Convenience stores are in a risky business. With a lot of cash on hand, goods in transit, resaleable items such as cigarettes and alcohol on open shelves and no security guard on the premises, smaller stores are often regarded as a soft target by the more unscrupulous out there - the sort that will pinch a 4X4 in order to drive it through your front window to hoick out the ATM.
Aside from crime, there are also acts of god to worry about - floods and drought (therefore subsidence), lightning strikes and storms. These are the sort of perilous events that sometimes appear in 'force majeure' clauses in terms and conditions in some contracts that free the supplier from any liability. Insurers are not among them, although they do have their own 'get out' clauses.
Then, too, in crowded cities there is also that uncertain shadow cast by the threat of terrorism. Yes, you need that 'necessary evil': an insurance package. Without the right cover, any business can be damaged or destroyed through the unexpected.
The only insurance that is mandatory is employers' liability (although, worryingly, the last time there was a survey done on the subject three years ago, it was discovered that some employers in the small business sector did not realise that it was required by law).
Other insurance, although not compulsory, is now included as standard (see box) from companies specialising in the convenience retailing sector. A good example of this is public liability, given that the UK is following the USA in its litigious quest for big payoffs. So when, for example, that bottle of fizzy falls out of an inadequate carrier bag and explodes, frightening the five-year-old, you can rest easy that you have at least £5m in public liability in your insurance package.
State of play
At the moment the insurance industry is in what is known as a 'soft market', or in other words, a buyer's market. Ian Hughes, retail services manager for Layton Blackham Insurance Brokers, which specialises in the convenience sector and which recently became a wholly owned subsidiary of the Axa group, explains: "The market is cyclical. It hardens and then, after a few years, someone else enters with lower prices and the rest of us have to fall in line. Now it is a buyer's market - premiums are about 10% down on what they were two years ago for retailers - providing they are virtually claims-free."
He expects this soft market to last until 2008 when, among other things, the government's NHS injury costs recovery scheme will kick in. This will allow the NHS to claim back costs for treating employees injured at work, with the result that employer's liability insurance could increase by 5-8%.
Ramming the point home
Ten years ago, there was hardly such a thing as a ram raid. Now they are one of the biggest incidents to impact on your policy should you suffer one. Statistics say that if you have an ATM, you are eight times more likely to be ram-raided. It isn't so much the loss of the ATM but what is known as 'theft damage to buildings' which costs, on average, £12,000 a case. This is so serious a consideration for some insurance companies that they will simply back off and not cover you for it. And if you do install an ATM and don't tell your insurers, it could invalidate your policy.
The principal claims on policies, aside from ram raid, are theft/armed robbery, window replacement (which can be a considerable cost) and unintentional arson (kids setting the wheelie bin on fire for fun).
Blowing your cover
As already mentioned, some things can invalidate your cover. Read your policy to see what it says about money in transit, for example. Many retailers do not realise that even if they are covered for, say, loss of £6,000 cash on its way to the bank, the terms probably say that the carrier should have been accompanied by two other people.
Bear in mind that insurance companies are like anyone else and do not have to supply anyone. It is a calculated risk. The more responsible the retailer is towards his/her duty of care, then the more likely an insurer will play ball. So don't wait until the roof caves in just because you think the insurance will cover it.
These days insurers look for 'incidents' as well as previous claims when putting a price on your policy - they are looking for a pattern. In fact, most are moving away from proposal forms to a statement of fact. They take down all your details over the phone, reproduce them in a statement prepared in "upmost good faith" and send it to clients for a "truthful" signature.
So what if you can't get cover because you have suffered too badly in the past? C-Store's agony aunt page Dear Jac gets a number of calls on this subject. Here's a perfectly legal trick. If you are a sole trader, change your status to limited company. It will give you a new identity and you will be able to get insurance again. It will be more expensive because as a 'start up' you will have no track record, but at least you'll be insured.
What does it cost?
We are really in ball-park territory here. Ian Hughes says: "There is no such thing as an average premium. Does the cover include the building or not? That could double the premium. What is the frequency of claim?
"Plus each insurance company works on zones numbered one to six, based on incidence of crime in the postcodes they have dealt with. For example, Welshpool, low crime, would be in zone one, whereas Uxbridge in West London might be a five or six. In city centres, the underwriter may have to refer to someone further up to get a quote."
Preparing for the worst
Despite the number of disasters which may befall a business, many business owners seem airily complacent, according to the British Insurance Brokers' Association. In February it launched a campaign to encourage small- and medium-sized enterprises to put continuity plans in place.
Its survey revealed that nearly three-quarters of businesses had no plans for dealing with the impact of terrorism; half had no plans to deal with flooding; a third had no plans to deal with storms; and only half had a plan to deal with the effects of fire.
These results have prompted an Early Day Motion tabled by Mike Penning MP, supporting the campaign. So far 19 MPs have signed in agreement.
Penning comments: "There is a real threat that your business and your employees' jobs will be lost if you do not prepare for the unexpected."
Most insurance companies offer a range of packages, with one 'tailored' for you, says commercial specialist Jardine Lloyd Thompson (JLT). It covers most eventualities and offers quotes over the phone or online. Where they vary is in terms of the amount of cover they offer.
Usual coverage includes public, product and employers' liability; malicious damage; theft; fire; burst pipes; storm and flood damage.
What you can insure
? Buildings, contents, stock, business interruption, goods in transit, glass breakage, neon signs, fascia boards and canopies, loss of money, personal assault, loss of licence and business equipment failure
? Extensions of cover can include accidental damage, subsidence, terrorism and employee theft
? Insurers have also added an optional extra to the employers' liability insurance called employment practices liability cover, or legal cover. This was developed to cover employment disputes that are not related to physical injury, such as discrimination and unfair dismissal claims.
Here's a tip
It's easy to overlook reviewing the basic elements of your business as it develops from year to year, says JLT. Along with any increases in your business is the need to review the cash-handling limits you have on your policy and the procedures you have in place for moving money around.
There are some simple checks you should do periodically to ensure that your insurance cover is not invalidated, such as carrying out a fire risk assessment. And it is wise to review your procedures for loading and unloading goods into your premises, as theft from an unattended vehicle, for example, would not normally be covered.