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