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A guide to shop insurance

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What is shop insurance?

Shop insurance is an umbrella term for a number of different insurance covers that retailers take out to protect themselves from paying out hundreds or even thousands of pounds. Take out a shop insurance policy and you will be covered for costs arising from your stock or premises being damaged or destroyed, customers taking legal action against you and a variety of other scenarios.

Who needs it?

If you own a business that sells products directly to the customer in physical premises - in other words, shops or retailers - you should probably take out some sort of shop insurance package.  So this of course means post offices, bakeries, newsagents, clothes shops, florists, off-licences, florists and so on.

Which trades do not need it?

Businesses providing a service (for example estate agents or financial advisors), manufacturers, wholesalers, distributors and internet-based retailers without premises and other home-based retailers.

Some businesses which some would argue fall into the retail category are nevertheless better suited to taking out a different type of insurance policy. Salons, bars, hotels, restaurants and takeaways are, for example, not suited to taking out shop insurance.

Does it matter if a retailer fails to take out shop insurance?

While not a legal requirement, the vast majority of retailers do take out some form of shop insurance and there's a good reason why. Legal action taken against you by a customer or a fire on your premises could ultimately cost you hundreds or even thousands of pounds if you haven't got cover - potentially putting you out of business.

Like any form of insurance, taking out shop insurance also affords a business owner peace of mind.

What type of cover should I get?

Shop insurance encompasses a number of different types of insurance. You'll certainly need buildings and contents cover, public liability insurance and employers' liability insurance.

You can then tailor your policy according to how you weigh the risk versus the additional cost of increasing the value of your cover. Types of shop insurance cover can include, among others:

Stock cover, which compensates for stock that is damaged, destroyed or stolen. A clothes shop with £50,000 worth of garments will naturally want to pay for a higher value cover than a newsagent with only £1,000 worth of stock.

Employee theft cover, which covers you for one of the major causes of stock loss

Loss of licence cover covering the licensed trades, loss of licence cover is for an off licence or any other retailer selling alcohol.

Business interruption cover, which can keep your business afloat following a disaster.  If your premises are burnt down, then while they are being rebuilt you would be covered for the profits you would have earned had the fire not occurred.

Loss of money cover. It's never a good idea to keep more cash than you need on the premises of course, but many businesses cannot help but have hundreds or even thousands on the premises at certain points.

Legal expenses. Although some are arguably more vulnerable than others, any business could be subject to expensive legal proceedings.

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