Insurance Query: How shop insurance is a better solution for SBOs

I am a small business owner in a central part of the city with my own showroom and a growing business. I have considered several insurance products for liability, theft and property. Can you explain how a shop insurance is a better solution for my needs?

Chand G

Operating a shop in India is a thrilling journey that combines enticing opportunities with inevitable challenges. The allure of serving customers and building a livelihood is undeniable, but the dynamic retail world also brings unforeseeable hazards.

This is where shop insurance, also known as retail insurance, plays a pivotal role. It’s a meticulously tailored policy designed to safeguard businesses in the retail sector, spanning from modest grocery stores to elegant clothing boutiques and bustling electronics shops. Shop insurance serves as a guardian, protecting not only assets and liabilities but also the hard-earned reputation of the business.

Delving deeper into shop insurance reveals a versatile array of coverage options. This flexibility allows businesses to fine-tune policies to match their unique needs. Property insurance, for example, shields against damages to physical assets — covering everything from the building itself to invaluable inventory. It even extends its protective umbrella to guard against natural disasters. Liability insurance is equally vital, offering protection against financial repercussions from accidents and injuries that can occur on the premises, ensuring peace of mind for both customers and employees.  

In the ever-evolving Indian retail sector, your shop is not just a place of commerce but a testament to your entrepreneurial spirit and dedication. Amidst the continuous flow of opportunities and challenges, there’s a fundamental question that every shop owner should contemplate: “Have I ever considered protecting my earnings against unforeseen threats?”

Shop insurance is the resounding answer to this critical question — a robust safeguard against unforeseen challenges that can significantly impact your business.

Why shop insurance is vital

Shop insurance offers a comprehensive array of coverage options. At its core, it shields you from financial losses stemming from unforeseeable events beyond your control. Key components of shop insurance encompass protection against Standard Fire and Special Perils, which includes coverage against a broad spectrum of threats such as fire, lightning, explosions, riots, earthquakes, burglaries, property damage, and more.

Furthermore, shop insurance goes the extra mile by including other built-in features at no additional cost. These features cover expenses incurred for debris removal (up to 1 per cent of the claim amount) and fees for architects, surveyors, and consulting engineers (up to 3 per cent of the claim amount). These inclusions address not only the evident damages but also the concealed costs associated with recovery.

Optional covers tailored to your needs

Shop insurance offers an array of optional add-on covers to customise your policy according to your retail business’s specific needs. Among these options, Burglary Coverage offers protection from scenarios such as burglary, housebreaking, hold-ups, and robberies.

Money in Safe provides security against money loss, covering cash, banknotes, currency, bank drafts, cheques, and more. It extends to losses or damages involving safes, strong rooms, or cash boxes, securing money even outside your premises with Money in Transit coverage.

Electronic Equipment protection shields essential devices such as computers, printers and fax machines from unforeseen physical loss or damage, while Portable Equipment coverage extends this protection to laptops and other portable devices. The policy also includes Machinery Breakdown coverage for equipment such as air-conditioners and refrigerators.

Plate Glass protection covers loss or damage to fixed glass due to accidents. Neon Sign coverage safeguards neon or glow signs within your premises from potential losses or damages caused by accidents.

Workmen’s Compensation ensures compliance with liability laws, compensating employees for injuries or death during employment. Personal Accident protection covers employee death or disability due to sudden, unforeseen, violent events. Public Liability shields against legal liability for injuries or property damage to third parties, and Baggage coverage includes the loss or damage of personal baggage. Fidelity Guarantee insurance protects against financial loss resulting from employee fraud or dishonesty. These optional add-ons empower you to tailor your shop insurance to your retail business’s unique requirements.

The legal perspective: Maharashtra’s mandate on shop insurance

In a significant move to underscore the importance of shop insurance, the state of Maharashtra is poised to become the first in India to mandate it for shops and establishments. The proposed mandate will require all shops and establishments in Maharashtra to obtain shop insurance, adding an essential layer of protection to their operations. This move is particularly significant in a State known for its bustling commercial centres and vibrant retail landscape.

Who should invest?

Shop insurance is designed to cater to various retail establishments, from small kirana stores to bustling electronics shops. Even convenience stores and thriving shopping malls can benefit from it. However, it’s crucial to note that shop insurance has exclusions, which can include losses from war, pollution, wear and tear of equipment, money loss due to employee collusion, and damage during the removal or alteration of plate glass or neon signboards. Understanding these exclusions is essential for a well-rounded policy.

The writer is Executive Vice-President & Head - SME, Tata AIG General Insurance 

Send your queries to insurancequeries@thehindu.co.in 

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