Retail business insurance is designed to help retailers manage selected risks associated with running a shop, from property damage to liability claims and business interruption following insured damage. Depending on the sections selected, it may help with certain financial consequences of unexpected events, subject to the policy terms.
Running a shop can be the absolute dream. You’re selling products to your local community, chatting with customers and watching the till go beep. Everything feels under control. But sometimes, even an ordinary Tuesday can take an unexpected turn.
A leak damages your stock. A customer slips near the door. Or a smashed window leaves your premises needing attention. Retail can be rewarding, but running a business also means dealing with risks that aren’t always obvious when everything is going swimmingly.
What is retail business insurance?
Retail business insurance is a type of business insurance designed to help with certain risks associated with trading from retail premises. Depending on the policy, it may include protection relating to property, liability, stock and business interruption following insured damage.
Who is retail business insurance designed for?
A typical retail policy is designed for businesses trading from shops, stores and other customer-facing premises. Eligibility depends on the trade and on the insurer, and the relevant business activities and premises must be accurately recorded in the policy schedule.
A busy high-street shop and a smaller independent retailer may have different risks to consider. One might hold substantial stock, while another could be more concerned about customers visiting the premises. The sections available are the same, but the cover that applies depends on what is selected.
Where a business trades matters, too. Each policy sets out the territory it covers, and some only cover businesses in Great Britain, not Northern Ireland. Cover is usually restricted to the business activities and premises shown in the schedule. Trading elsewhere or undertaking activities that haven’t been declared may fall outside the policy’s terms.
What does retail business insurance cover?
A typical retail policy is made up of separate cover sections, such as the ones below. Cover only applies where the relevant section is shown as selected in the policy schedule, and remains subject to the applicable limits, exclusions, excesses and conditions.
Think of it like stocking your shop. Knowing what’s on the shelves matters, and knowing exactly what’s included in an insurance policy matters just as much.
- Property damage: May cover insured damage to buildings, contents and stock, where selected and subject to the policy wording.
- Public and products liability: May respond to certain covered liability claims involving the public or products, depending on the policy terms.
- Business interruption following insured damage: May help with certain financial losses arising from business interruption following insured damage, where selected and subject to the wording.
- Money and assault: May provide specified protection relating to insured money losses and assault, where the relevant section is selected.
- Goods in transit: May cover certain insured losses involving goods while in transit, subject to the applicable conditions and limits.
- Loss of licence: May provide cover for specified losses arising from an insured loss of licence, where selected and subject to the policy wording.
Not every section automatically applies. The Insurance Product Information Document (IPID) provides a summary, while the policy schedule identifies the selected sections and the policy wording explains the applicable terms.
What isn’t covered by retail business insurance?
Retail business insurance isn’t a magic wand for every unexpected expense. Even where a section has been selected, exclusions and restrictions determine which losses may be covered and which fall outside the policy.
Some types of cover may not be part of a retail policy at all. Employers’ liability is included in some retail policies and not in others, while professional indemnity and treatment or malpractice cover are often arranged separately. The policy documents show what is and isn’t included.
Policies also list exclusions in the IPID and policy wording. Common examples include:
- Communicable disease.
- Cyber risks and electronic data loss, except where an insured peril causes physical damage.
- Gradual causes and wear and tear.
- Deliberate or dishonest acts.
- Losses outside the territory the policy covers.
Other important restrictions apply. These include policy excesses, cover limits and sub-limits, together with security, safety and maintenance conditions. Many policies also restrict cover if premises are left unoccupied for a set number of consecutive days.
For example, closing a shop for an extended period isn’t necessarily the same as operating it normally. The conditions relating to unoccupied premises can affect the available cover, making the precise wording important.
The IPID, policy schedule and policy wording need to be read together to establish what is insured, what is excluded and what obligations apply. A section appearing in the schedule does not mean every loss connected with that section will be covered.
Is retail business insurance a legal requirement?
Retail business insurance of this type is not generally a legal requirement. However, there is an important distinction between this optional commercial policy and insurance that businesses may be legally required to hold.
According to GOV.UK’s guidance on employers’ liability insurance, a business must get employers’ liability insurance as soon as it becomes an employer, with some exceptions, such as where it only employs close family members. Some retail policies include employers’ liability and some don’t, so a business with staff would need to check whether theirs does and, if not, arrange it separately.
How does buying retail business insurance work?
Buying retail business insurance involves identifying the relevant business details, reviewing the available sections and understanding the policy documents before making a purchase. Quotes and cover come from our insurance partner, not Insureworks, and the process is non-advised.
1. Start with accurate business details
The business gives the insurer accurate information about its premises, activities and other requested details. This information matters because a policy usually only applies to the activities and premises recorded in the schedule.
2. Review the available sections
The business chooses which of the available sections to select. The selected sections appear in the policy schedule, and the resulting cover depends on the applicable policy terms.
3. Check the policy documents
The IPID, policy schedule and policy wording explain the available cover, exclusions, conditions and financial limits. Reviewing these documents helps clarify what has been selected and where restrictions may apply.
4. Keep the details up to date
Businesses change. More stock might arrive, trading activities might develop or premises details might change. Relevant changes need to be reported to the insurer so the policy information can be kept accurate.
5. Report claims promptly
If an incident occurs that may lead to a claim, it needs to be reported as soon as reasonably practicable through the applicable claims process. The policy wording explains the relevant notification requirements and information needed.
Retail insurance expert comment
“Retail business insurance can involve property, liability and trading interruption risks, but cover depends on the sections selected and the schedule. Business owners should look closely at exclusions, limits, excesses, sums insured and conditions before deciding whether a policy matches their needs.” Joanne Safo, CEO, Lukango.
Frequently asked questions
Does retail business insurance cover loss of trade?
Not automatically. Business interruption cover on a typical retail policy relates to interruption following insured damage and only applies where the relevant section is selected. A general fall in sales or trading activity does not, by itself, establish an insured claim.
Does retail business insurance cover stock?
Property damage cover may include stock, where selected and subject to the policy wording. The applicable insured events, sums insured, excesses and exclusions affect what may be covered, so the details in the schedule matter.
Can I cancel retail business insurance?
Yes. If the policy is cancelled within 14 days with no claim, it is treated as never having been in place and a full refund applies. After that, a pro rata refund may apply, subject to a minimum retained premium, administration costs and no claim having been made or being pending.
Is retail business insurance available in Northern Ireland?
It depends on the policy. Some retail policies only cover businesses trading in Great Britain and don’t extend to Northern Ireland, so the territory shown in the policy documents is the thing to check before buying.
Find out more about retail business insurance
Retail businesses have plenty to think about, without getting lost in insurance jargon. For more information about retail business insurance, the sections a policy may include and the restrictions that can apply, visit the retail business insurance page on the Insureworks website. Quotes and cover come from our insurance partner, not Insureworks.
This page is information only and is not personal advice. Insureworks is not the insurer and does not underwrite or pay claims.