Insurance for pop-up shops and restaurants
What business insurance should you think about if you're opening or running a pop-up shop or temporary restaurant?
Pop-up shops and restaurants can offer a quick, low-cost way for aspiring retailers to test their product on the public, but their transient nature can produce problems as well as opportunities.
From cost and space constraints to working out what business insurance you might need, getting a pop-up organised can take a lot longer than you planned.
However, according to an August 2015 report by the Centre for Economics and Business Research (CEBR) for EE, the pop-up sector is worth £2.3bn to the UK economy.
Not only is the sector bigger than ever, but it's growing fast with a £200m increase in sales compared to 2014.
- Just like permanent businesses, pop-up shops and restaurants need business insurance
- Dedicated pop-up policies might not be available, but consider any business cover you have through your home insurance or the pop-up venue, and what add-ons you can buy as separate policies
- Businesses insurance can protect stock, staff and third parties within your pop-up, even if you don't need to insure the premises
Are there specific insurance policies for pop-ups?
Insurance companies have been slow to create specific policies for pop-ups.
The unique, transient and variable nature of pop-ups - duration, shop size, type of activity, staff numbers, risks, value of stock - makes them difficult to insure.
In the future insurance companies may create specific daily-rate insurance for short-term businesses, but so far they've avoided this.
How to find the right cover for your pop-up
If you're thinking about launching a pop-up and need insuring, finding the right policy can take time.
Pop-up entrepreneurs need to ensure they have all the right policies in place before they launch their pop-up. Just like other start-up businesses, making a mistake at an early stage could cost them a lot.
In January 2016, no mainstream insurers offered policies specifically for pop-up businesses, so aspiring retailers may need to get creative with the way they find their cover.
If you compare policies through Gocompare.com, you'll see the option of speaking to an insurance specialist in a UK-based contact centre. Alternatively, if you find your pop-up space using a third party such as Appear Here or We Are Pop Up, they may be able to help you find the right cover.
The need to get creative with cover means businesses should leave plenty of time to organise insurance, to ensure that they're protected in the way they need and expect.
Pop-up shop case study
Alexandra Heywood is owner of online retailer Teastained Lil and regularly sets up pop-up shops to promote her business.
"Often you're expected to provide your own insurance, proof of which you'll need to show when taking on the short lease," said Alexandra.
"I was able to obtain an at-home business policy with an add-on 'working on site' policy for my business which covered all my shops.
"Others I know have paid for short-term policies to cover the shop period."
It's essential to consider different kinds of business insurance when launching a pop-up business, as well as insuring the stock of your shop or whatever it is you're selling.
Retail space insurance products traditionally work on an annual basis, which means that short-term tenants usually have to overpay for their business insurance policy or buy an annual policy and pay cancellation fees.
Short-term business insurance
Although it may not be designed specifically for pop-ups, a specialist short-term business insurance policy might be an option.
Short-term cover for the duration of the pop-up should include contents, stock and fixtures, as well as employer and product liability, business interruption and loss of profit.
Business cover on your home insurance
Some house insurance policies have cover that takes into account working from home, which might cover some aspects of your pop-up business.
On 13 January, 2016, Gocompare checked 400 home contents insurance policies listed on the matrix of independent financial researcher Defaqto and found that 355 offered cover for business equipment as standard and 20 as an optional extra.
That means that you might be able to get cover for computers, electronic till equipment and other essential business items under your home contents policy.
But your business equipment might only be covered while it's in your house and not if you take it out and about - check your policy wording carefully to find out.
If your home insurance covers you for working from home, you might also find you can extend your policy to cover you for working at a different location for a few days or weeks - but you'll probably have to contact your insurer directly to find out.
Also, while business equipment cover may come as standard on the majority of policies, the level of protection varied dramatically.
Of the 355 policies which included business equipment protection, 56% offered cover ranging from £5,000 to £9,999, while 23% offered cover exceeding £10,000. Some had more limited protection, with 4% of policies offering cover of £3,000 or less.
Be aware that your home insurance is unlikely to offer cover for any stock you store under your own roof - of the 400 contents policies checked on Defaqto, 349 (87%) offered no cover whatsoever for business stock, while the remaining 51 offered cover as standard.
However, of the 51 polices which did include business stock insurance, 45% offered cover of less than £1,000, with just 37% covering stock worth over £2,500.
Types of insurance for pop-up businesses
Business insurance covers a number of different things relating to your business, including your premises, stock and staff. Most businesses will need insurance of this kind, but may not need all the different types of policies listed below.
Business premises insurance
Usually the landlord's insurance will cover the space itself, but it's important for a tenant to check this beforehand.
Otherwise, if no cover's in place, the tenant could end up liable for any damage that occurs while they're occupying the space.
Business contents insurance
While business contents insurance isn't a legal requirement, it can protect the contents and fixtures of your pop-up, as well as any stock you have.
Protecting your stock is essential with any retail venture, and no less so with a pop-up.
Employers' liability insurance
Employers' liability is a form of business insurance that's compulsory for firms that have one or more staff, so if you're planning on staffing your pop-up you'll need it.
Employers' liability insurance helps you protect the interest of your employees and complements your business' health and safety procedures.
Public liability insurance
Public liability cover isn't a legal requirement but is a sensible precaution if your business involves contact with any third party - a person or entity that isn't an employee of your business.
Otherwise, you could find yourself facing expensive legal action if anyone's injured within your pop-up.
Other things to remember
Just like other retailers, pop-up shops need to ensure they adhere to employment law and have considered becoming a VAT-registered company.
Finally, pop-up owners should find out whether they require a licence, for instance for music or the selling of food or drink.