Retail Shop Insurance Guide: 5 Things You Have To Know

Retail Shop Insurance Guide: 5 Things All Shop Owners Have To Know

#1. What is retail shop insurance?

Retail shop insurance is a type of commercial insurance designed for the unique risks that shop owners face. As a retail shop owner, you need to make sure you’re protected against major risks like property/inventory damage, retail theft, public liability, employee injuries or Covid-19 infections, and more.

Provide offers online quotes for retail shop insurance, which covers all these major risks that retailers need to protect against.

#2. What types of insurance do retail shops need?

1. Commercial property insurance

This protects your retail shop from common and major risks like:

1. Fire and explosions
2. Water damage
3. Furniture damage
4. Inventory damage
5. Burglary
6. Vandalism

Besides some exceptions, commercial property insurance essentially protects all the contents of your store. You can also choose to add on coverage to protect the building itself, which is useful if you happen to own your commercial property premises.

Some examples of what commercial property insurance covers are:

1. Shop contents: inventory, furniture, renovations, equipment, etc.
2. Glass fixtures (e.g. shop display windows)
3. Employees’ and your personal belongings

Example: One of your electrical outlets catches fire. The fire spreads to the rest of your retail shop and destroys the premises. All the renovations and your inventory are destroyed. This type of insurance will pay for the property damage caused, equipment replacement, and will replace the destroyed inventory.

2. Full theft insurance

This type of insurance compensates you if someone steals from your retail shop. For instance, if a customer walks into your store and steals your goods, you would be compensated for the value of the goods that were stolen.

Theft vs burglary insurance:

Theft and burglary might sound like somewhat interchangeable terms, but they carry very different meanings in insurance, with significant implications for policy holders.

A property all risks policy (which almost all shops will have) will cover burglary. However, if you read the fine print, this only covers burglary with forcible and violent entry. This means that coverage will only apply if someone breaks into your shop (e.g. picks your lock, cuts your padlock, smashes windows, etc).

Burglary coverage does not apply to theft, which is stealing goods without forcible and violent entry. For most shop owners, it is actually theft that is more concerning. Given that many customers will walk in and out of the store every day, it is very difficult to ensure that people don’t steal your goods.

A full theft policy will thus extend your coverage to include stealing of goods without break-ins.

Example: Someone walks into your clothing store. They pick up a large bunch of clothes, and head into your changing room to try them on. They hand you back the clothes they tried on, and don’t buy anything. At the end of the day during your stock-taking, you realise you’ve lost $500 worth of merchandise. When you review the CCTV footage, you realise the person who took that large bunch of clothes handed you fewer clothes than they took into the changing room. This type of insurance will pay for the value of your stolen merchandise.

3. Work injury compensation insurance (A.K.A. WICA insurance)

Now that Singapore has re-opened its economy, customers are beginning to slowly return to patronising retail stores. This means that retail shop employees will be coming into close and extended contact with large numbers of the public. Given the highly infectious nature of Covid-19, this presents a serious infection risk to retail shop employees.

Under the Work Injury Compensation Act (WICA), business owners must pay for:

1. Medical expenses of employees for work-related injuries/sickness
2. Lost wages of employees while hospitalised/on medical leave

For patients infected with Covid-19, the government has already declared that hospitalisation charges will be waived for Singaporeans/PRs. However, business owners are still legally liable to pay the lost wages of employees while they’re hospitalised or in quarantine! Remember that hospitalised Covid-19 patients can be warded for up to 2 months (or more!). As a retail shop owner, can you imagine how costly it would be to pay 2 months’ worth of salary for a worker in the hospital?

This is where Work Injury Compensation Insurance (WICA insurance) steps in. WICA insurance will protect your employees from work-related injuries/sickness, including Covid-19 infections.

This pays for:

1. Medical expenses like hospitalisation and surgery charges
2. Lost wages while on medical leave
3. Lawyer’s fees if your employees sue you for injuries/sickness

Work injury compensation insurance also happens to be highly affordable:

Example 1: One of your staff gets infected with Covid-19, and spreads it to all your other employees. Your retail shop manager ends up being hospitalised for one month. The manager’s monthly wage is $5,000. Because this is a work-related infection, you are now legally responsible for paying your manager’s lost salary. If you have Work Injury insurance, it will cover your managers’ lost wages.

