As the owner of a brand new coffee shop, the last few months have been quite exciting. Yes, that dream of finally running your cafe has always fascinated you. This has been your cherished dream, a childhood dream.
What has remained a dream for years is finally getting realized! You feel the adrenaline rush. The doors of the new coffee shop are finally opening tomorrow to receive the first guests. You are feeling over the moon. Everything seems to be entirely figured out- or so you think.
Then you suddenly remember: There is one small element that needs to be taken care of: you have not secured insurance for your business. How should you go about this and how much does the insurance cost? You need to learn a few pertinent facts relating to this. For a start, what is café insurance?
What is cafe insurance?
Cafe insurance is a policy that is needed to protect your business against incurring financial losses in the event of an accident. It will protect you if circumstances force you to close your dear company.
It does not matter; whether you run a coffee shop, a bistro, or a cafe, you need to take steps to secure commercial insurance for the business. This will potentially insulate your shop against risks and claims. But a few questions still beg for answers; is it indispensable to get insurance for your business?
Is cafe insurance necessary?
Remember that, like a cafe owner, you must take responsibility for the safety of every customer that comes to your premises. You must take responsibility for the services offered. Were they to get ill or injured, for instance, due to any negligence in your business premises, you would personally be liable for that. In such a case, insurance your business would cover aspects of all compensation or legal costs and fees attached to the claim. Now, the big question is: Does it cost the earth to get insurance for your business?
How much does it cost?
The cost of insuring your café or coffee shop directly depends on the kind of policies that you choose, the value of the equipment stocked in the shop, the unique risks that the business faces, and a few other factors. Indeed, the cost estimates are often a result of the policies that insurance customers purchase. Let us consider some factors that are relevant to this:
1. Size of business matters
Other factors will also influence the cost of insuring your business. The first is the size of the business. Usually, this is assessed by factoring in the financial or physical value of an enterprise. Obviously, the smaller the shop, the lower the premium. Why should this be?
In case of a catastrophe, a smaller coffee shop will, naturally, have fewer resources to lose than a big, multi-story café. Most customers likely spend less time on smaller premises than they do in bigger premises. This enhances the possibility of fewer valuables being damaged. Moreover, smaller shops generally manage fewer employees.
2. Location matters
The location of your business also matters. Think of it: Is your coffee shop located in a crime-prone area? Is there a high chance of the business suffering damages resulting from flooding, or similar natural disasters? In such cases, your insurance premium will, of course, be higher.
Interestingly, the location of your café can positively impact on the hospitality insurance costs. If your business is hosted in a shopping mall, for instance, your premium will be significantly lower. This is because malls typically have a security and fire alarm system in place.
3. Equipment and level of insurance
What type of equipment do you use in your café? This can impact the price of your business insurance. Deep fat fryers and woks, for example, commonly cause property damage and personal injury. If your café uses such appliances, it might require a higher insurance premium.
Level of insurance: What level of insurance do you prefer for your café or coffee shop? Do you want a cheaper insurance scheme? If this is so, the basic policy of public liability complete with added glass cover is enough to meet the minimum requirements for a lease. Unless there are higher risks with regards to your business, this plan of cover will usually cost less than one thousand dollars.
Practical steps for reducing insurance costs
If you want a thorough cover for your café, however, there are other enhanced policies that you can take advantage of. These include stock, contents, theft, general property, business interruption, and machinery breakdown plans. This depends, of course, on how much money you are prepared to spend on an insurance scheme. It depends on how much risk you are ready to take with your business insurance.
As a café owner, there are several ways in which you could significantly reduce your insurance premium. The most common is fire protection. If your cafe has access to fire extinguisher facilities or other means of fire prevention, your insurance will be considerably lower.
If you install sprinklers on your premises, you can get higher insurance benefits. This is because insurers more favor sprinklers compared to other protection measures. You can also reduce insurance costs by sufficiently investing in break-in deterrents. Moreover, you can ensure that your business always observes proper health and safety measures. This minimizes risks in the workplace.
Which type of insurance will work for you?
Whether you work alone or employ staff in your business, you need to have quality insurance. This protects your cafe against varied risks and claims.
Let us consider a few examples of insurance policies that you might need:
- Public liability insurance: This policy protects your business against claims by a customer, a client, or some other third party who gets ill, is injured or suffers property damage in your premises.
- Business contents insurance: This policy covers the replacement of items in case they are damaged, stolen, or lost.
- Business tools and equipment: This plan covers the replacement of equipment like coffee machines or dishwashers, in case they are stolen, get damaged, or lost.
- Employers liability insurance: This policy protects you, the employer, against various claims related to illness or injury in your shop.
- Product liability insurance: This scheme protects your business against claims for property damage, or personal injury that may be caused by a product that was designed, supplied or sold by the company.
- Business interruption insurance: This policy provides financial support if your business is forced to close.
What does cafe insurance cover?
You are free to take a wide range of policies that will potentially protect your cafe from incurring financial losses. If you get the right insurance, your café can be covered for certain essential elements that would usually result in massive losses. These include the situations outlined below:
- Theft or stock damage
- Theft or equipment damage
- Employee illness or injury
- Customer illness or injury
- Temporary closure
Note that there can be more policy extensions in case you need protection that is specially tailored to your business needs.
Final thoughts
A coffee shop is among the most favored businesses to start in many countries. You can easily customize it to attract specific local customers. It has comparably low overhead costs and generally occupies little space. Moreover, you need very few supplies to run it.
Regardless, even a cafe is still a business. Running a café, you must incur the general business costs incurred by others who own similar or different enterprises. This includes a permit, equipment fees, and insurance premiums for the building and employees.
You cannot have a one-size-fits-all policy. To determine the insurance cost for your shop, it is advisable to consult a qualified broker. Such a person should, preferably, have dealt with cafes and associated hospitality establishments for a considerable period.