Coffee shop insurance could arguably be called one of the most important types of coverage when you consider how essential coffee—and therefore, the shops that serve it—are to society.
All joking aside, while running a coffee shop can be lucrative, you can also face many risks. Your risk management plan should be a big part of your overall business strategy, with insurance as the underpinning.
Whether you’re operating a mobile cart, kiosk, taking over an existing shop, starting your own shop from scratch, or simply trying to streamline costs by price shopping your current coffee shop insurance, understanding some of the types of coverages and why they’re important can help you get the best value for your money.
Why Do Coffee Shops Need Insurance?
Your coffee shop business is your passion—you need to protect it. It’s hard to imagine something could go wrong, until it does. Even a small incident can financially ruin you. How?
- A woman ordered a coffee from the McDonald’s drive-through and it was spilled on her. She was awarded $3 million in damages for the resulting burns.
- A Florida woman sustained first and second-degree burns after her Starbucks coffee lid came off, spilling hot coffee on her. She was awarded $100,000 for the medical bills.
- A Portland man sued Starbucks after he was served the wrong drink. He ordered soy milk and was given almond milk—and he had a life-threatening nut allergy.
Everyone knows that accidents happen. But sometimes accidents have horrible consequences and someone is held responsible. If you accidentally harm a customer, you want to make sure you don’t lose your business and way of making a living.
What Insurance Do Coffee Shop Owners Need?
Here are some of the basic types of business insurance coverage you should consider for your coffee shop.
What happens if a customer slips and falls in your shop? General Liability Insurance protects coffee shops from third-party bodily injury, third-party property damage, and libel or slander. The insurance company can cover medical bills and legal expenses. This is the most basic coverage you can get to protect your business—don’t skip it.
Your building, equipment, furniture, computer, and even the actual coffee and cups are only part of what makes your coffee shop a business, and you need to protect your shop with commercial property insurance. If your shop starts on fire or is damaged in a storm, this insurance can pay to repair or replace destroyed property.
If an event such as a fire should sideline your store’s operations, you need business interruption insurance (often referred to as business income insurance). This policy can help cover lost profits, payroll, operating expenses, taxes, and even debt. Some insurance policies will also cover the cost of a temporary location to operate your business. Employees and landlords still need to be paid, even when disaster strikes.
As a small business, a Business Owners’ Policy can be an affordable way to get some of this important coverage. It typically includes general liability insurance, commercial property insurance, and business interruption insurance. Insurance companies offer this to small businesses at a great price.
What else do you need? Product Liability Insurance is something that needs to be considered. If you accidentally use spoiled milk or sell a customer expired bakery items, they may get ill. Product liability coverage can pay their medical expenses and your legal expenses if you’re sued.
Do you need coverage in your coffee shop insurance policy in case there’s an incident resulting in a significant loss of inventory? Contamination and spoilage coverage can help replace lost inventory.
Other Coffee Shop Business Insurance to Consider
What other types of commercial insurance policies should you consider, if necessary?
- Workers’ Compensation Insurance: You need to get Worker’s Compensation if you have part or full-time employees. It’s legally required in most states. It protects your employees if they are injured on the job by covering their lost wages and medical bills. The last thing you want is for an employee to sue you for an injury.
- Liquor Liability Insurance: Do you also offer wine or cocktails at your coffee shop/cafe? If so, you may be required to get liquor liability insurance. If a customer becomes inebriated and commits a crime you may be held responsible. This insurance helps protect you from liability.
- Equipment Breakdown Coverage: You use expensive and special equipment in your business. Consider protecting it with a specialized policy to protect the equipment if it breaks down.
- Employee Dishonesty Coverage: If an employee were to steal from you, this policy can help compensate for the loss.
- Commercial Auto Insurance: Do you use vehicles for delivery? You might need Commercial Auto insurance.
- Cyber Liability Insurance: If you offer a rewards program for your customers and take some of their personal information, you need to protect it. If you’re the object of a data breach and their information is stolen, they can hold you liable.
Make sure you discuss the distinct aspects of your business with your licensed insurance agent so they can help you determine the appropriate coverage you may need.
How Much Does Business Insurance Cost for Coffee Shops?
The average cost of general liability insurance for coffee shops is between $35 and $60 a month for $1,000,000/$2,000,000 in coverage. Factors that can influence the cost include:
- The location of your business
- The size/age of your property
- Estimated yearly payroll
- Estimated yearly sales and experience
- The deductibles and coverage limits you choose
A coffee house insurance policy needs to provide coverage for a variety of risks. There are several coverage options with varying limits and deductibles. Talk to your licensed insurance professional to review what is available.
Get a Free Commercial Insurance Quote for Your Coffee Shop
Don’t let your commercial coffee house insurance add to the stress. Having a good commercial coffee insurance policy in place will reduce stress and worry down the road. Spend your time creating new and exciting coffees and lattes for your clients and not worrying about what-ifs.
There’s no doubt that running a successful coffee shop is a challenge, but your contribution to helping the world wake up and get about the business of living is important. Your coffee shop insurance could make or break your effort to caffeinate lives—be sure it’s doing everything it should!
If you're ready to take the next step to protect your business, complete the form at the top of the page or give us a call at 877-907-5267 for a free quote.
Related Articles: Product Liability Insurance, Liquor Liability Insurance