The low down on pop-ups. What insurance do you need?
Setting up a pop-up shop in a town centre or shopping mall is an exciting proposition, giving you a short-term opportunity to promote your business while breathing new life and growth into a declining space. But, as with any new business venture, it’s essential to ensure you have the right insurance in place.
A popular new trend
The short-term lease has enabled the seeds of retail recovery to be sewn in a new and temporary format, giving new business owners a ground-breaking opportunity to sell their goods for a limited time in a high-profile space. It’s a trend that is starting to take off, with swlondoner online reporting* in February 2024, there had been a 23% rise in pop-up shops during 2023. In terms of high street positioning, this figure equates to around 10,500 pop-up shops across the UK, employing around 26,000 people.
A special sales opportunity
Although some businesses are happy simply to maintain an online retail presence, others welcome the opportunity to trade from an actual shop, giving them a valuable connection with their customers.
So, what kinds of businesses are popping up? Anything goes, it seems, with pop-up businesses ranging from cafes and cocktail bars to local artists, vintage clothing and a wide range of retail items, from candles and calendars to sweets, confectionery, phone covers and more.
A particular plus point for pop-ups is the sense of exclusivity and urgency they bring. For customers, it is a special opportunity to buy a product only available to them for a limited time. For a new business owner, that’s a great selling opportunity.
Cost-effective
A pop-up shop can be very cost-effective. The limited time frame means it’s easier to control stock and bills, such as rent and utilities. A pop-up shop tends to be a product-driven sales operation, but despite its temporary nature, it’s still subject to the same regulations as any other traditional retail business. If you’re an entrepreneur entering the pop-up arena, you should be aware of the specific rules that apply.
A change in the planning laws has fuelled the boom in pop-up shops. They state that as long as the pop-up space is no bigger than 50 square feet in a commercial space, it can be used for up to two years for retail, hospitality, finance, offices or leisure. Planning permission is not needed either for use that only continues for up to 28 days in a 12-month period.
Insurance required
The new rules have an impact on the insurance required. In terms of cover, the new ‘pop-up regulations 101’ are shaping how both property owners and those taking out a lease should proceed with insurance:
- Landlords should check their existing building insurance covers pop-up usage, and it’s their responsibility to ensure adequate cover is in place
- Tenants will need a separate policy providing cover for contents, fixtures and stock, along with Employers Liability, Public and Products liability, whether you are open for one month or for a longer term. Everything and everyone that enters the rented space is the responsibility of the shop operator, which means a separate trade contents and fixtures policy provides the ideal solution
Other considerations
If the building has been vacant for more than a certain amount of time, additional premiums or considerations may be highlighted in the buildings insurance policy. Tenants should also ensure they are happy with additional insurance for flood cover, if necessary, and for business interruption insurance in the event of damage to the unit that prevents them from trading.
Talk to TMD
Once the insurance is in place for both the landlord and the tenant, all stations will go with the pop-up shop, which could be the start of a new and exciting business. As you can see, however, it’s essential you have an appropriate level of cover in place right from the start.
Here at TMD, our business is your protection, and we can help you arrange cover for your new pop-up business. To find out more, please contact TMD: call 01992 703 000 or email insurance@mcdonaghs.co.uk
Source:
swlondoner.co.uk: Are pop-up shops revitalising the brick-and-mortar retail economy in London?