Insurance for Coffee Shops, Cafes, Restaurants, Bakeries, and the Hospitality Industry
Whether you are a coffee shop owner, a caterer, or, the operator of a country pub. Having the right insurance to cover your business is important. We recognise that no two businesses are the same; the way you run your business is unique. We provide specialist advice for the Hospitality industry that is customised for your unique business. On this page we have prepared some general information to help you understand some of the common risks and insurance options for your industry.
deep frying and wok cooking
Onsite Cooking with Deep Fryers or with Open Flame Wok Cooking are two of the more common risks for Cafes, Restaurants and the Hospitality Industry. This risk can be offset through some of these risk reduction measures:
- Thermostatically controlled shut-off safety feature on your deep fryer set to 215 degrees Celsius
- Regular cleaning of your splashbacks, ducting, flues, filters and canopies to reduce the amount of grease and oil buildup on surfaces which may be susceptible to catching fire.
- The installation of at least a 4.5 kg Dry Chemical Extinguisher and a Fire Blanket in your kitchen, correctly mounted and easily accessible can make the difference between a small fire with very little damage to a major loss of property and potentially lives.
Some insurers will impose restrictions if you have deep fryers or wok cooking. These imposed restrictions outline how frequently you may have to clean your filters or ducting, how many extinguishers you must have and the like. Failure to follow imposed restrictions may void your insurance cover.
machinery breakdown and food spoilage
Even the most well maintained and in some cases brand new machinery can break down. Whether that is through a burnout of the motor, a failure of some key electronic component such as a temperature control unit (digital thermostat), or a failure of the wiring which may have fused.
Regardless of the cause, the loss to your business can be high, particularly if it occurs during an extended period where the business is closed, whether that's overnight or a public holiday. The reason for this is simply that no-one is there to notice the temperature rising on the cool room display and no-one is there to move the expensive perishable foods into alternative cooling.
This is where a remotely monitored or back to base temperature alarm system can be an excellent loss mitigation tool. Whilst in most cases it wont stop the breakdown, it will reduce how much it is going to cost you in spoiled food and in downtime not able to serve your customers.
It is for this reason that quite a few insurers will only insure up to $10,000, and others up to $25,000 as a maximum food spoilage cover unless you have monitored temperature alarms.
EPS AND SANDWICH PANELS
EPS is short for Expanded Polystyrene and is quite often found in Cafe's, Restaurants, Pubs and Clubs and any other environment where regulating the temperature is important. This is because EPS is an excellent insulator and as a result it is often used in commercial kitchens for Cool Room Panels, Wall Panels, Partitions and Dividers and Suspended Ceilings all with the aim of keeping the room(s) cool, saving on electricity and spoiled foods.
Unfortunately, regular EPS cores used in Insulated Sandwich Panels (ISP) is highly flammableand is often viewed by Fire Brigades as a contributing factor to Rapid Spread of Fire, Fire Load, and Toxicity during a Fire. For emergency services, EPS walls and roofing present a risk of collapse and injury to the emergency services personnel.
Whilst many modern ISP are made from Flame Retardant materials, such cores still melt even if they do not actually spread the fire. For insurers, this presents a risk that the core of the walls may melt if the fire is hot enough (or if an oven is placed next to an EPS wall) causing more damage and a higher claims cost.
Claims have been declined by insurers who have not known that a customer had extensive Sandwich Panelling finding out after a fire and subsequently declining the claim on the grounds of non-disclosure. A very prominent example is Kotku Bread Pty Ltd Vs Suncorp.
Many insurers will not provide cover if your EPS or Sandwich Panelling exceeds 10% of the total occupied / available floor space. For some insurers it is up to 15%, others it is up to 30% whilst there are specialist insurers who can insure up to 100%.
What is important for you as the business owner is that you tell your broker or insurer that you have a fitout that includes insulated sandwich panels, regardless of whether it is EPS or a different core so that there is full disclosure.
TYPICAL INSURANCE COVER
A typical Business Insurance package is made up of the following types of insurance:
- Material Damage insurance or Property cover for damage to your fitout, contents, stock and your building if you own it. Typically this cover is to protect you from a catastrophic loss such as a fire, a flood, a burst pipe, or storm; something which may not happen often but if it does, the damage cost will be high.
- Loss of Income or Business Interruption Insurance. This is one of the more important covers often overlooked for cafes, restaurants and the hospitalist industry. The loss of income following damage to your business premise or the loss of income following interruption of utilities (like electricity, water and gas) can make the difference between your business re-opening its doors or never re-opening, even if you insured the material damage correctly, without your income during the time it takes to repair or regain access to utilities; the damage to your business cashflow may be permanent. During the downtime you will still have wages and certain costs to pay and this is where business interruption insurance helps.
- Flood Damage is often excluded from the Material Damage Section with most insurers. If this is a new business of yours, you should check your area's local history to determine if there is a risk of flooding in the future or whether the location may have flooded historically. Flood Insurance is usually obtainable for most businesses, so it is important to let your broker know when you are speaking with us that Flood Cover is important to you so that we can help you identify which insurers offer flood and which do not. It is also important to note that if your policy has cover for Material Damage and for Business Interruption, but, doesn't have Flood Cover, your loss of income following a flood would also be excluded.
- Burglary cover is a commonly available coverage for theft of your equipment following forced or violent entry and / or exit to your premise. What most small business owners aren't aware of is that in most cases, a burglary policy does not cover theft of money, theft from shoplifting, or, theft as a result of fraud.
