What is Shopkeeper’s Insurance Policy? Do Shop Owners Need It?

Planning to start your own business?

Finances might be your first concern in this regard. As crucial financial planning is in the form of inventory management and adequate cash flow, you should also be prepared to tackle any adverse situations which might arise during the course of your business.

The first step towards securing your business is availing a shop insurance policy. Though not mandatory, such plans provide comprehensive coverage in the event of any unforeseen circumstances, be it theft or any damage caused by a natural calamity.

But how does this policy work?

To understand the working mechanism of such insurance policy, you need to know about the extent of coverage, and its respective claim process.

What is Covered Under Shopkeeper’s Insurance Policy?

All items which generate revenue in a retail outlet are monetarily covered under a shopkeeper’s insurance plan. Renowned insurance companies also extend financial coverage on the retail property on account of damages caused to it.

Total sum insured of a shopkeeper insurance policy depends on the entire stock of goods maintained in the store, valued at cost price.

Read: 10 Types of Business Insurance You Need to Know About

Finding it difficult to understand? Let’s demonstrate with an example.

Suppose you own a footwear shop. You have 2500 unisex sneakers in your inventory, each valued at Rs. 1000. You plan on selling the same at Rs. 1200, keeping a margin profit of Rs. 200 for yourself.

In such a case, your total sum insured would be valued at Rs. 25,00,000 (2500×1000), payable against legitimate claims lodged. Such claims will only be entertained in the following events –

• Natural disasters such as earthquake, hurricane, floods, etc.
• Fire
• Accidental explosion or implosion leading to damage of inventory
• Riots
• Burglary
• Terrorism

Other types of coverage extended by renowned insurance companies are –

1. Damage to property – Damages to the shop due to external events such as natural calamity, fire, or malicious acts perpetrated by a third party are financially covered by such insurance policies.
2. Accident cover – Medical expenses on account of injuries sustained by a respective policyholder due to accident is monetarily covered under such insurance plans.

Such extensive coverage not only helps you secure your shop and all valuables present in it but also acquire financial coverage for medical expenses incurred due to an accident occurring inside the shop.

Also See: Must Have 4 Types of Insurance Policies for One and All

But before obtaining any insurance product, it is essential to have widespread knowledge of both its coverage extent and limitations, thereby, facilitating claim approval and disbursal procedure significantly.

What is Not Covered Under the Shopkeeper Insurance Policy?

Items present inside the shop for purposes other than sales is excluded from sum insured calculations. This includes any furniture such as tables, chairs, storage cabinets, etc. Cash registers also fall under this category, as it is not covered under a standard shopkeeper insurance policy.

Any damages resulting from malicious activities committed by family members or employees are also not covered under a standard shop insurance plan.

Is a Shopkeeper’s Insurance Policy Necessary?

Despite its limitations, a shopkeeper’s insurance cover is crucial for a business to mitigate its losses in the event of any external damage.

But do you really need it?

Looking at its advantages as well as annual premium charges will help you make an informed decision regarding such expense.

Benefits of a Shopkeeper Insurance Policy

• Secure your finances by availing extensive coverage in any unpredicted event

Damages sustained by the goods in your inventory will be covered financially as claim settlement. Such monetary assistance helps you to secure your income against adverse and unprecedented circumstances, mitigating any unwarranted risks.

• Cost-effective premiums reduce your financial liability

Renowned insurance providers charge competitive rates on their shop insurance policies. Nonetheless, premiums levied are calculated based on the following parameters –

1. Location of the shop
2. Size of the outlet
3. Type of product sold
4. Total inventory maintained at a given point of time

Thus, if you run a retail shop, availing shopkeeper insurance can be of great use as it diminishes the risk factor significantly. At reasonable premium charges, you can ensure no compromise is made on your income.

Must Read: Reasons Why Your Business Needs a Cyber Insurance

Who Should Buy a Shopkeeper’s Insurance Policy?

You should consider purchasing a shopkeeper’s insurance policy if –

• Your shop is your primary source of income.
• You own and manage a shop.
• You own multiple shops.
• Your shop is situated in a low-lying area.
• Your shop(s) is/are located in popular parts of a city.

In case you own multiple shops, you need to avail an insurance policy for each shop to insure those and their contents.

By comparing the features and benefits of numerous such policies available in the market, choose one most suited to your requirements for all-round protection!