Retail business insurance is not a compulsory policy that every shop must have in place. Other business insurance requirements may apply depending on the type of business you have and your needs. For example, you will need car insurance if you are using a car for your business, and you will need employers’ liability insurance if you are employing people.
Unfortunately, running a business involves more than just opening the door and hoping the card machine keeps you in a good mood throughout the day. You’ve probably got customers visiting your shop, stock stored in various places, or products flying up and down the motorway network.
Even if just one element backfires, it can lead you to having to close the doors permanently. It’s a scary thought. This thought leaves many shop owners asking, do I need retail business insurance? It’s not a legal requirement, and there’s no single answer for every business.
Some businesses may think it is worth it for them, and others won’t feel that way. This guide explains the legal position, the cover areas available for retail business insurance and the details to check before deciding whether a policy meets your requirements.
Understanding if I need Retail Business Insurance
There is no legal requirement for retail business insurance, but some people consider it for several reasons. Knowing whether it is relevant to your business will depend on your premises, stock, activities, turnover, employees, and the risks you are prepared to manage yourself.
When asking what insurance do I need for my retail business, it’s vital to consider the practical risks attached to the business rather than starting with a long list of policy names and crossing them off as you go. It’s already a nightmare task, so there’s no point making it even more difficult to process.
A retailer should think about the following items when considering business insurance:
- The premises it trades from
- The value of its stock and contents
- How often customers visit
- The products it sells
- Whether stock is transported
- Whether cash is kept at the premises
- Whether it depends on an alcohol licence
- Any requirements in its lease or other contracts
The Lukango retail business insurance product available through InsureWorks can include several cover sections. Each one is subject to its own eligibility requirements, terms, conditions, exclusions, excesses, limits and sub-limits. Only the sections selected in the Policy Schedule apply.
When Might Retail Business Insurance Be Suitable?
Retail business insurance may be worth considering when an unexpected event could leave your business facing a cost that would be difficult to cover from its own funds.
For example, you may wish to consider retail business insurance if you:
- Trade from a shop or retail premises in Great Britain
- Keep valuable stock, contents or equipment at the premises
- Regularly welcome customers, suppliers or other members of the public
- Sell products that could potentially cause injury or property damage
- Transport stock between suppliers, shops, storage sites or customers
- Hold cash at the premises or take business money to the bank
- Rely on an alcohol licence to carry out a large part of your trade
- Could lose a significant amount of turnover if insured property damage stopped you from opening
A clothing shop holding several seasons’ worth of stock, for example, may wish to consider how it would replace damaged goods after an insured fire or flood. A convenience store may be more concerned about business money, customer injuries or its alcohol licence. A furniture retailer delivering products may also want to review whether goods in transit cover reflects the way it operates.
That does not mean every available section will be suitable for every retailer. A florist, bookshop and off-licence may all fall under the retail umbrella, but their stock, premises and daily risks are unlikely to be identical. One size may fit all for carrier bags, but it rarely works that neatly for business insurance.
Before buying, retailers should compare the available sections against their own activities, premises, stock values, turnover and financial circumstances. They should also read the IPID, Policy Schedule and policy wording to check the limits, excesses, conditions and exclusions.
When Might Retail Business Insurance Not Be Suitable?
Retail business insurance may not meet the requirements of every business. There may be situations where the product, or some of its available sections, do not match the way a business operates.
For example, this particular product may not be suitable where:
- The business does not operate from retail premises in Great Britain
- The activities carried out are not listed or accepted under the policy
- The business needs cover for locations that are not shown in the Policy Schedule
- The required level of cover is higher than the limits available
- The business cannot meet security, maintenance or occupancy conditions
- The main risks the owner wants to insure are excluded
- The business requires cover for risks outside Great Britain
- The selected excesses would be too high for the business to manage following a claim
An online retailer primarily concerned about a major data breach may need to look at separate cyber insurance rather than assuming retail business insurance will cover that risk. A business with employees should also not assume public liability covers injuries suffered by staff, as employee injury is excluded from that section.
A retailer may also decide that certain optional sections are not suitable because it does not face the related risk. A business that does not carry goods, hold business cash or depend on an alcohol licence may have little reason to select goods in transit, money or loss of licence cover.
In other cases, a business may decide it is financially able to manage a particular risk itself. That is a decision for the business owner based on the possible cost of a loss, the amount they could afford to pay and the protection offered by the policy.
Insureworks has partnered with Lukango to offer retail business insurance. Get started today with a straightforward retail business insurance quote process.