Retailing: insuring your retail business

Running a retail business is demanding and can be stressful. Primary areas of concern are staffing, inventory and your premises. Do you need insurance? With regular public contact the level of coverage that a retail business requires is a little different to other businesses. In this article we explain where insurance for a retail business may need to go beyond that necessary for other types of businesses.

What does retail insurance cover?

Service industry businesses only have to be concerned with normal business coverage, including liability, property and disaster insurance. The retail sector also has to cover the basics but business owners have additional concerns that are not covered by general business policies. Retailers have to insure the goods that they are selling in case they are stolen, burnt, water damaged and the like. Failure to do this may result in loss of supply to the business and negligent claims against the retailers by the suppliers. Retailers have to protect themselves against liability claims from consumers that may arise due to faulty product or inappropriate labelling. Comprehensive retail insurance limit’s the retailer’s responsibility in such circumstances. Usually the insurance relates to a specific premises. However, if you change premises you may be able to transfer insurance, depending on the insurer. Most insurers allow a transfer if the goods and personnel remain the same as at the original venue. The new property may have to be insured on a separate policy unless the insurer allows the policy holder to complete a transfer form. Notify your provider before you move and they should be able to advise you of the proper process – and may even provide a cover note for stock in transit to the new place.

Typical retail coverage will probably include the following:

What is a “retail” business?

The types of businesses that generally take out retail insurance are: cafes and juice bars, newsagents, florists, hairdressers, clothing retailers and grocery stores. Businesses that do not qualify as retail businesses are those in the manufacturing sector, the forestry industry, mining and other high risk industries. (Insurance is available for these businesses but they require more specialised insurance that is not covered under a standard retail policy. They also tend to be higher risk businesses so the premiums may be more costly.)

An area of cover you may not have considered is terrorist cover – sounds crazy but in this day and age it is now compulsory for all insurers to provide coverage against pre-defined terrorist attack on all eligible polices. For further information you can visit the Government website www.arpc.treasury.gov.au.

To make retail insurance less of a drain on your cashflow it is possible to spread payments over the course of a year, for example, monthly, or, if you are cashed up, pay an annual fee.