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Why Do Shops Need Insurance?

By Maria Hickey on January 6th, 2023

Commercial shop insurance helps shop owners cover their financial losses when something untoward happens with their business. This could be a member of staff tripping over a box and getting injured while working in the shop or a customer slipping on a wet floor and suing the shop owner for compensation.

Shop owners are also at risk of losing their stock to a devastating fire, flood, or theft in a burglary. Their shop premises may be damaged from a smash-and-grab or act of vandalism, which could see the shop closed for an extended period while repairs and refurbishment take place.

The associated costs from these events can be devastating and could even see the business closing down for good. This is why shop insurance is invaluable for anyone running a brick-and-mortar shop business.

Why do shops need insurance?

Shop owners face numerous financial risks if they are not covered by the right insurance. The coverage your shop might need can differ significantly from any of your neighbouring shops selling different products or services.

For example, your shop may be at a higher risk from fire if you stock and sell flammable items. Flammable products can catch fire and burn quickly at normal temperatures should a fire break out in your shop. These goods can include lighter fluid, alcohol, and firelighters for use with a barbecue.

You may also sell combustible goods that need higher temperatures to set alight. In a grocery store setting, combustible products can include flour, sugar, instant coffee, powdered milk etc. Even if you think your shop sells low-risk goods, once a fire takes hold on your premises, it can quickly spread and destroy your stock, causing more damage along the way.

In most brick-and-mortar shop settings, a typical shop insurance policy comprises public liability, employers’ liability, stock insurance and contents insurance. However, more coverage may be needed depending on the type of stock your shop sells.

Here is a breakdown of the best insurance coverage you can take out for your shop, depending on your individual needs:

  • Buildings insurance: This is usually purchased by the property owner and covers damage or loss to events such as fire, flood or burglary.
  • Business equipment: You may lose your office computers, laptops, printers, cash registers etc., during a fire or burglary. This coverage will pay for your replacements.
  • Business interruption: If you need to close down your shop for a long time due to fire or flood damage, this coverage will keep your bills paid and cover against lost sales until your shop opens again.
  • Contents insurance: This helps pay for the costs of replacing or repairing your shop fixtures and fittings following a fire, flood, theft or accidental damage.
  • Employer’s liability: This protects your staff should they get injured or fall ill due to the work they do for your business.
  • Product liability: This is usually offered alongside public liability coverage for shops. This protects you should a customer makes a claim for harm done by a product you sell.
  • Public liability: If a customer gets injured in your shop, this covers your legal costs and compensation payment.
  • Stock insurance: Your stock can be lost during a fire, flood or burglary. This coverage will help you restock at cost price without having to pay out of pocket to replace your stock.

Do you legally need shop insurance?

Strangely, shop insurance is only a legal requirement in the UK if you employ staff in your shop. Employers liability insurance is a legal requirement to protect employees should they fall ill or have an accident while working for their employers. This includes any staff you hire to work in your shop part-time and any temporary staff you hire for Christmas or to cover staff holidays or sickness.

Even if you have volunteers or work experience students working in your shop, you need employer liability insurance to protect them. Any shop owner found to be in breach of this law can face being fined £2,500 by HMRC for every day you are not adequately insured.

Many shop owners don’t know that HMRC can also fine them £1,000 if they do not display their Employers Liability certificate or refuse to make it available to inspectors when asked.

Other than the fact that employer’s liability insurance is a legal requirement, shop owners should take the sensible step of taking out public liability insurance alongside additional valuable coverage such as stock insurance and business interruption protection.

What happens if you don’t have shop insurance?

Suppose you are a shopkeeper trying to keep your overheads down. In that case, it can be tempting to forgo some shop insurance elements and only include what is absolutely necessary under UK law (employer’s liability). But let’s examine what could happen to your shop business if you don’t have insurance, for example, public liability insurance.

Suppose a customer is leaving your shop and trips over a product that has fallen from a shelf onto the floor. The customer falls badly, breaking their wrist. Your customer is entitled to make a compensation claim against your business to cover their costs, which could include lost income if their injury prevents them from working.

Should your business be found liable, you could face paying a hefty compensation amount and your customer’s legal fees for taking the claim to court. As compensation claims can often run into tens of thousands of pounds, could you afford to pay this and remain in business?

Public liability insurance covers your costs should a customer or member of the public make a compensation claim against your business. This means that you won’t face losing everything and having to close down your shop business because you cannot afford to keep it running.

Let’s use another example of how the right shop insurance is invaluable. While you may think that stock insurance is an added expense that you could comfortably leave off your shop insurance quote, if you ever needed to replace your stock, could you afford to pay this out of your own pocket?

Remember that without your stock, you have no shop business. Your customers will be unwilling to come into a half-empty shop that doesn’t have the items they want. If you lose your stock to a fire or flood, how long will it take you to restock your shop out of your own pocket?

Your customers will most likely go elsewhere for what they need, and shopping in a new place can quickly become a habit. It will be hard to entice your regular customers back to shop with you if you cannot restock promptly and open up again with a complete inventory.


Having shop insurance makes a lot of sense, especially when you weigh up the risks your shop faces every day. From fire, flood, storm damage and theft, the right type and level of shop insurance will cover your business for any financial losses due to a major event.

You can quickly and easily build a perfect shop insurance policy with Brisco. We work with leading UK insurance providers and can find you the best coverage at very cost-effective prices. Our insurance experts can help you compare business insurance quotes and choose the one that provides the most comprehensive coverage.

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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