Example 2: While mopping the floor, one of your staff slips and falls, breaking their arm. They require surgery to fix a steel plate in their arm. The hospital bill is $10,000. Because this is a work-related injury, you as the retail shop owner are now liable for this $10,000 medical expense for your employee. Work injury insurance will pay for the medical bills, as well as lost wages while your staff is on medical leave.

4. Public liability insurance

Public liability insurance will cover two major liability risks for retail shop:

1. Customer and third-party injuries (e.g. customer slips and falls)
2. Property damage to third-parties (e.g. during renovations)

This type of insurance will pay for medical expenses if people get injured while browsing in your retail shop. If you intend to do renovations to your store, public liability insurance is crucial. It will protect you from legal liability if your renovations damage other people’s property, or injure other people.

Example: One of your employees was mopping the floor. A customer slips on the wet floor, breaking their arm. They require surgery to fix a steel plate into their arm. They sue you for their $30,000 to pay for their surgery costs, and for personal injury damages. This insurance will pay for their medical fees, your lawyer’s expenses, and any final damages awarded by the court.

5. Fidelity guarantee insurance

If you allow employees to manage the cash register, or handle cash payments from customers, there is a real risk of employees stealing from you. Retail owners should consider having Fidelity Guarantee insurance coverage to protect against dishonest staff members.

A Fidelity Guarantee insurance policy pays for:

1. Cash/cheques that are stolen by employees
2. Fraud committed by employees (e.g. issuing false invoices or false refunds for their own benefit)

Example: You assign an employee, Robert, to man your cash register. For two days in a row, you come up short $500. After reviewing the CCTV footage, you discover that Robert has stolen the money. He refuses to return the stolen money. A Fidelity Guarantee policy will pay for the $500 that was stolen from you.

Note: Fidelity guarantee insurance is common not just for retail shops, but also for F&B businesses and other industries that deal with lots of cash. If you’re not handling the cash yourself at all times, make sure you have Fidelity Guarantee coverage. Unless you’re running multiple retail shops, you won’t need a lot of coverage – even having a policy with a small limit (e.g. a couple thousand dollars of coverage) is advisable to protect you from employees seeking to take advantage of you.

#2. Retail shop insurance discounts – tips and tricks

CCTVs – Having CCTVs in your retail shop can attract lower prices from insurers

Fire extinguishers, sprinkler systems – Having fire extinguishers and sprinklers can result in lower prices for property insurance

#3. How much does retail shop insurance cost?

With Provide, retail shop owners can get a comprehensive package of insurance starting from just $300/year – i.e. a little over $25/month. That’s probably less than what you’ll spend on your phone bill! Considering the significant amount of protection you get, that’s a really good deal.

You can mix and match any combination of the above policies to suit your needs.

#4. Retail shops selling jewellery, watches, and other precious goods need extra coverage

Precious goods: Some retailers’ line of business involves selling expensive goods like jewellery, watches, antiques or other precious merchandise. If this sounds like you, take note: most standard retail shop policies will actually exclude coverage for such merchandise.

Have a look at this policy’s exclusions, which is taken from the policy wording of a well-known American insurer. This is a typical example of what most standard retail shop policies will not cover:

“This retail shop policy excludes loss or damage to gold, silver, platinum, or other precious metals and jewellery, watches, pearls, set or unset precious stones or furs, and garments trimmed with fur”. 

If you’re selling these expensive goods, you need to have a tailored policy that specifically covers these risks. Provide’s platform makes it easy for you to cover these risks online, quickly and affordably.

#5. Where is the best place to get retail shop insurance?

Provide is the best place to get online retail shop insurance quotes.

With Provide, retail shop owners can get a comprehensive package of insurance starting from just $300/year – i.e. a little over $25/month. That’s probably less than what you’ll spend on your phone bill! Considering the significant amount of protection you get, that’s a really good deal.

When you use Provide, you’ll save up to 25% on your insurance premiums. Our online operating model creates lower overheads, so we pass every dollar saved back to you. At Provide, we take pride in understanding the unique risks that each industry and business faces, so we can recommend the best solutions to protect you from such risks.