Retailers are the life blood of the local economy, contributing around $262 billion to local GDP figures each year. Given how important retailers are to the health of the Australian economy, this means it’s essential for retailers to protect their livelihoods. We explore the top six risks facing retailers and what they can do to help minimise them.
Don’t be stung by theft
But, says Michael White, Steadfast’s broker technical manager, most policies don’t cover shoplifting.
“Some insurers have a policy with a small limit, but in general, you can't insure for shoplifting,” he warns. This is because shoplifting is hard to prove, with the only evidence available usually stocktakes and inventory checks.
Michael explains for claims to be successful under theft policies, the policy holder must be able to prove there was a theft. “You can't just say, ‘Well, I did a stock take, and according to my records I should have had 1,000 spanners and I've only got 900. Therefore the other 100 must have been stolen.’ You have to actually prove they were stolen.”
In the event of other thefts, it’s essential for policy holders to contact the police as soon as possible and avoid touching anything at the crime scene to prevent contaminating the evidence.
Policies to protect against property damage
Property damage is another major risk for retailers. Damage can take many forms. Shops may be affected by fire or weather events such as floods, for instance. This can result in the destruction of stock and in some cases, the business may not be able to operate for a period.
As such, it’s essential for retailers to take out not only policies that cover the shop’s contents, but also business interruption insurance. As long as the claim is successful, this can mean your business has a better chance of keeping afloat until the damage is repaired.
“Liability policies can cover businesses in the event somebody suffers an injury on their premises or buys a product and is injured as a result of that product”
Safeguarding your cash
There are specific insurance policies that can cover a business against the theft or loss of cash.
“You can insure physical cash, up to a certain amount, against theft or fire, among other things,” Michael advises.
To avoid the risk of money being stolen, ensure cash is banked on a regular basis.
Protect your shop from a neighbouring shop’s fire
A common problem retailers face happens when a major retailer located in a shopping centre experiences an insurable event such as a fire, the upshot of which means other retailers are unable to open until the damage is repaired.
This is known as denial of access and retailers can take out insurance to help protect them from this risk.
Powering up when your power is down
There are also policies that can provide cover in the event the business cannot access utilities such as power for a period, for instance if a major storm means the electricity goes out for a time.
This cover is relevant for businesses such as cafés that require access to utilities to operate.
Don’t let a customer’s injury cause you undue damage
Liability policies can cover businesses in the event somebody suffers an injury on their premises or buys a product and is injured as a result of that product.
This is essential cover for retail shops to have to help ensure that in the event a customer suffers an injury as a result of their operations, they – and their customers – are protected.
To reduce the risk of having to make a claim as a result of a liability, it’s an idea to keep the shop tidy and try to ensure there are no hazards in aisles people can trip over. “Also try to ensure there are no known hazards associated with products you sell by doing proper due diligence on suppliers,” Michael advises.
It’s a good idea for retail shops to work with an insurance broker to identify the risks to which they are exposed and take out insurance policies that maximise in the event of a claim, the policy should pay out.
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