COFFEE SHOP INSURANCE: 3 Coverages You MUST Consider

Insurance for your coffee shop or coffee house is not necessarily as straightforward as you would think.

There is a basket of insurance coverages you must consider to protect the long-term sustainability and profitability of your coffee shop.

Watch this short video or keep reading for everything you need know about coffee shop insurance…

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Coffee Shop Insurance

Before we can talk about coffee shop insurance coverages, it’s important we first define what is a coffee shop according to insurance companies…

Coffee shops prepare and serve coffee to their customers. Most do not have table service.

Customers must place orders and pick them up at the counter. In addition to espresso, lattes, cappuccinos and other coffee-based drinks, teas, snacks, sandwiches and packaged coffee beans or fresh ground coffee may be sold. Non-food-related gift items such as books, CDs, travel mugs, or pottery may be available.

Coffee shops may offer free internet service, live entertainment, art exhibits and similar activities. They may offer outdoor seating. A few operations serve beer, wine, or other alcoholic beverages. While many shops are franchised, there are local and regional chains as well as totally independent shops.

That being said, let’s talk about insurance for your coffee shop. Now there are several main exposures that you need to consider when you own a coffee shop.

Property Coverage

Property exposures are from electrical wiring, refrigeration units, coffee brewing equipment, and heating and air conditioning systems. All wiring should be current, up to code, and well maintained.

Most coffee shops use an espresso machine, which is operated at elevated temperatures and is pressurized. Other equipment includes coffee grinders, steamers, blenders, and related or similar property. Light cooking and baking may also be present but are not usually accompanied by any grease-laden vapors.

Spoilage exposure is high if refrigerated goods are sold. A small fire or a power outage can cause all fresh and frozen goods to be condemned as unfit for consumption or sale. Business income with extended time period coverage should be purchased. While clientele tends to be fairly loyal, they will switch after a major loss due to the lag time between the re-opening and the return to full operations.

Crime Coverage

Crime exposures are from employee dishonesty and money and securities. Criminal background checks should be conducted on any employee handling money.

Most customers pay in cash. Money should be regularly stripped from the cash drawer and moved to a safe away from the door. Irregular drops should be made to the bank during the day to prevent substantial accumulations of cash.

There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements.

General Liability Coverage

There are two parts to almost every general liability insurance policy:

Premises liability exposures are moderate due to public access to the premises. Customers move throughout the coffee shop with cups of coffee and other beverages, generating spills that can result in slips and falls.

All spills should be cleaned up promptly. Temperatures of hot beverages must be limited to reduce injuries due to scalding. Older patrons and those with mobility limitations are more prone to injury should a fall occur. Procedures should be in place to assist these customers in transporting beverages to their table.

Floor covering must be in good condition with no frayed or worn spots on carpet and no cracks or holes in flooring. Steps and uneven floor surfaces should be prominently marked.

Exits must be well marked, with backup lighting systems in case of power failure. Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slips and falls. Outdoor security and lighting must be consistent with the area. Lists of ingredients should be posted to prevent allergic reactions.

Product liability exposures are from contamination, food poisoning and allergic reactions from food and beverages carried off premises for consumption.

Appropriate sanitary measures and the posting of product ingredients are important. If the shop imports coffee or gift items directly, it has the exposure of a manufacturer or coffee retailer.

Auto coverage

Automobile exposures are generally limited to hired and non-owned liability for employees running errands.

When you purchase a Business Owner’s Insurance Policy (BOP) often you can add hired and non-owned auto liability insurance as an endorsement to the policy. We highly recommend you add this coverage.

Workers Compensation Coverage

Worker’s compensation exposures are primarily due to slips, falls, puncture wounds, burns, foreign objects in the eye, heavy and awkward lifting, and interactions with customers.

Food handling can result in passing bacteria or viruses, resulting in illness. As with all retail businesses, hold-ups are possible, so employees should be trained to respond in a prescribed manner.

Espresso machines may explode if not monitored and properly maintained. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals.

The employees tend to be minimum wage and turnover may be high. Company incentives to encourage long-term employment are positive signs of management control.

Cyber Liability Coverage

The last coverage that you want to make sure you have if you want a coffee shop and you’re offering wifi is cyber liability insurance.

All those people on their computers using a network that they’ve logged into, whether you give out a password or not, no matter how secure it is, I don’t care what kind of cyber security you have. If you’re offering wifi and you have a coffee shop, you need to have a cyber liability policy.

It is crucially important. Cyber liability is a huge risk. In many cases, and it’s becoming even more important than general liability, although because of the hot coffee exposure, people burning themselves, slipping and falling, things like that, general liability is very important for a coffee shop.

The Rub

There are a few other coverages that are worth discussing depending on the unique needs of your business, but those outlined above are the big ones you should consider for your coffee shop.

That is why we focus on small businesses, to make sure business owners, like you, have the right insurance program through the right carrier at the right price every single time.

If this is the kind of relationship that you would like with your insurance provider, we would love to talk to you.

I look forward to introducing you to a new way of viewing your insurance program.

Thank you,

Ryan Hanley

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