What Is Retail Insurance, And Do You Need It?

Do you own a brick-and-mortar shop? 

Or perhaps you run a successful online store?  

Or even both?

If that’s the case, the good news is that there has never been a better time to be in the retail space in Australia. 

According to the latest data from the Australian Bureau of Statistics, retail sales are consistently rising, with an increase of almost 18% year on year! 

In fact, according to experts, e-commerce spending has reached an all-time high in 2022 and is set to double over the next five years.

But while this is good news for your company, it’s important to keep in mind that operating in the retail space comes with some risks. And the best way to protect your business against these risks is to have retail insurance.

But what is retail insurance exactly? 

How can it protect you and your company, and do you really need it?

These are the questions we’ll tackle in this blog post.

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Does Every Business Need Retail Insurance?

As mentioned before, whether you have a brick-and-mortar shop or run an online store, your business is exposed to certain risks on a daily basis. Sure, these risks differ depending on the nature of your store, but they’re nonetheless present in every type of retail business. 

For instance, if you have a physical store, your customers might slip and fall on wet floors, exposing you to a lawsuit. Or someone could steal one of the items on display without you noticing. Depending on the item’s value or the frequency with which this happens, your bottom line could be significantly impacted. 

Likewise, if you run an online store, cybercriminals could hack your systems and networks and leak sensitive data, which, in turn, can significantly affect your business and even lead to bankruptcy. 

So, how to protect your company against these risks?

Well, the most effective way is to draft a detailed risk management plan highlighting each risk your business could be exposed to. Then, detail the strategies you’ll implement to reduce these risks and devise a mitigation strategy for each. And in addition to this, you should transfer some of the risks to a third party by purchasing retail insurance.

Devising a detailed risk management plan and investing in tailored retail insurance will help reduce the risks for your company and ensure your business thrives for years to come.

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Common Retail Risks: Which Retail Insurance Policies Can Help?

For you to develop an effective risk management plan, you need to know what risks you’re facing as a retail business owner. 

So, to help you, we’ve shared below the four most common risks retailers face and how insurance can help mitigate and even eliminate them sometimes.

Theft

According to the Australian Retailers Association, shoplifting costs over $9.5 billion to retailers every year. And even though you can mitigate the risk by installing surveillance cameras and sensor-based product tags, the reality is that it can still happen. Especially as theft doesn’t only result from visitors. It can also come from your own employees.

So, what kind of insurance should you buy to be covered against theft?

As a good practice, we’d recommend purchasing retail insurance that covers your physical store, inventory, and equipment. Also, make sure to add commercial crime coverage to your policy, as it will protect you from crime-related losses stemming from fraud, burglary, and petty theft. 

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Cyberattacks

Theft doesn’t only apply to physical stores. In fact, as an online retailer, you’re particularly vulnerable to cyberattacks and data breaches. For instance, recent studies show that phishing and social engineering attacks are up 400% this year, affecting wholesale and retail the most. Now, you might think that your business is too small to be a target. But the truth is that small and medium-sized businesses are the target of cybercriminals in 43% of the attacks! And only 5% of them are prepared.

These attacks can be challenging to combat as a small business. Yet, we live in a digital era, and protecting your business and customer data is critical. If you process credit card payments, store your customer information online, or partner with online suppliers, you need protection.

That’s where cyber insurance can help!

A good cyber & privacy liability policy will provide you with first and third-party coverage and reimburse you for the loss of income resulting from a cyber incident. For instance, you’ll be covered for ransom payments, data restoration, and business interruption costs. 

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Property Damage

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If you sell or store your products at a physical location, you’ll need to consider the risks related to property damage. After all, a fire or storm could significantly damage your property, equipment, and inventory and affect your bottom line. This is exactly what commercial property insurance can help you with.

Commercial property insurance is designed to protect your business against a range of events, including:

• Accidental damage to your property or its contents
• Industrial accidents
• Earthquake
• Tsunami
• Burst or leaking pipes
• Fire
• Explosion
• Lightening
• Impact by a vehicle or falling object
• Storm damage
• Malicious damage
• Storm damage

Note that commercial property insurance can be added to your retail insurance policy.

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Employee injury

Workers’ compensation is a mandatory form of insurance for all employers in Australia. It provides cover in case one of your employees suffers a work-related disease or injury. More specifically, if one of your workers injures themselves while carrying out work-related tasks, workers’ compensation will cover medical and hospital costs and rehabilitation services. 

Additional Retail Insurance Considerations

In addition to the coverages mentioned above, here are some insurance policies you could benefit from as a retailer:

• Commercial Motor Insurance: If your business employs drivers to deliver products to your customers, from your warehouse to your store, or if your employees need to be on the road to provide your services to your clients, you need commercial motor insurance. This will protect your drivers in case they’re involved in an accident.

• Professional Liability Insurance: This insurance is designed to protect your business if one of your employees makes an honest mistake resulting in a third-party injury or financial loss.

While we recommend considering the coverages we just mentioned when purchasing retail insurance, there isn’t a one-size-fits-all approach when choosing your insurance policy as a retailer. Ultimately, it all depends on your business needs, so it’s important to discuss with your insurance provider before purchasing online retail insurance.

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Looking For The Best Retail Insurance For Your Business?

Then, you’ve landed on the right page!

At upcover, we specialise in providing small business owners, freelancers, and independent contractors with tailored insurance catering to their specific needs.

The retail insurance upcover offers is a highly tailored solution designed to safeguard retailers like you from inherent risks to your industry. 

This retail insurance includes the following:

• Public Liability Insurance: This protects you and your business if someone injures themselves on your premises or while you’re carrying out your operations in Australia.
• Products Liability Insurance: This protects you if your business sells a faulty product to a third party, resulting in someone being injured.
• Vicarious Liability: This policy covers you for any negligence on your employees’ part while delivering your services.
• Care & Custody & Control: Care, Custody & Control protects you if you damage a third-party property such as leased equipment. Note that the loss or damage must not have occurred through the performance of your work.
• Legal advice: Our complimentary legal advice add-on allows you to benefit from one hour of free legal advice with one of our insurance partner’s legal experts every year. 

If you need more information about our retail insurance or want to discuss your needs with professionals, don’t hesitate to contact us. We’re always happy to help!