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What Happens If I Don’t Have Shop Insurance?

By Maria Hickey on January 3rd, 2023

It surprises people sometimes that retail shop insurance is not a legal requirement in the UK, apart from employer’s liability insurance, which is required by law if you employ staff in your shop and will be an essential element of your shop insurance quotes.

For any business owner with a brick-and-mortar shop, it is inconceivable to risk going without essential protection, such as buildings and contents insurance or stock insurance, to cover the costs of losses following a significant event.

Even essential insurance, like public liability, isn’t a legal requirement. It seems contradictory when considering how much a shop business owner stands to lose should they face a compensation claim that can run into tens of thousands of pounds.

While it may be tempting to go without all but the most basic legally required insurance (employer’s liability) to help keep your business overheads down, it may be far more financially draining if you risk running your shop business without any protection.

Is shop insurance legally required?

While all but employer’s liability insurance isn’t a legal requirement, it can help you to have a well-built shop insurance policy in place to give you plenty of protection should a compensation claim be brought against you or you lose your business to a devastating fire or flood event.

If you care about your livelihood and want to see it thrive for many years to come, then investing in the proper type and level of shop insurance will be a must. There could be nothing worse than to lose the entire business that you spent many years growing to an event that you could have been insured against for a very cost-effective price.

For example, public liability insurance is considered a ‘must-have’ element for shop owners because of the nature of the business and the environment in which you conduct business. This insurance protects you against claims for damages or injuries sustained on your shop premises.

Compensation claims can run into tens of thousands of pounds, including the legal fees you will pay. Should you lose your case, you will be responsible for paying the compensation claim amount, your claimant’s legal fees, and your own legal fees spent defending your case.

If you employ staff in your shop, even in a part-time, seasonal or volunteer role, it is essential to know that employer’s liability insurance is a legal requirement. Public liability insurance is specific to injury or damage to the personal belongings of your customers – not your employees. This is why you need employer’s liability insurance to protect your staff from injury or illness caused by working for your business.

Does every shop need insurance?

When shopping for insurance quotes, it can be easy to wonder if every shop needs insurance. While it isn’t a legal requirement for any UK shop business to have insurance unless they employ staff, it could be tempting to go without specific coverage to make your shop insurance premiums cheaper.

But what would happen if you went without public liability insurance, for example? While you won’t be breaking any UK laws, you may find it difficult or even impossible to recover from paying the costs associated with a customer compensation claim.

Depending on the type of shop you own, you may find it difficult to source stock from some large manufacturers because many will only do business with you if you are adequately insured. This could severely limit the range of stock you can offer your customers, resulting in them shopping elsewhere.

Many shops are run as franchise businesses, and you may need to take out commercial shop insurance as part of your contract. Should anything happen to your shop, your franchise owner may not be willing to cover your losses if you fail to take out or renew your expired shop insurance coverage.

Even if you run a small shop or shop kiosk by yourself and don’t employ any staff, there are risks your small shop business faces every day that you can insure yourself against. You won’t be obliged to take out employer’s liability insurance as a sole trader, but it will give you great peace of mind to take out public and product liability insurance.

Could my shop go bankrupt if I don’t have insurance?

You could lose everything if you don’t protect your livelihood with the most appropriate shop insurance to meet your needs. Even a sole trader running a small shop alone could lose their business to an expensive compensation claim if they accidentally sell faulty or damaged goods that cause harm, illness or injury to a customer.

No matter whether a customer makes a claim for compensation for an injury following a slip or fall on your shop premises, or they claim for a faulty or dangerous product you sold them, if you don’t have the right insurance coverage in place to protect you, your business could quickly go bankrupt.

When a customer files a claim against you, the customer or their solicitor will contact you with the details. From here, you can choose to admit liability and face paying a hefty compensation claim as a result, or you can file a defence. Should you file a defence and lose, you will end up paying even more in legal costs; so that you could end up bankrupt either way.

One of the most common questions our Brisco Business Insurance team is asked is, why do I need product liability insurance if I don’t make the products I sell? It can be tempting to leave out this coverage from your commercial shop insurance quotes because you don’t manufacture your own products. However, you can still be held liable for selling faulty or dangerous goods if they cause harm or damage to a customer.

This is why it makes sense to include public and product liability when comparing shop insurance quotes. Brisco Business Insurance makes it easy for you to compare the most cost-effective quotes from the UK’s leading insurance providers. Use our ‘Compare Quotes’ tool on our website, and you can discover the best-value insurance for your shop business in a few clicks.

What shop insurance should I include in my quote?

Each shop will face unique risks, so there is no one-size-fits-all approach to buying your insurance. It will help to build your shop insurance policy around the essential elements with extra protection on top, depending on your needs.

Most UK shop insurance policies should include the following protection:

  • Buildings insurance: This protects your premises if it’s damaged or destroyed by a major event such as a fire, damage caused by burglaries or vandalism, floods or storm damage.
  • Contents insurance: This covers the contents of your business, such as furniture, but not anything that is classed as stock or inventory.
  • Stock insurance: Shop stock isn’t usually covered by contents insurance, so you will need stock insurance to cover the costs of replacements should it be lost to theft or fire.
  • Public liability: This is considered essential for customer-facing businesses such as shops. It protects you against compensation claims from injuries or damage to their property while on your premises.
  • Product liability: To cover against claims made for illness, injury or damage caused by a faulty or dangerous project.
  • Employers’ liability: This is a legal requirement if you employ staff. It covers you should an employee fall ill or sustain an injury while working for you.
  • Business interruption: To cover costs such as rent and loss of income should you close your shop due to a fire, flood or illness.


Going without appropriate shop insurance could see you paying out for claims ranging from a few hundred pounds to tens of thousands of pounds, depending on the incident. Claims for compensation to cover loss of earnings, medical expenses, and legal fees can be devastating to a small shop owner, so while insuring your shop against risks isn’t a legal requirement in the UK, it makes good business sense to insure your shop if you care about your livelihood and future.

Remember that our team of highly experienced business insurance brokers are here to help you with our free advice and guidance should you need it. We can help build the most cost-effective shop insurance policy to suit your needs and budget. Finding the right business insurance can be overwhelming. Let our team compare policies and find the best one for you.

Maria Hickey

For more than 20 years, Maria has worked in the insurance sector and has extensive underwriting and customer service expertise. Maria is an experienced Senior Underwriter with a particular specialism for shop, office and surgery related insurance.

All articles by Maria Hickey

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