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Retail Insurance for your business

With over 75% of SME Businesses comprising retail businesses, the importance of retail insurance cannot be under-stated. SME Businesses are the backbone of the Malaysian economy. On a quarterly basis compared to the previous years, it has had an average growth of 2–3% per Quarter.

The increase was driven by retail sales such as stalls & markets (10.8%) as well as the increase in food and beverage stores. Though diversity and options may be great for the economy, it can be bit overwhelming when it comes to retail insurance. With so many options available, it’s hard for businesses to know where to start. It gets even more complicated due to the wide range of businesses in the retail industry. 

There are various types of businesses classified under the SME Category. With each business having its own unique needs, standardized insurance policies are unable to fully insure the risks.

For example, the business model for an athletic apparel store might not necessarily be similar to a store specializing in office equipment. However, these establishments are both owned by small businesses and are looking to save on insurance costs. In order to derive which insurance package is needed for each specific industry, a brief framework below could assist business owners.

Choosing Retail Insurance that Suits Your Business

1. The product that you sell affects the type of insurance policy needed.

The products your client sells affect their coverage. Some items carry more risk, which means the seller has a greater responsibility to their customers. For instance, a bakery shop may carry more product risks compared to an office equipment store. This is simply because baked goods are disposable products that can be consumed by the masses.

2. The location of your business

Location of a retail store plays a significant role in the formulation of insurance policy rates. If your business is located in a high traffic area, your public liability policy premium would then be priced at a higher rate as the chances of third party making a damage claim is higher than the area where foot traffic is low.

How much does retail insurance cost?

The value for retail insurance  varies according to the number of insurance policies. As a standard guide, below are the insurance policies that are recommended for retail businesses to take up.

Fire Insurance

The Fire Insurance policy is designed for business owners who either owns or is renting the retail outlet/property, with a considerable number of items that are deemed necessary to the daily business function. With Fire Insurance, you can cover for alterations and renovations made to the property if you are a restaurant owner. You can also cover each equipment with Fire Insurance in case of any any untoward incidents. . Read more here.

Burglary Insurance

The Burglary Insurance is designed for all retail business owners. Coverages can include the stocks-in-trade such as food items, office equipment, and even light or heavy machinery to name a few. To reduce the overall cost, you can opt to be insured on a First Loss Basis.

Money Insurance

Money Insurance is a coverage that is not widely available in the Malaysian market mainly due to its lack of awareness. However, it doesn’t make it any less important. Money Insurance should be purchased by businesses that are cash incentive, such as restaurants, bakery shops, florist shop and other businesses usually found in high foot traffic area.There are two sections in the money insurance policies that business owners need to understand.Firstly, Money-In-Transit.

Businesses are known to deposit their cash earnings into the bank on a daily basis if not weekly. This policy helps cover the loss in the event of unfortunate incidents that may occur on the way to bank.

Secondly, Cash-in-Premise. To note, this insurance policy is only applicable to Cash Incentive businesses. The rates for the insurance policy are determined by the estimated annual carrying for the cash in premise.

Plate Glass Insurance

Many retail outlets would require this insurance, especially if the outlet is built with the emphasis on glass features. By purchasing this policy, retail business owners can cover the cost of repair and replacement for accidental breakage and/or fracture to the glass due to reasons mentioned, and agreed upon in the policy negotiation.

Whilst offered at a reasonable cost, majority of business owners do not purchase the policy due to the low occurrence of claim. But to insure some form of protection, they would insert an additional clause within the Fire Insurance policy to include Impact Damage insurance policy.

Public Liability

The Public Liability Insurance policy is one that is purchased by many retail business owners. Designed to cover a business that deals with members of the public, its main objective is to insure the legal costs arising from the third party injury sustained due to negligence within the business premise.

The rates for the insurance policies are determined by the proposed Sum Insured and type of business. For example, if the business is a local bar, the chances of a Public Liability claim happening is higher. Thus, the Minimum Sum Insured must be at least RM1 million for premiums ranging from RM500 onwards.

All Risk

All Risk Insurance encompasses a wide range of incidents that a basic Fire Insurance or Burglary Insurance policy will not cover. There are two types of All Risk Insurance to consider:

Named Peril Insurance Policy

This policy covers for only specific perils that are mentioned in the policy and are considerably cheaper than an unnamed All Risk Perils Insurance. A Named Perils Insurance Policy would cover your business in the event of fire, windstorm, hail, aircraft, riot, vandalism, explosion and/or smoke.