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What type of insurance is needed for a retail store?

23 August 2022

There is a huge amount of effort, time and money involved in starting up any kind of retail business. To protect their investment and safeguard their livelihoods, retailers should take out a range of insurance policies. In fact, there are certain types of insurance that owners of retail stores must be covered by under UK law.  

So, whether you are about to open a retail store, or you are an existing entrepreneur, you’re going to need to be insured, it’s an administrative task that you can’t avoid. Finding an insurance is part of the legal steps to open a retail store. What type of insurance are you going to need for your retail store? Unfortunately, this is not such a straightforward question to answer. 

There are thousands of insurance companies out there promoting all types of insurance policies. Deciding on the right policy or a combination of policies for your needs can be tough. In this article, we’ll go into some of the most common insurance policies for small retailers in the UK. The Ankorstore team hope that this information will help you to better protect your business and your family.  

Clara Jammes

Why does a retail store need insurance?

Because they often operate with narrow profit margins, retailers need to be prepared for any eventuality. A seemingly minor issue can quickly turn into a problem for a retail store. Loss of income or damage to stock can have a negativeimpact on a retail business’s bottom line. Retail store owners face risks such as theft, fire, flood or legal action arising from an accident or injury.  

Choosing the right types of insurance can protect your shop from any unexpected incidents or unforeseen accidents. Even if you are already in business and carry insurance, it’s always useful to consider your options. Insurance provides small retailers with peace of mind and added security. If the worst does happen, then your insurance will provide you with the financial means to keep your retail business running.  

Additionally, in the UK it is legislated that certain types of businesses must hold certain types of insurance. If your retail shop is not adequately insured, you could face heavy financial penalties. 

The top reasons to insure your retail store

  • To comply with the law 
  • To protect your employees 
  • To protect your customers
  • To protect your stock
  • To protect your premises
  • To protect your livelihood
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The best types of insurance for small retailers

Employers’ liability insurance

If your retail store has employees of any kind, then under UK law you will need to take out employers’ liability insurance. This is an unavoidable legal requirement for any retailer who employs staff. 

Employers’ liability insurance provides cover in the event an employee is injured or suffers an illness as a result of their employment. It will pay any associated legal and compensation costs relating to a case brought by a staff member. 

If a retail store doesn’t have employers’ liability insurance, then it can suffer severe financial penalties. Uninsured stores with staff can be fined up to £2,500 every day they are unprotected. If an employers’ liability insurance certificate is not displayed or cannot be produced on request, a £1,000 fine can be issued.

Example: Employers’ liability insurance 

John owns a busy toy store. He has six staff members who are frequently very busy serving people and restocking shelves. During a particularly hectic day, one of his staff tripped over a toy lying in an aisle and sprains her ankle. If the staff member files a complaint in court, John will be covered for any legal costs relating to the case.

Public liability insurance

Retailers deal with the general public on a daily basis. This constant influx of people poses a variety of risks for retailers. Accidents can, and always do, happen. A customer may slip on a wet floor, they may trip over stock, or they may be unintentionally injured by a staff member. Any of these incidents could result in costly legal action. 

To mitigate these risks, many small retail owners choose to have public liability insurance. Although it is not a legal requirement, public liability insurance is the most common type of insurance for small business owners. If a member of the public is injured on your premises, public liability insurance will cover any associated legal costs. 

Example: Public liability insurance

Jane operates a successful store selling gardening supplies. Although her business is doing well, her shop fittings are quite old. While browsing the products, a customer suffered a cut due to a sharp edge on a metal shelf. Because Jane has public liability insurance, she is covered if the customer decides to take legal action. 

Contents and portable equipment insurance

Retailers depend on being able to provide the public with quality products. To do so, they not only need stock but also shop fittings, computer systems, filing cabinets and furniture. If a store’s contents are damaged, it can seriously impede its ability to operate.

Connectivity is crucial in today’s modern world. Most bricks-and-mortar retail stores will use a range of laptops, mobile phones and other portable devices. 

Contents and portable equipment insurance covers the contents of a store and any objects that are taken off-site. It pays for replacement costs if contents or devices are damaged by incidents such as theft, fire or flood. 

Example: Contents insurance

Michael and Gareth are business partners who run a boating supplies store. An electrical fault resulted in a fire that damaged most of their stock and their shop fittings. Since they had contents insurance, Michael and Gareth were able to replace the damaged stock and shop fittings quickly.  

Example: Portable equipment insurance

Aarav is the owner of a sport store. During a meeting with a supplier, Aarav’s business laptop was stolen from his car. Luckily, Aarav took out portable equipment insurance that covered the cost of a new laptop.

