Shop insurance protects your business from customer injury claims, property damage, stock loss, theft and trading interruptions, providing essential cover for high-street shops, cafés and boutiques trading with the public.
You’ve had a great retail business idea, found suitable premises and got everything ready to open your doors to the public. But have you thought about the potential risks involved in opening a high-street store and serving the general public?
When dealing with customers, it’s important to know that you, your staff and your business are protected against any potential dangers and insurance claims.
Let’s explore how shop insurance can provide the protection you need as a retail shop, boutique, food outlet or high-street cafe.
What does shop insurance typically cover?
Shop insurance is a bundled package of business insurance that’s designed specifically to provide insurance cover for retail outlets and high-street stores.
Shop insurance packages will protect your retail outlet, café or coffee shop business from the key risks that are inherent in trading with the public and holding stock.
It generally bundles together several essential covers into one policy, giving you a customised bundle of cover that’s tailored to the needs of your shop or café.
Protections will typically include:
Public liability insurance to cover you for claims relating to injury, illness or property damage to third parties
Product liability insurance to provide cover against claims relating to the products you sell as a business.
Stock insurance to provide cover for your perishable and non-perishable stock that’s held on the business premises.
Fixtures & fittings cover to protect the permanently installed business assets that are vital to the operation of your shop or café.
Business interruption insurance to give you coverage if you’re not able to trade due to loss of your trading premises or similar events.
Money cover so any physical cash you handle, hold on your premises or transport to the bank is covered at all points
Goods-in-transit cover to provide cover for your goods from damage, loss or theft while they’re in transit to or from your business premises.
What cover will be provided for my retail premises?
Your retail premises are a vital element in your business model. It’s important to have specific insurance cover that protects your shop in the event of there being an unexpected accident, freak weather event or property damage.
Your premises will generally be covered for theft, accidental damage, fire, flood and water damage. It’s also likely that there will be certain security endorsements in the policy, requiring you to fit alarms, shutters and CCTV to reduce the insurance risk.
What additional cover can be added to shop insurance packages?
Shop insurance bundles will also give you the option of adding specialist cover, to tailor your package to the precise needs of your retail business.
Specialist cover may include:
Accidental damage for glass/shopfronts if you experience vandalism
Loss of licence cover (where relevant, if you require a licence to trade)
Cover for seasonal stock increases over busy periods
Cyber security cover for your point-of-sale (POS) systems and hardware, and for your ecommerce platform.
Covering the costs of shop insurance
Factoring the costs of shop insurance into your budget can be challenging. But having the requisite cover is vital and may actually be a mandatory requirement from some landlords when leasing shop space to new businesses.
Taking out a short-term retail business loan is one way to access the extra working capital that’s needed, making it easier to cover your insurance costs.
An iwoca Business Loan can easily provide the cash to cover an annual shop insurance premium, while breaking up the cost into manageable instalments.
Do I need public liability insurance for my shop?
It’s strongly recommended that you take out public liability insurance cover for your retail outlet. It’s not a mandatory legal requirement, but many landlords and shopping centres will require it as part of your retail tenancy agreement.
Public liability insurance will cover you against events such as customer trips or falls and spill injuries. It will also protect you against claims for damage to third-party property inside or just outside your premises.
How shop insurance is tailored to the needs of different retail businesses
The specific kinds of insurance coverage you need will be defined by the type of business you run, and the products and/or services you provide.
For example, a coffee shop that serves hot drinks to customers presents more of a potential risk to customers than a fashion store that only sells clothes.
Let’s explore the insurance needs of some common retail sectors:
Coffee shops/cafés: As a café, you’ll need protection against hot food risk, stock deterioration, business interruption, public liability coverage for seating areas, as well as specific warranties for your fryers and cooking equipment.
Barber/hair/beauty: Beauty outlets will need treatment liability, coverage for sharps/chemical risks and professional indemnity insurance to cover you against any claims for damage or injury caused by your treatments.
