We’ve written before that when registering a business, many vape shops face difficulties in classifying their businesses due to the lack of a specific SIC code for vape retailers. In many cases, vape shops end up being classified as linked to the tobacco industry even though they are not tobacconists.
But electronic cigarettes are very different from traditional tobacco-based products such as cigarettes. The use of a battery-operated device, the use of, mixing and selling of e-liquids all mean that the electronic cigarette and vape shop industry face unique risks from an insurance perspective.
The importance of classifying your vape shop for insurance purposes
Whilst it may be possible, if not ideal, to find a best fit SIC code for your vape shop when registering your business, it is vital that you don’t use this ‘best fit’ approach to classify your business when it comes to your insurance.
Classifying your business incorrectly when it comes to insurance can have significant consequences.
Insurance is risk based. To ensure that your policy cover accurately reflects the risks that your business faces, you must disclose correct information about the nature of your business. And keep this information up to date.
As a vape shop for example, you may use your premises to mix and blend your own e-liquids. Which means you will have a very different risk profile compared to that of a retailer who simply sells goods.
If you classify your business as a retailer when taking out your vape shop insurance, you could find that you have any claims denied due to non-disclosure, that is, not accurately representing all the facts about your business.
The importance of understanding the vape insurance cover that you do have
If you have taken out a vape shop insurance policy, do you really understand the cover that you have in place?
Product liability is a big area that we see confusion about in the vaping industry. Product liability cover will provide cover for areas such as:
- Injuries caused by products
- Damage to property caused by products
- Contaminants in e-cigarettes and vaping devices
Yet availability of this cover is extremely limited in the UK, with an extremely restricted insurance market that will provide full Products Liability coverage for claims arising from the sale or supply of e-liquids. In reality, most vape shops do not have Product Liability cover in place for the e-liquids and vape products which they sell.
Not understanding the insurance cover which you have can leave you in a position of being underinsured, or having claims turned down.
How working with an insurance broker can help you arrange vape shop insurance
At Anthony Jones we have specialised in vape insurance since 2013. But regrettably, we are seeing many insurers exit the vape insurance market, and as such cover which is available is rapidly increasing in price.
Given the specific and unique risks that vape shops face, and the limited availability of true vape shop insurance, working with an insurance broker in this area can be hugely beneficial.
As we’ve touched on above there are various areas to consider. We’ve seen many surprising things – vape shops classified as Newsagents or an Electronic Retailer for example, because the insurer they purchased cover from didn’t have ‘vape retailer’ as an option. And the insured used the ‘best fit’ option. Misclassifying your business in this way can mean that you do not have the insurance cover in place that you believed you did and can see you have claims denied.
We understand the vape insurance market and can work with you to understand the risks that your business faces and the insurance that you will need to truly have the right protection in place should anything happen. You can get in touch with our team of vape insurance experts on 0208 290 9080 or email us at firstname.lastname@example.org.