Business interruption insurance

Maintaining a steady income stream is vital for the majority of small retail businesses. The loss of even just one day’s takings can severely impact the financial well-being of a small business. If a retailer is prevented from selling goods for a week or more, they may have to close their business. 

This is where business interruption insurance comes into play. Business interruption insurance covers costs if you are unable to trade for a period of time. It can help to pay for rent and utilities as well as staff wages. 

Example: Business interruption insurance

Jessica has a small bookstore. She works on her own and has no staff members. Last year, Jessica’s bookstore flooded. Jessica had to take a month off from running her business while the building was repaired. Her business interruption insurance enabled her to keep paying the rent on her bookstore during this time.

Directors’ and officers’ liability insurance

If you operate your retail store under a company structure, then you may wish to consider taking out directors’ and officers’ cover. Sometimes called management liability insurance, this insurance provides cover for anyone who holds management responsibilities.

Directors’ and officers’ liability insurance covers management personnel in the event that a legal charge is made against them personally. Typically, this insurance covers financial issues, health and safety breaches or matters of misadministration. Before putting their money into a company, many investors will want to see proof of directors’ and officers’ liability insurance.

Example: Directors’ and officers’ liability insurance

Former staff members of a small retail chain store have instigated legal proceedings against the directors of the company. The ex-staff members allege that management mishandled pension funds. The costs of defending management against these claims will be covered by directors’ and officers’ liability insurance.

Cyber risk insurance

Accurate record-keeping systems are vital for any type of retail business. These days, accounts are usually maintained via IT systems. But what happens when an IT system fails or is compromised? Cyber risk insurance provides small retail store owners with protection against lay losses or damage relating to IT networks or systems. 

Also known as cyber liability insurance, policies covering digital information are fast becoming popular amongst UK small business owners. If sensitive financial data or customers’ personal details are lost or stolen, a business can be subject to court proceedings or fines under the General Data Protection Regulation (GPDR). Cyber risk insurance can help to cover any of these associated costs. 

Example: Cyber risk insurance

The computer system of a store specialising in selling designer bags suddenly crashed. To save their data, the managers of the store had to pay for an IT expert to come and recover the lost files. This cost was covered under the store’s cyber risk insurance. 

Ps: Of course all this differents assurances needs to be adapted depending on the type of entity choice you have made with your retail store.    

Common mistakes retailers make with insurance

Although having insurance is incredibly important when running a retail store, many business owners still make mistakes.

  1. A common mistake is to not describe their business activities in enough detail, which can lead to a lack of cover. 
  2. Many retailers also sign insurance policies without fully going over the fine print. They may find that their cover is not sufficient for their needs. 
  3. Often, a small business owner will underestimate the amount that their policy is for. If a worst-case scenario occurs, their insurance may not cover all of their costs. 
  4. One of the most common mistakes small retailers make is not to review their insurance coverage on an annual basis. Their policies may no longer match their requirements or cover the entire value of the business.

Do you have the right insurance for your store?

Choosing insurance cover for a retail business is a serious matter. Time and care should be taken when considering what cover you should get for your business. Always read the terms and conditions of any policy thoroughly. Don’t simply assume that something is covered, it may well not be. If anything is unclear, ask the insurance agent to explain and clarify it in more detail. 

Think about the type of retail shop you operate, its value and what risks you are most concerned about. It can be just as easy to over-insure a business as it is to under-insure it. Your insurance should meet your existing requirements but also provide flexibility if your needs change. 

If you are unsure that your policy is right, try speaking with your insurance provider. Alternatively, a retail business owner may wish to consult an insurance broker or a consultant to find the right match. 

How to go about changing your insurance policy

As a retail business develops, its insurance requirements will also change. Some shop owners find that they are able to slim down their insurance after the first years in business. Others may need to scale up their insurance as their store grows to meet demand.  

Any changes that you wish to make to your insurance policies should be done directly through your insurance provider. The majority of insurance companies are very customer focused and are usually happy to upgrade or downgrade policies on request.

Starting any kind of retail business is a challenge. To find the support and advice you need, check out the new Ankorstart program from Ankorstore. 


What are the most common types of insurance for retail stores?

Since it is a legal requirement, employers’ liability insurance is the most common insurance for UK retailers. Public liability insurance and contents insurance are also popular with retail store owners. 

Can I be fined if I don’t have the right insurance?

Yes. A retail store that employs staff and does not have employers’ liability insurance can face significant fines. These fines can amount to up to £2,500 for every day you are not covered.

Where can I find more advice on insurance for retail stores?

More information on insurance for retail stores can be found online via insurance companies or UK government websites. Retailers can also get advice about insurance from brokers or business consultants.

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