If you have a shop, even a very successful one, the cessation of business due to an accident or unforeseen disaster can be ruinous. Insurance can be roughly divided into 3 categories, liabilities, property and buildings, and business assets and equipment.

Types of insurance for shops

The primary consideration has to be the building fabric, since normally this is the most valuable asset that a shop owner can have- of course, if the building is leased then it would normally be insured by the landlord. Following that, the stock must be insured, against natural disasters certainly, but equally against theft. All businesses need public liability insurance, and shops are no exception, given the close interface of the public with the business. In addition a retail outlet may employ staff, so would then require employer liability insurance, to protect staff against the risks they may run in the course of their work. This is, in most countries obligatory by law, with a statutory minimum cover, as is the public liability insurance. Business interruption insurance could make the difference between the shop surviving a closure, or bankruptcy. If for instance in the case of a fire the shop has to shut for several days, even weeks, this compensates for the loss of revenue during this time.

Another type of insurance which is not always considered by the retailer, is product liability insurance, which covers manufacturing flaws or design defects in the products sold in the shop. It also covers against defective warnings or badly worded instructions, and includes medical costs compensatory damages and economic damages. Although this is generally the responsibility of the firm which manufactures the goods, in cases where the manufacturer has gone bankrupt and is therefore not in a position to take responsibility for the product, the onus has in the past been taken to be the responsibility of the shopkeeper.

Finally there are two categories of insurance that are also worth considering, one is insurance for goods in transit, particularly where the shop arranges to deliver goods for customers themselves. The other is key man cover- this could apply for example in the case of a carpet shop where a fitter is sent out to lay the carpets sold, in the customer houses. If this employee was away from work due to accident or sickness this could materially affect the number of items sold in the shop.

Good faith

Insurance is sold and redeemed subject to a bond of good faith, which means that there must be an honest relationship between insured and insurer. Material facts must be disclosed between the parties in an agreement, and in return, the insured party can sleep soundly at night knowing that the “slings and arrows of outrageous fortune” have less power to wound!

he Moorhouse group are based in Caerphilly in Wales, and are leading providers of insurance for shops, small businesses and competitive liability insurance policies.