Essential Cover for Your Cafe or Coffee Shop
It goes without saying that, Australia is a coffee obsessed nation. Our love affair with coffee has been continuously growing since the 1950’s, so it’s no wonder many people aspire to open their own cafe or coffee shop and serve ‘the best coffee in town’.
If you’re one of those lucky ones who have been able to follow their dream, you’ll know all too well there’s a lot more to running a successful cafe other than just serving up the hippest coffee on the block. Sure, that may help to keep your business afloat, but what would happen if you could no longer serve that ‘double-shot-mocha-soy-latte’ or even just your average flat white?
Getting the right insurance for your cafe might not be the most exciting thing on your to-do-list this year, but it could well be the most sensible.
Do I really need it?
Most people don’t think twice about insuring their car or home, but when it comes to insuring their business, some business owners question whether they really need it or not. Arguably, it’s even more important. After all, you need it to protect your cafe, and your cafe is your livelihood. Without the income it brings in, your other assets could be on the line.
Unless you’ve got lots of disposable income or a big wad of cash tucked safely away, you might choose to forgo insuring your cafe. But, to get an idea of how you would manage an unforseen event, such as a fire, have a look around your cafe and tally up the cost of replacing everything. This means absolutely everything, from the coffee machine and refrigeration system, right down to the paper takeaway cups and napkins. Also, think about the down-time whilst your cafe is closed and not bringing in any revenue. Could you continue to keep paying the rent, bank, utilities, supplier’s accounts, employee wages, and so on?
And then think about the costs involved if somebody was to injure themselves on your premises, or you accidentally caused an outbreak of food poisoning. The compensation; legal fees; cost of taking time out of working on your business to defend yourself; and the cost of hiring a PR person to mitigate any damage caused to your reputation. How much would you be out of pocket?
What types of cover should I consider?
There’s an insurance policy for almost every type of risk a cafe owner could face, and in a perfect world (or perfect business) we’d have them all. But in reality, we still need to manage the budget, so it comes down to choosing the most essential ones – those that could mean the difference between your cafe surviving after a major event, or having to close your doors for good.
To help you on your way to choosing some essential forms of cover for your cafe or coffee shop, we’ve listed our top picks. All of these forms of cover are generally available under a Business Insurance Pack; which means rather than having to manage multiple policies, you can bundle them all into the one simple policy.
Public Liability
Public Liability insurance is at the top of the ‘must have’ list of insurances for any kind of hospitality business. With customers and suppliers constantly coming on to your premises, your face many different kinds of risks on a daily basis. From slips and falls, to injury caused by broken glass and porcelain, or hot spills, Public Liability insurance is essential to protect you against the costs associated with 3rd party injury, and may even be a requirement by your landlord.
Product Liability (a component of Public Liability) protects your business if a claim is made against you as a result of injury or illness caused by the food and drinks you serve.
Public Liability insurance helps cover the cost of compensation, legal and defence costs, court attendance costs, and PR costs.
Building
If you own your own building in which your cafe operates, Building insurance will cover you for the cost of repairing or reconstructing your premises as a result of fire, storm and other perils.
Contents & Stock
Damage caused by fires, storms and other disasters are all very common (and often unpreventable) claims among hospitality businesses, especially if you are using hot equipment such as stoves and deep fryers. Even a fire that starts in a neighbouring business can quickly spread and cause extensive damage to your own contents and stock. Ensure it is protected against such events with the appropriate amount of Contents cover.
Business Interruption
Incidents beyond your control, such as fires, storms, burst water pipes, power outages, theft and vandalism, may force you to close your cafe doors for an extended period of time.
Business Interruption insurance can mean the difference between re-opening or being permanently closed if you suffer a major event, by compensating you for lost revenue and other operating expenses whilst you are not fully operational.
Glass
Accidents happen, which is why Glass cover is a popular option for cafes, particularly those that are street facing and have large shop front windows. It covers the cost to replace internal and external glass, as well as specified items such as glass counters and display counters, that have been damaged or broken due to an accident or malicious damage.
Theft
Theft covers the loss or damage of your contents and stock through theft or attempted theft at your cafe by forced entry, armed hold-up or an actual or threatened assault. It generally however, does not cover theft of items from shoplifting.
You have the option of including Money which covers physical money belonging to your cafe that is lost, stolen or damaged whilst on your premises, in transit to or from your premises, or in your personal custody.
Machinery Breakdown
No doubt your cafe relies on an expensive industrial coffee machine to make dozens of coffees each day; refrigeration units to keep food fresh; and perhaps ovens and deep fryers if you prepare and heat your own food. Without functioning equipment it would be very difficult to continue trading, not to mention costly to have repaired.
Machinery Breakdown insurance is designed to cover the cost repairing or replacing such equipment that has broken down and can protect against budget blowouts.
It has the option of including Deterioration of Stock, to cover you against losses incurred from food spoilage as a result of incidents covered by Machinery Breakdown.
Of course, this is not an extensive list of insurance policies for cafes and coffee shops, and there are some other ‘nice to have’ insurances should your budget allow for them. Management Liability, Tax Audit, and Personal Accident and Illness are all additional covers to consider.
To get multiple quotes from leading Aussie insurers, or to find out more about other types of insurance policies are available for cafes and coffee shops, visit BizCover.com.au or call 1300 866 744.
BizCover™ Pty Ltd (ABN 68 127 707 975; AR 338440) is a corporate authorised representative of Mega Capital Pty Ltd (ABN 37 098 080 418; AFSL 238549). This is general advice only and does not take into consideration your personal circumstances.
