Shop Insurance

What is shop insurance?

Shop insurance is a form of cover that protects your high street retail business against various risks and claims. These can come from customers, who may have injured themselves or become ill through your products, or from damages inflicted through any employees you’re responsible for.

As your shop is a customer-facing business, you’ll want to protect your business against the risks associated with that. If you run a shop that produces food and drink, perhaps a bakery, deli or butchers, then you may want cover to protect you against potential claims from customers who become ill from your produce. Likewise, even if you’re a service based shop, such as a hair salon or dry cleaners, the use of chemicals and other substances could put you at risk of a claim. You may also wish to protect your shop’s building, its contents and stock, as well as its employees.

Compare prices from 18 leading business insurance providers^[1], including:

^[1]Correct as of June 2024.

Do I need insurance for my shop?

The only type of business insurance that’s a legal requirement is employers’ liability insurance. If you employ other staff, this will provide cover for any employees who are injured or suffer from an illness caused by working for your business.

Your shop is your livelihood, so it makes sense to ensure you have the right cover in place to protect you against anything else that might affect your retail business. You may have stock on the premises, which needs protecting against theft and damage. Stock insurance covers exactly that. You’ll also need to consider what cover is required to protect you if members of the public injure themselves in your shop. Public liability insurance is one of the most important forms of protection for shops. With lots of people coming and going from the high street, public liability insurance can cover you if someone is injured (or even if their property is damaged somehow) while they are on your business’ property.

It’s also worth thinking about what would happen if you had to close the shop for a period, for whatever reason. What would be the implications of a few days or even weeks without trading? Business interruption insurance will allow you to claim for loss of income, if your shop is forced to close.

At this time, shop closure or supply issues due to COVID-19 are unlikely to be covered by a shop insurance policy.

What does shop insurance cover?

There are many things that you may want to protect your shop against. With each form of risk, there’s a suitable form of cover. When taking out shop insurance, here are some examples of cover you can include:

Employers’ liability insurance: This could cover you if one of your employees becomes ill or is injured as a result of working for you. If you employ one or more people or are a limited company with multiple directors, it’s a legal requirement to have cover. If you're not a limited company, it’s not a legal requirement to have employers’ liability insurance if the employees are immediate family members, though if a policy is in place it would still cover immediate family members working for you.
Public liability insurance: If someone is injured at your shop or their property is damaged, you can claim on your insurance to cover any compensation due to them, or any legal costs if they take you to court. With members of the public in your shop every day, this is particularly important.
Business interruption insurance: This protects your business if you’re unable to trade for a while, for example because of a fire or a flood. Buildings and contents insurance will cover the fixtures, fittings and stock, but business interruption cover will help protect you against lost sales and costs incurred while you get things up and running again. Claims related to shop closure or supply issues due to COVID-19 are now unlikely to be covered by business interruption insurance.
Buildings insurance: If you own the building where your shop is located, you’ll need buildings insurance. This usually covers the cost of repairs to a building’s structure, or even full re-building if needed.
Contents insurance: This covers shelving, furnishings, computers, till systems and other business equipment you may have on the premises.
Stock insurance: Your stock is what keeps you in business, so it’s important to have this cover to insure you against theft or damage.
Personal accident cover: if you were injured in an accident and forced to close your shop, personal accident cover could compensate you for the loss of earnings.

Consider if you need to cover for a seasonal increase in the value of your stock, for example in the run up to Christmas. Shops selling food and drink may also want to check for cover for frozen stock and items of high risk at being stolen for example, alcohol and tobacco. Some businesses such as antiques shops, gift or electronics shops might want to check the cover for high-value items. You will also need to understand if your goods are covered while in transit or if you need additional cover. Stock is generally insured at its trade price.

What extra levels of cover are available with shop insurance?

If your shop isn’t straightforward product retail, you may need to consider some optional extras to your cover. It will likely largely depend on the products or services you provide.

For example, if you sell rare antiques or expensive jewellery, then a standard shop insurance policy may not cover you for the amounts you need. With antiques in particular, the value of these goods may fluctuate more regularly, making covering them more complicated. For this reason, you may need a more specialist policy, or take out additional levels of cover, with higher single-item limits.

Alternatively, your shop may provide food and drink, whether that’s as a takeaway service or as a regular supermarket or corner shop. These sorts of shops may require cover for expensive equipment such as cookers, fridges and freezers, and, if selling alcohol, you may want cover for loss of licensing. There are specific optional extras that cover exactly these things.

How much shop insurance do I need?

How much shop insurance you need depends on the type of shop you run. If you deal with large volumes of stock, or specialise in particularly expensive products such as jewellery or electronics, then covering that stock will require a higher limit, which will usually cost you more.

When considering the amount you should cover your stock for, calculate this using your cost amount, rather than the price you sell at retail. This may lower your cover limit, bringing the price of your policy down, while still providing you with enough cover to replace stolen or damaged goods.

It can be difficult to estimate your stock’s value, but take the time to calculate this as carefully as possible, to avoid underinsuring yourself, leaving you in a potentially expensive problem if something were to go wrong, or over-insuring yourself, meaning you’re paying more for cover than you need to.

My business has moved online during the coronavirus pandemic, do I have to update my insurance policy?

Normally, switching from a high-street shop to an online retailer would mean you’d need to also change your insurance. However, with many shops affected by the coronavirus pandemic, forcing them to switch temporarily to operating online, you should find that a standard shop insurance policy will continue to cover you through the pandemic. This means you shouldn’t need to make any changes to your policy. However, it’s a good idea to check this with your insurance provider.

If you decided to make the switch to being an online retailer permanent, after the coronavirus pandemic ends, you would then need to change your cover.

Frequently asked questions

What optional extras are available?

Depending on the type of shop you run, you might need extra levels of cover:

Legal expenses – if a claim is made against your shop, for damages, injury or illness, legal cover can compensate you for the legal expenses.
Stock not stored on the premises – if your shop is an online retailer, or deals in stock which is stored offsite (in a warehouse or industrial unit), then you’ll need to take out extra cover. This could insure that stock against theft or damage.
Alcohol – if you sell or serve alcohol, you’ll need to hold the right licence. Losing this licence could majorly impact your business, so you’ll want to consider loss of licence cover.
Terrorism cover – perhaps not applicable to all businesses, but if you run a business in a high-risk area for terrorism, this can compensate you for any damages sustained during a terrorist attack.

Do I need shop insurance for an online shop?

Even if your shop is run as an online business, you’ll still face many of the same risks and claims against you and should consider cover you may need. As an online retailer, you’ll still have stock that is at risk of damage and theft, and you will still legally require employer’s liability insurance, if you’re responsible for any staff. If something causes your business to close down for a period, business interruption insurance would also be very useful.

You should treat your online business like a regular one, considering all of the potential risks and appropriate cover.

Can I get shop insurance if I’m in a flood risk area?

If your shop is in an area which is deemed high risk for flooding, you’ll need to consider the potential impact that may have on any business building and contents insurance you’re looking to protect yourself with.

Many insurance providers may raise their premiums significantly, so consider your options carefully, and shop around to find the best deal for you.