Why is insurance for coffee shops and cafes a must-have?
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5 insurance policies every coffee shop should consider
Business insurance covers costly accidents and lawsuits within the coffee shop industry, and certain policies may be required by state or local law. These insurance policies protect against the most common risks faced by coffee shops.
Business owner's policy
Coffee shops are often eligible for a business owner's policy, also called a BOP. This bundle includes both general liability coverage and commercial property insurance at a discount.
- Customer bodily injuries
- Damaged customer property
- Stolen or damaged business property
Workers' comp insurance
Most states require businesses with employees to carry workers' compensation insurance. Personal insurance won’t cover work-related employee injuries, making this policy crucial for sole proprietors.
- Work-related medical expenses
- Disability benefits
- Lawsuits from workplace injuries
General liability insurance
A commercial general liability policy protects food and beverage businesses against legal costs from third-party injuries and property damage, such as a customer who slips on a wet floor.
- Customer slip-and-fall injuries
- Accidental damage to a customer's property
- Advertising injuries, such as copyright infringement
Commercial auto insurance
Most states require commercial auto insurance for business-owned vehicles. This policy covers legal costs in the event of an accident involving a delivery truck or other company vehicle.
- Damage caused by your vehicle
- Legal costs from an accident
- Vehicle theft and vandalism
Cyber insurance
This type of insurance helps coffee shops recover from costly cyberattacks and data breaches. It's also called cyber liability insurance or cybersecurity insurance.
- Data breach investigations
- Fraud monitoring services
- Ransomware attacks
Coffee shop and cafe insurance costs
From our customer data, here's a quick look at average food service insurance costs:
General liability: $63 per month
Business owner's policy: $92 per month
Workers' compensation: $97 per month
Factors that can influence your coffee shop insurance costs:
- Type of business, such as fast food restaurant or food truck
- Number of baristas and other employees
- Coverage limits
- Types of insurance purchased
- Policy limits and deductibles
- Claims history
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Common questions about coffee shop insurance
Will insurance cover my coffee shop or cafe if it's forced to close temporarily?
Whether your business experiences a burst pipe, fire, storm, or another disruptive event, an unexpected closure can be frustrating and expensive.
A business interruption insurance policy will protect your coffee shop in the event of an unforeseen temporary closure due to a covered property claim. It helps cover employee wages, lost income, relocation expenses, loan and rental payments, and more.
Business interruption insurance is exceptionally helpful for cafes, which often operate with narrow margins and require daily business income to stay afloat.
Are coffee shops and cafes required to have product liability insurance?
Your city or state may not mandate product liability insurance for cafes and restaurants. However, you could still be held liable if your product causes harm to a customer.
Even if the manufacturer or wholesaler caused the error that resulted in customer sickness or injury, you, as the coffee shop owner, could still face a lawsuit should someone become ill after consuming food or beverages at your establishment.
Lawsuits that don't result in a judgment can still result in significant financial losses and take a long time to resolve.
Product liability insurance will protect your business if a customer has an allergic reaction, is served contaminated food, or is otherwise harmed by a packaging or labeling error. It can be purchased on its own or as an endorsement to a general liability insurance policy.
Is food poisoning covered by general liability insurance?
General liability insurance does help cover customer injuries and accidents that result from certain food-related issues, including food poisoning.
General liability will typically help you if a customer sues for damages, medical bills, or lost income, claiming they received food poisoning from your coffee shop.
However, it typically won't cover expenses for food that has been spoiled or contaminated and the resulting financial loss from discarded inventory.
Many cafes, restaurants, and other food and beverage establishments purchase a food contamination and spoilage coverage policy. This covers the cost of lost perishable inventory due to an electrical failure or power outage, which can get expensive.
This coverage is often a supplemental endorsement to commercial property insurance or a business owner's policy (BOP) and can help in the event that a customer gets sick or reacts poorly to food that has been spoiled or contaminated.
While you can practice careful risk management protocols, like frequent equipment and expiration date checks, many small business owners carry spoilage coverage for additional peace of mind.
What other insurance coverage do coffee shops and cafes need?
Coffee shop businesses take on significant risks due to working closely with the public and should protect themselves accordingly. Consider the following additional coverage policies to ensure that you're not hit with an expensive repair cost, medical bill, or lawsuit.
- Employment practices liability insurance (EPLI) helps with legal expenses if an employee chooses to sue your small business, claiming discrimination, harassment, or poor employee working conditions at your coffee shop.
- If you or your employees plan to run errands for the cafe using a personal, rented, or leased vehicle, your commercial auto insurance won't cover expenses in the event of an accident. For personal vehicles, you'll need a hired and non-owned auto (HNOA) policy.
- Employee dishonesty coverage can be added to a business owner's policy or as an added endorsement to a commercial property insurance policy. It protects your business if one of your employees steals from your company. This is an essential protection, as coffee shop employees often have access to cash registers and high volumes of money.
- Cafes rely on espresso machines, dishwashers, blenders, and other essential machinery. Protect your expensive equipment with an equipment breakdown coverage policy, which is often added as an endorsement to a BOP, a commercial property policy, or a commercial package policy.
- Electronic data processing (EDP) insurance helps protect computer systems and workstations from destruction and data loss caused by fires, natural disasters, power surges, and similar events. An EDP policy is often added as an endorsement to a BOP.
Picking the best policies for your business is a great way to save money while protecting your business. Contact our insurance agents today and we'll provide free quotes for the best coverage options from top insurance companies.
