Shop Insurance Guide

What is shop insurance?

Our guide explains the features and exclusions of shop and retail 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). 

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.

A specialist insurer will be able to understand the specific risks of your business depending on the type of retail shop you run and will be able to create a tailored policy to suit your business needs.

Features of shop insurance

Public liability - 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 public liability cover could 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.

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 in case you need to completely re-build from the ground up. This cost should be detailed in the deeds of the building but can also be obtained from a surveyor or using an online calculator. 

Business interruption - Business interruption insurance pays the outgoings such as overheads, wages or increased cost of working expenses if something happens that stops 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 - Anything permanently fixed in your building is covered in with the building insurance. As a general rule, anything that isn't fixed down in the building needs to be included in your contents insurance. For further information speak to your insurance adviser. If you rent the property your landlord should have their own policy covering the contents that belong to them and you will typically need a policy to cover the contents belonging to you and your business.

What are package policies?

Commercial property package policies are made up of various types of insurance cover which are designed to cover the standard risks for a particular industry. For example, a shop insurance package may offer glass cover for the shop window or seasonal adjustment cover for months when stock levels are likely to be higher. Package policies can be a cost-effective way of getting cover designed to suit the needs of your business.

Optional features of shop insurance

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.

However, 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 adviser 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. 

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 extend 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 increased fire risk a frying range is deemed to add. It is key that this is highlighted and covered adequately so if you have any uncertainty its best to check with one of our advisers.

Shop insurance from Towergate

Whether on the high street or out of town, our shop insurance policy helps to keep you open all hours.

About the author

Mike Stephens is a respected senior industry professional and Fellow of the Chartered Insurance Institute (CII) with well over 40 years’ varied experience in the commercial insurance sector as a director, underwriter, and operational improvement manager.