- Internal and External Glass Breakage is commonly available in business insurance policies and will help protect you for the cost of replacing plate glass windows and your internal windows such as display counters, glass partitions or dividers, display fridges, porcelain sinks and other ceramic fixtures. This cover is often required as a condition within most commercial leases. If you have an external plastic light up sign or neon sign, be sure to add the often optional signage cover to protect the cost of replacing that sign.
- Money, Cash, and Gift Cards are usually insurable in most business packages in the money section of the policy. The policy will usually exclude or have limits on how much cover there is for money left in certain areas, such as in the till overnight after hours. If you operate with cash, be sure to talk through with your broker how it is collected, stored and banked so that we can help you get the right amount of cover for your business.
- Machinery Breakdown Insurance and Spoilage of Food Cover is one of the more frequently claimed sections of cover within the Hospitality Industry and with good reason. Most states within Australia require food to be disposed of if the temperature exceeds a maximum temperature, particularly for your refrigerated or frozen proteins which can be very expensive to replace. There are a wide variety of policies, some that have age restrictions, some that have exclusions for 'wear and tear', others that don't cover electrical or electronic fault (such as the power board or temperature control unit failure) and majority of policies also do not provide loss of income whilst the fridge / cool room is being repaired or replaced. Whilst this is one of the most commonly claimed covers, it is also one of the most disputed simply because business owners haven't taken the time to understand their cover before they pay for it.
- Public Liability and Products Liability Insurance is one of the more commonly known types of insurance within a business insurance package. This cover is usually requested as part of a commercial lease. A Public and Products Liability Insurance is cover for your obligation to others as a result of a negligent action by you or your employees, or, as the result of their injury from a product (such as food you have cooked) you have supplied them with.
What other insurance policies may you require in addition to a BUSINESS Insurance Policy?
Cyber Crime is a big risk to most small businesses. Chances are your business network is already vulnerable or infected as a result of cyber crime and you may not know it. Most small business owners think it wont happen to them simply because they are a small business. But, it is small businesses that are quite often the easiest targets simply because they don't have the resources of big business to stop cyber criminals.
You may have heard of someone who has had their computer and data locked and that they had to pay a ransom to unlock their data. This is an example of Cyber Crime and it is becoming more common, particularly amongst small businesses. It is also a common exclusion in most business insurance policies.
A well structured Cyber Insurance Policy can protect you in three ways;
- Loss of or damage to your own equipment, websites, domains and assets as a result of cyber crime. This is the cost of replacing your damaged /infected hardware and the cost of reinstating your data. In some cases, the policy will also provide cover for the ransom if there is no other reasonable alternative.
- Loss of income following an insured event. This is particularly important for any business that relies on its technology infrastructure to generate income. Whether this is an online shop, an online booking system for customers to book tickets and seats, or more simply your EFTPOS system.
- Your liability to your customers for their data that you hold. Cyber Liability is one component of a Cyber Insurance policy which is aimed at protecting your business for the liability or obligation to others for the data that you hold in the event that their privacy is breached by the criminal activity on your network.
Directors Liability & MANAGEMENT LIABILITY Insurance
As the director of a company, you can be held personally liable for decisions you or your staff make on your behalf in the running of your business. These decisions may result in an alleged breach of employment law (harassment, discrimination, bullying, unfair dismissal), trade practices act, environmental protection, or workplace health & safety laws. A directors liability or management liability insurance policy generally protects the company and any innocent parties by paying for defence cover to defend against such allegations against you as a director and / or the business entity.
Workers Compensation is compulsory in most states for employers. In NSW for instance, if you pay more than $7,500 in wages, including casual labour and including goods or accommodation in lieu of monetary payments, it is compulsory for a workers compensation policy to be in place. This also includes directors of a Pty Ltd company, even if it is the family business.
We can assist you with Workers Compensation Insurance in the following states & territories
- New South Wales Workers Compensation
- ACT Workers Compensation
- Victorian Workers Compensation
- Tasmanian Workers Compensation
- Western Australia Workers Compensation
- Northern Territory Workers Compensation
As workers compensation insurance only covers you during working hours, you should also consider reviewing your life insurance, income protection, or injury insurance for you and your family on a 24 / 7 basis to cover you for injuries outside of the work environment.
Personal Accident & Sickness Insurance or Business Continuation Expenses
If you operate as a sole trader or partnership, or are a director of a pty ltd company in a state that doesn’t cover directors and are as a result unable to arrange cover for yourself under workers compensation insurance, you may wish to consider personal injury / accident insurance or a business continuation expenses policy.
A personal accident & sickness insurance can assist you in the event of an accident or sickness preventing you from undertaking your work by providing you with a weekly benefit of up to 85% of your ongoing weekly income. The policy can also be extended to include a capital lump sum benefit in the event of permanent disability or death.
Unlike Workers Compensation this type of policy is typically a 24 / 7 policy providing you with cover in your personal time. Whilst a personal accident & sickness policy covers you for a continuation of a portion of your salary, it typically doesnt cover your medical expenses associated with an injury or sickness.
The business continuation expenses insurance can be taken as an extension of this policy or as a stand alone policy in its own right. This particular cover helps protect your business by paying for the costs associated with keeping your business running whilst you recover from an accident or sickness claim.