Retail insurance
How business insurance can cover your retail store
What is ‘retail insurance’?
‘Retail insurance’ refers to a tailored business insurance policy in Australia designed to protect the business’s assets, and may cover stock, future liabilities, machinery breakdown, business interruption and a lot more for retail businesses. When considering the cover you need, you should consider customer foot traffic, physical inventory, public liability and potential disruptions in trading.
Insurance is a crucial aspect of protecting a business. Running a retail business, whether it’s a small boutique store, electronics outlet, convenience store or other types of shops, comes with unique risks that insurance can help solve.
Why is insurance important for retail business owners?
Running a business comes with risks—some you can manage, others you can’t. Accidents like a customer tripping or damage from a nearby fire can happen unexpectedly. Business insurance acts as a crucial safety net, protecting your livelihood, staff, and customers from unforeseen events.
Business insurance can ensure that these events and more don’t result in devastating financial loss. It allows you to:
- Protect your cash flow
- Safeguard your reputation
- Meet legal or lease requirements
- Rebuild and recover faster in the face of disruption.
Types of insurance to consider for your retail business
Business insurance for retail isn’t a one-size-fits-all approach; there is a range of covers that can suit the different and specific risks retail businesses face. Not all retailers need every cover that is listed, but all retailers should assess their exposure to each risk.
Always read the policy wording in the relevant Product Disclosure Statement (PDS) and the Target Market Determination (TMD) to ensure you understand the inclusions and exclusions of your policy, and that it’s the right fit for you.
Public liability insurance
Public liability insurance covers your legal liability and associated compensation costs if a customer, supplier or other member of the public suffers personal injury or property damage on your business premises and holds you responsible. It’s highly recommended for all retail stores with customer foot traffic. For example, if a customer slips on a freshly mopped floor that you neglected to warn about and injures their back, public liability insurance could cover their medical costs and your legal defence if they sue.
Product liability insurance
Product liability insurance can cover your liability for claims arising from your defective or harmful products. If a product you sell causes injury or damage (even if you didn’t manufacture it), you could still be held legally liable.
This insurance is highly recommended for retailers who sell physical goods, particularly electrical, food, cosmetic or baby products. For example, if a customer purchases a faulty kitchen appliance from your store that causes a fire, product liability insurance may cover the cost of damages.
Business interruption insurance
A business interruption insurance policy can cover ongoing expenses and sometimes additional costs incurred to keep your business running if an insured event (like a fire, storm or vandalism) forces you to temporarily close or significantly reduce operations.
For example, should a fire damage your shopfront, you’ll need to close for repairs, and business interruption insurance may compensate for lost revenue during the downtime.
Theft insurance
This type of insurance may cover your financial losses due to theft, attempted theft or burglary, whether by outsiders or, in some cases, by employees (if extended to employee dishonesty).
Say your store is broken into overnight, and valuable stock is stolen. Theft insurance may help cover the replacement cost of that inventory.
Commercial property insurance
Commercial building and contents insurance can help protect your physical assets, including buildings (if owned), stock, furniture, fit-outs and equipment, against loss or damage from events such as fire, flood, storms, vandalism or accidental damage.
For example, a storm damages your shop’s roof, and the stock is ruined by water ingress. Commercial property insurance covers the cost of repairs and stock replacement.
Workers’ compensation insurance
Workers’ compensation is a legally required insurance in all states and territories in Australia for businesses that employ people. It provides wage replacement, medical expenses and rehabilitation for employees who suffer work-related injuries or illnesses.
Should a shop assistant injure their wrist while lifting boxes, for example, workers’ compensation may cover their medical treatment and part of their wages during recovery.
Other business insurance policies to consider
- Cyber insurance: For retailers using e-commerce platforms or storing customer data.
- Glass insurance: Covers the cost of repairing or replacing both internal and external glass windows, doors, mirrors and display cabinets in the event of accidental or malicious breakage.
- Tax audit insurance: Covers costs if the ATO audits your business.
- Management liability: Insures directors and officers against claims of wrongful acts or omissions.
How much does insurance for retail businesses cost?
The cost of business insurance for retailers in Australia varies based on factors like business size, location, and coverage level. Compare policies from multiple insurers to find the best cover option within your financial situation and business needs. Calculate your sum insured, as being underinsured can be nearly as risky as having no insurance at all.
You can also work with an insurance broker to make sure you’re not underinsured. 
Always read the full details of the policy documents to know what your coverage is before signing up for any insurance policy.
Factors that can affect the cost of your business insurance include:
- Type of business (e.g. fashion retailer versus liquor store)
- Size of the business (including annual revenue and number of employees)
- Location (some areas have higher risks of crime, flooding or natural disasters)
- Value of stock and equipment
- Level of public interaction (more foot traffic often means higher liability risk)
- Claims history (previous insurance claims can raise premiums).
Meet our business insurance expert, Adrian Taylor
As a General Insurance expert with over 13 years’ experience in financial services, Adrian Taylor strongly believes in the protection and peace of mind that all types of business insurance provide business owners. Adrian says this type of cover can be the difference between a business staying afloat and going under if trouble arises.