Retail businesses are faced with a variety of risks and threats ranging from theft of physical items to customer injuries and digital data breaches. Surveys show nearly half of retail businesses have made losses due to shoplifting and dishonest employees. Entrepreneurs must take solid steps to protect their investment, pre-empt potential risks, and ensure the continuity of their business. Business insurance for retailers is an excellent way to safeguard your business from known and unforeseen risks.
Reasons for Getting Retail Store Insurance
Retail store insurance is far more than a ‘cost of doing business’. It is an investment in the future of your company. It protects you from typical threats and risks that could otherwise force you to shut down. Below are some of the key reasons why your Hong Kong retail business may need commercial retail insurance.
Manage known risks
Individuals who are operating retail stores (and other businesses) in Hong Kong are required by law to purchase certain types of insurance.
Protect your investment
It takes a lot of financial investment to set up your store and stock it up with the merchandise. It only makes sense that you proactively protect your physical store along with employees, customers, and inventory.
Common accidents such as people slipping and falling within your premises can happen at any time. Affected customers or members of the public may sue your company. This means you need to foot legal expenses and possibly pay a claim if you lose the lawsuit. You may prefer to settle with the injured party to reduce legal costs and prevent reputation damage. Given the kind of damage that a single claim can cause to your business, it is always beneficial to have liability insurance.
Manage known risks
Retail shops trade in fast-moving merchandise, which could attract theft by shoplifters or rogue employees. Items on display could get damaged or injure people in the store. Furthermore, there is a risk that you might purchase inventory and not sell it. These are some of the common known risks that compel retail store operators to get insurance.
Who Needs Store Insurance?
Running a retail shop can be stressful. You've got to worry about attracting and retaining customers, managing inventory, and delegating employees - among other things. Retail business insurance protects your venture from risks such as employee accidents and customer injuries. Numerous Hong Kong retailers can benefit from this kind of coverage, including:
Luxury brand outlets
Food and beverages businesses
Sports and outdoor equipment outlets
Used goods stores
Cost of Business Insurance Hong Kong
Every retailer is unique in the nature of its setup and operations. The cost of retail business insurance in HK will vary from one shop to the other based on a variety of factors:
Location of your business
Nature of property owned
Value of property owned
Number of employees
The size of the Payroll
History of claims
Understandably, insuring a small shop with few employees will cost much less than a large store that has massive assets and numerous employees. Other considerations such as selecting a higher deductible can lower the cost of premiums. It is important that business owners shop around to find the right coverage for their precise needs.
Types of Hong Kong Retail Insurance
Below are some of the major business insurance covers available to retailers in Hong Kong.
→ Public Liability Insurance
This is fundamental business insurance that is designed to protect your business if a customer, supplier, or member of the public gets injured or suffers property damage due to negligent business activities. Public liability insurance in Hong Kong covers diverse business risks, ranging from environmental pollution to accidents such as things falling and hurting people. It is an important type of coverage to have especially if your business regularly interacts with the general public.
→ Employee Compensation Plan
Hong Kong law requires ALL employers to have this type of coverage. An Employee Compensation plan cushions your business from liability and claims if an employee gets injured or sick in the course of doing their job. This coverage may pay benefits in the form of wages, reimbursement for medical expenditure, compensation for economic losses, and often even death benefits to a worker's dependents.
→ Cyber Liability Insurance
Many retail businesses collect electronic data such as customer information and credit card details. Cyber-attacks may cause interruption of computer operations along with destruction, corruption, or theft of sensitive electronic data. Cyber liability retail insurance provides funds to remedy the data breach or pay compensation for damages.
→ Business Income Insurance
Retail businesses are typically exposed to external threats ranging from malicious activities such as vandalism to disasters such as fire or windstorms. In the event of these occurrences, you may be forced to temporarily close the shop so you can repair the damage. Business income insurance helps replace the lost net income or foot ongoing expenses (payroll, mortgage, relocation, etc). This retail business insurance is usually very customizable to the needs of your store.
→ Commercial Property Insurance
This commercial insurance protects your premises and physical assets from unforeseen losses caused by theft, vandalism, fire, and storm damage. Basically, you make a record of everything within your business that has a monetary value before purchasing the retail insurance. In the event of losses, the insurance company will reimburse you so you can replace your equipment and valuable assets.
How to Find the Right Retail Business Insurance in Hong Kong
Choosing the right liability insurance is paramount so you get sufficient protection for your business and maximum value for money. You must consider multiple factors including Hong Kong's legal requirements, your own budgetary constraints, and any special requirements that are pertinent to your business. Partnering with a licensed Trusted Union insurance agent is a great way to sort through all the options and find the right insurance company and coverage for your store.
As a retail store owner and operator, you work hard to build your business. And while we always hope for the best, unforeseen risks such as customer injuries, computer breaches, theft, vandalism, and natural disasters can occur at any time. These may result in massive losses and in some cases even discontinuity of your business. Commercial business insurance can't prevent disasters from happening but can protect your business from these events.
Hong Kong employers (including businesses and households) are required by law to purchase worker's compensation insurance. What other types of insurance you get will depend on the precise protection needs that your business has. Our licensed insurance agents at Trusted Union can help you wade through the options and custom-select a business insurance pack that is best suited for your store.