Bike shops: A bike store will need higher-value stock cover, workshop liability insurance and coverage that protects you against injury claims incurred on demo bikes while customers are test riding your products.
Convenience stores/off-licence: Corner stores will need coverage for tobacco/alcohol risk, money cover and specialist insurance that covers you for the additional risks of extended opening hours.
Ecommerce/bricks-and-mortar stores: If you sell products, whether online or on the high street, you’ll need coverage for stock at multiple locations, goods-in-transit insurance and cover for cyber attacks and security breaches.
Do levels of coverage change during peak seasons?
For many retail sectors, there are seasonal peaks – such as Christmas or Easter – that result in increased demand planning and an uptick in the amount of stock you hold.
It’s important to check if the sums you have insured are aligned with the stock levels over these seasonal peaks. Having an accurate, real-time inventory system will alert you to high seasonal stock levels, where extra insurance cover may be needed.
What type of insurance do I need for a coffee shop?
Coffee shops do present a risk, as you’re serving hot (and potentially dangerous) beverages to your customers. Typically, you’ll require public liability and product liability insurance to cover you against claims for spills, damage and injuries.
You’ll also need cover for contents/fixtures, stock (including your frozen/chilled stock, with deterioration cover) and business interruption. If you have any employees, you’ll also need employers’ liability insurance. And, if applicable, you need an awareness of the endorsements around your heat and liquid petroleum gas (LPG) usage.
Additional cover to consider: employers’ liability, professional indemnity and glass insurance
Depending on your circumstances and the type of shop you’re running, there are other additional kinds of insurance coverage that may be needed.
Here’s a brief overview of some of the important areas of additional coverage that may be required as part of your wider shop insurance package:
Employers’ liability insurance protects you against having to compensate any employees who become injured or ill while working for you. Having this cover is a legal requirement if you employ staff (including any temporary, part-time or contract employees).
Professional indemnity insurance is relevant if you provide any advisory or treatment-based services through your shop. This might include barbers, beauticians, or even a bike-fitting service that offers custom builds.
Shopfront glass insurance provides coverage if the plate glass of your shopfront is damaged and needs repairing or replacing. This is vital to keep the premises secure and to keep the shop trading.
While it’s important to consider what additional cover is needed, you also need to factor in the additional costs of these extra policies.
The base price for shop insurance packages is rarely the price you’ll end up paying. So, make sure you budget accordingly for the cover that’s relevant to your shop.
Is employers’ liability insurance a legal requirement for shops?
Yes. If you employ anyone, whether full-time, part-time, temporary or on a contract basis, it’s a legal requirement to take out employers’ liability insurance.
You must take out a minimum of £5 million of coverage, with £10 million limit a common level of coverage to aim for. Fines apply for non-compliance and you can potentially be fined £2,500 for every day you’re not properly insured.
How much does shop insurance cost in the UK?
Insurance costs can vary significantly from business to business. Although standard shop insurance packages are available, you’ll typically need to tailor and customise the base package, leading to additional coverage and costs.
Price comparison sites, like money.co.uk, do offer recent comparisons of shop insurance prices, based on typical business needs and insurance cover.
Factors
Scenario 1
Scenario 2
Scenario 3
Number of employees
1
2
3
Turnover
£50,000
£100,000
£500,000
Public liability
£2,000,000
£2,000,000
£5,000,000
Employers’ liability
N/A
£10,000,000
£10,000,000
What influences the price you pay for shop insurance?
There are a number of factors that drive the price of your shop insurance. Each business is unique, so it’s sensible to understand the key drivers of price and how they might affect the total premium you pay to be covered.
Sector or trade type dictates your base risk profile. A business with inherent fire hazards (a chip shop or takeaway) or high-value items (a jeweller) will face a higher premium than a lower-risk retail sector, like a stationery shop.
