The Charity Shops Survey 20181 revealed that for the first time in 15 years there has been a net decrease to the overall number of charity shops in the UK. The charity shops operated by the 71 charities that responded to the survey have closed 12 more shops in total than they’ve opened. This is the first drop since 2003. There could be a number of reasons for this, one being the trend for charities opening fewer but larger shops over lots of small ones, however there is some concern that the market has reached capacity.
It’s not all bad news though with reports showing that retail income was 3.8%, an increase from last year’s figure. While costs have increased by 3.9%, this is less than last year’s increase and has led to the first increase in profits for three years. One key contributing factor to this was an increase to the price of rag, which has risen by 9%.
There has also been an increase in the number of volunteers for the first time in 3 years. The survey showed that there were 2.4% more volunteers than last year and the average hours were at a recordbreaking 134.8. There has also been a boost to the number of paid shop staff which is now at an average of 2.24, and these employees have also received an average rise of 3.3% to their wages. Both the increase in paid staff and volunteers can be attributed to a drive in engagement from larger charitable organisations.
Protecting your Assets and Liabilities
The future is looking brighter for charity shops, however it is still prudent to protect your assets and indemnify the charity against potential liability claims from employees, volunteers and the general public by arranging suitable insurance. Often shop insurance can be found as part of a main Property and Liability package, although some smaller charities may prefer to purchase a separate shop package policy.
Which insurances should you consider?
With so much scope and choice available, it can be hard to tell which insurances are essential to the continued running of your shop. The following insurances are a starting point to help protect and defend your financial position should a claim occur:
- Property Insurance: whether your organisation owns or rents the building, it will have contents and stock which needs insuring. Stock is an interesting area as this may include new and donated goods. New items for sale should be insured at the replacement value but should you insure the donated stock? Some charities do select to insure each bag at a nominated amount whilst others do not – on the basis that the goods are individually usually of a low value and will be replaced by future donations should they be stolen or damaged.
- Business Interruption Insurance: what if an event happens to your property which means that you cannot open the shop? This can lead to a loss of income that can impact the profitability of the shop and the contribution it makes to the charity’s income. There are various routes available to charities for business interruption insurance. You may want to insure against ‘Loss of Income or Gross Profit’ if the shops are profitable, or alternatively consider an ‘Additional Cost of Working’ basis of cover if the real cost to you is more likely to be the additional costs that you incur while the shop has to remain closed.
- Money Insurance: covers money stolen from the shop or in transit to/from the shop and the bank. In addition, Personal Assault is usually included which will compensate employees who are injured or require counselling as a result of an attack with the aim of stealing your money.
- Employer’s Liability: covers your charity for damages and legal costs if you are accused of negligently causing injury to an employee or in certain circumstances a volunteer.
- Public Liability: covers your charity for damages and legal costs if you are accused of negligently causing injury to a volunteer, customer or other person on your premises, or causing damage to their property.
- Products Liability: covers your charity for damages and legal costs if you are accused of negligently supplying a product that causes injury or damage to volunteers, customers and other persons on your premises.
The switch by some charities to shops with higher value items such as electrical goods and furniture may result in a change of thinking too, of course.
How can you help your insurance company defend you in the event of a claim?
A meticulous health and safety and record keeping process can help you to defend your position against any claims that occur following an incident. You should consider keeping the following:
- Accident Report Form
- RIDDOR Form (F2508)
- Witness Statements
- Post Incident Investigation Reports/Notes
- Risk Assessments (Pre and Post Incident)
- CCTV Recording
- Employee Files (Including Training Records)
- Wage Details (13 Weeks Pre and Post-Absence)
- Inspection/Maintenance Logs
- Cleaning Logs
- Details Of Any Visits/Correspondence Post Incident from Health & Safety Executive
Please note that this is not a definitive list and additional information may be requested from Loss Adjusters appointed by insurers and some of these documents will not be relevant in the case of a public liability claim.
Would you say that the number if hours given per week by the average volunteer is:
With volunteer numbers and hours increasing, plus some charities predicting an increase in larger shops, it is vital to ensure risk management is embedded to reduce the likelihood of insurance claims occurring.
Risk management to help reduce the risk of a claim
Finally it is important to have a thorough risk management process in place to help reduce the risk of a claim occurring in the first place. This should include:
- Using appropriately qualified and skilled employees and professional advisers to develop and implement your Health & Safety policy and act as your Competent Person.
- Keeping your risk assessments up-to-date and relevant to your activities.
- Making sure you have comprehensive records for training, PPE issue, health screening etc that have been acknowledged and counter-signed by employees and/or volunteers.
At Gallagher we offer risk management and insurance for shops. With over 8,500 UK-based charity clients we have the experience and specialist knowledge to support your charity in protecting your shop assets through insurance programme design and risk management advice.