Just a general note here. All shop insurance policies carry an excess on every claim, so each risk we talk about from here on carries an excess, which can either be paid by you up front, or deducted from settlement of the claim.
Shop insurance policies generally carry small excesses, in the vicinity of from $250 to $500 and a specialist business insurance broker can advise you about these when arranging your covers.
Contents & Stock – Fire, Water, Wind, Impact, Burglary, Theft
First, you want to protect your stock and contents, because without them you have no business and no turnover. So the things you need to consider cover as against for your stock and contents are Fire, Water Damage, Impact, Wind Damage, Burglary, Theft and Staff Pilferage.
Cover for the Building – Commercial Property Insurance
Secondly, if you own your own building you will want to insure it for Replacement Cost, in case it burns down or is otherwise destroyed by Wind, Water or Impact damage.
If, however, you are leasing your shop the Landlord might also require you to insure their building, under the terms of your Lease. Please check the Insurance clauses in your Lease. Either the Landlord will insure the building and then charge you the premiums under the “Outgoings” clause. Or they will require you to insure the building and name them on the policy as Owner and Landlord.
Loss of Income – Business Interruption Insurance
Next thing to consider protecting is your Turnover. What happens if your shop is destroyed or damaged for a long period by Fire, Water, Wind or Impact damage? Your turnover stops but your financial obligations don’t. You may still have to keep paying the Rent – or mortgage payments if you own it – but there is no money coming in.
You can remove this worry by taking out Business Interruption, which insures “Loss of Income or Profits” if one of these serious incidents stops your business from earning income. You can insure your Gross Income, so that ongoing rent or mortgage commitments are also covered.
You can even get cover under Business Interruption Insurance for loss of supply by your Energy Utilities, like Gas and Electricity, if the loss of supply goes beyond 48 hours, i.e., there is a 48 hour excess on this section, which means that you can claim for loss of income if the failure of the Utility lasts longer than 48 hours. But the first 48 hours is NOT covered. Note that some policies may have a 72 hour excess.
Burglary & Theft
And next you have to worry about Theft and Burglary. You can insure your Stock and Contents against these events, so that this covers any losses you might suffer from those events (subject to the excess mentioned above). This is good way to get peace of mind, so you don’t have to worry about theft or burglary.
Well then, how about protecting your cash and your takings? You can easily get a Blanket Money cover, which covers your takings in the shop, in a locked safe, in a till, on the way to or from the bank, on the way to or from your home. And even in your home. With the prevalence of drug related money grabs from shops these days, if you have $1000 or more on the premises, you should not run a shop without some Money cover. You can get cover for amounts from $1,000.00 – or more.
Glass is another area to worry about. Whether you own or rent the building you will still have to cover the Glass. Vandals or Burglars smash windows, do ram raids through your windows, or even Graffiti your windows so badly that they have to be replaced. Again, if you have any sort of shop your shop insurance should consider cover for Glass.
Liability is a critical cover that no shop should be without. A liability claim could result from a simple trip and fall at your shop. Or a claim could arise from a product that you sell. You cannot be in business without Liability cover.
If you rent your shop the Landlord will require you to have this cover, and Councils and Government departments will also require you to have this cover in order to get relevant permits to operate your shop.
It is recommended that shop operators take out an absolute minimum of $10,000,000 Liability cover, as one negligent death could cost you $9,000,000 or more, based on recent Australian court decisions. $20,000,000 is fast becoming the norm, and you should consider taking out this higher sum insured, so that is one less thing to worry about.
Machinery Breakdown Insurance
If your shop relies upon machinery, like fridges, freezers, cool rooms, ovens cookers etc you need to keep your machinery operating or your business will be negatively affected. Some machines are operating 24 hours a day, 7 days a week. Breakdown can occur at any point in time. Machinery breakdown insurance can cover repair or replacement costs in the event of sudden and unforseen breakdown of your plant and machinery. It can also cover loss of stock such as food and perishables contained in cold storage such as a cool rooms, fridges and freezers, but you must elect to take that optional cover if you want these items insured.
Your shop will most likely have an electronic till and a computer. If your electronic equipment breaks down, it would severely hamper your operations, including no ability to take credit card or EFTPOS payments.
The majority of consumers now prefer to pay electronically, so your turnover might drop substantially if these devices break down. This section covers unforseen or sudden loss to mechanical and electrical equipment. The section can also cover the restoration costs of data that may be lost, if you take that electronic equipment cover as an optional extra.
You may be unlucky enough to be selected by the ATO for a Tax Audit of your shop business. The Australian Tax Office conducts audits on a random basis into businesses in Australia, so you never know when it may be your turn.
What we can tell you is that it is expensive to get your accountants to prepare all of the figures which the ATO require. In the event that your business is audited, the necessary and reasonable costs you incur (such as your accountants or tax agent fees for work done) is covered.
Employee Dishonesty- Fidelity Cover
How would you feel if you found out that one or more of your employees were stealing from you? Or from your customers? You would probably be devastated. This type of crime is called employee dishonesty (including theft or pilferage by staff), embezzlement of your money or assets and theft from customers. This section covers you against loss of money or property caused by theft, fraud or dishonesty by an employee of the business.
Goods in Transit & Marine Cargo Insurance
If your business involves the importing of goods from overseas by air or sea or the national or local transportation of your goods by road, sea or air you may wish to consider insuring your goods against potential damage whilst in transit.
If you deliver goods from your shop to customers who don’t have to pay until they are safely delivered then you should also take out Marine Transit insurance. With just a few questions a specialist business insurance broker can advise you if you need any cover, and if so, what type and how much. Just another way to remove the worry from your shop business.
General Property Insurance
In today’s electronic society we all now rely heavily on devices that we take with us to do business. Phones, Laptops, Cleaning Equipment, Tools etc.
Many businesses these days have a range of equipment need to be insured when they are away from your business premise. You can arrange cover to specifically insure the items you want. Or where feasible, have a blanket cover with a maximum limit any one loss.
Commercial Motor Vehicle Insurance
You probably also need your motor vehicle for your shop to operate. That might be a car, a van, a utility or a truck. How much would your business be affected if your motor vehicle was not available?
If the answer is “a lot” then you can also insurer your motor vehicle(s) under your shop insurance program.
Management Liability Insurance
One of your biggest worries when running a shop can be your staff. If your staff sued you for wrongful dismissal, bullying, sexual harassment etc. how would you cope? Legal fees and judgements against you for Employment Practices claims could cost you hundreds of thousands of dollars.
Another staff issue is Workcover claims by employees. If an employee is injured (or killed) at work, your business WILL be called to appear before a Workcover enquiry, which costs tens of thousands of dollars in legal fees alone. In the event of an employee death, you could even be prosecuted in a criminal court for Industrial Manslaughter.
Management Liability cover can help remove some of these worries. The policy covers Acts, Errors and Omissions by Owners, Director or Officers (Managers or senior staff). These negligent Acts, Errors and Omissions are simply the mistakes you may have made in your business in one of the employee areas above.
If you employee any staff in your shop or business, in today’s environment you should really consider Management Liability insurance.
Well, that ends our list of areas that you need to consider for Shop insurance. Based on your particular type of business you may not need all of the policies . Many different types of cover can be packed together under the one policy. This is typically called ‘Business Pack Insurance’ or simply a ‘Biz pack’. A specialist business insurance broker such as SMART Business Insurance can help make sure that you get suitable cover to adequately protect your business.
A specialist business insurance broker, which you now access online ,can help cover for you for your business risks and let you get on with what you do best – running a successful and profitable shop.