Turnover is used to calculate the maximum potential financial loss from a major event. If you have a high annual turnover, this increases the insurer's potential exposure, resulting in a higher premium for both liability and business interruption policies.
Stock value and seasonal peaks determine the maximum amount the insurer will need to pay for replacement inventory. If you declare a high stock value, or require a seasonal uplift in cover (e.g., before Christmas), your contents premium will increase in line with this.
Location and crime rate directly affect your risk of theft and vandalism. Premises in areas with a historically high crime rate will have higher premiums due to the increased probability of property damage and contents claims.
Flood score and risk are assessed using specialist mapping data and will have a significant influence on your property damage premium. A high flood score (due to proximity to a river or coastline) will lead to a higher cost for your buildings and contents insurance.
Opening hours relate to the period your business is open and trading, which can be a key risk factor. Shops that open late at night, or operate 24/7, face higher premiums due to the increased risk of theft and damage.
Claims history is a crucial indicator of future risk. If you have a history of frequent or high-value claims, this can signal poor risk management to the insurer – and that means higher renewal premiums or exclusions.
Security measures demonstrate that you’re proactive about mitigating the key risks. The presence of insurer-approved measures (grade-rated alarms, heavy-duty locks, CCTV) reduces the likelihood of successful theft and vandalism, leading to discounts on your premium.
Your indemnity period defines how long your business interruption insurance will cover lost profit after an incident. A longer period (for example, 24 or 36 months) will substantially increase your premium, but it does give you more time to get the business back on its feet after a disruptive event.
What’s the typical structure for a shop insurance package?
The base policies for a shop insurance package will usually be public liability cover, plus product liability, contents cover, stock cover and business interruption insurance.
On top of these foundational areas of cover, you may also want to add on things like shopfront glass insurance, cybersecurity cover and money-in-transit insurance. Having approved security arrangements and delivering training to your staff may also be needed to mitigate risk and bring down the cost of your premium.
Spreading the cost of your annual premium
Paying one annual premium is the most cost-effective way to pay for your shop insurance. But that initial outlay might stretch your cash flow if paid in one amount.
Taking out flexible retail funding, like an iwoca Business Loan, gives you the capital you need to pay the annual fee. This helps you make the most of the best available price, while also leaving extra capital free to invest further in the business.
How to compare shop insurance quotes effectively
The UK business insurance market has many options for shop insurance, so it’s sensible to put in the research to find the package that’s best for your shop.
Make sure you compare shop insurance packages against each other. This means reviewing the limits of cover, the excess and exclusions that are included and the warranties around areas like locking-up the premises and setting alarms etc.
Here are some other considerations to think about:
Check the basis for your business interruption cover. Is the amount paid out based on your gross profit or your gross revenue?
What periods are covered with your indemnity cover and do you need to specify additional cover for peak seasons and high stock periods?
Verify the insurance requirements stipulated by your landlord and the terms and conditions of your lease or shopping centre tenancy.
Keep all relevant documentation, so you have inventories, proof of security, maintenance logs, etc. This helps at claim time and can reduce your premium.
It’s worth talking to an insurance broker if your insurance needs are complex, or you’re unsure about what cover is needed. They can liaise with a network of insurers to get you tailored shop insurance at the best possible premium.
iwoca: Flexible business loans to help you reduce your insurance costs
Paying monthly instalments for your shop insurance is the most expensive way to pay for cover. Paying the annual premium in one payment helps you reduce your insurance costs – and iwoca is here to provide the flexible funding you may need.
With an iwoca Business Loan, you can borrow from £1,000 to £1 million, with no early repayment fees and interest only charged on the money you draw down.
Pay your annual premium and have plenty of capital left over to invest in staffing, new equipment or refitting your retail outlet or coffee shop.
Steve is a writer, author and finance content expert, specialising in fintech, small business finance, accounting and SaaS. He’s been telling and sharing business stories and advice for over a decade.
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