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Whether you’re starting a new cafe, buying an existing one or simply running your own, controlling costs is a big part of the job.
One of the many costs to consider is your business insurance.
How much should a cafe be spending on insurance? It’s a good question, and one that has many answers!
In this article we’ll take a look at how the cost of cafe insurance is impacted upon by different factors relating to your cafe.
Not all cafes are charged the same when it comes to insurance.
If you’re comparing the cost of your cover with another cafe down the road, the costs could be completely different for similar levels of cover.
So what affects the cost? Let’s take a look at some of the main factors:
Size of business
One of the first things your broker or the insurance company will look at is the size of your business.
They may do this by looking at the number of seats in your cafe, the number of staff or the annual revenue of the business.
In some cases they may take into account all three measures.
Generally speaking, the larger or busier your cafe is, the greater the potential for something to go wrong, and therefore the greater the cost of the insurance.
Not all cafes just serve flat whites and croissants!
Whilst there are many cafes that only serve coffee and cakes, there are also plenty with their own cooking facilities.
If your cafe has its own kitchen the cost of your insurance will be higher than for a cafe with no kitchen.
If you have a deep fryer or do any cooking with a wok the price will be higher again. Even the size of your deep fryer can have an impact on the cost.
For cafes which are licensed or offer BYO the cost can also increase, as the risk of incidents will generally increase once alcohol is involved.
Depending on how you are insuring your cafe, the cost of the cover may be impacted by the type of premises which you operate from.
For cafe owners only choosing to cover their public liability this won’t be such an issue, but if you are insuring your contents it will be.
For example if your cafe is located within a shopping centre that has security and fire alarms, along with fire sprinklers, your insurance cost should generally be lower.
On the other hand if your cafe is located within a building constructed from combustible materials (such as timber) and you have limited fire protection, the cost will generally be higher.
The existence of a cold room, especially one that takes up a sizable percentage of your floor space, could also impact upon the cost of your cover due to the risk involved.
Level of cover
The other big factor which will affect the price of the insurance is what level of cover you choose to go with.
If you only care about price and nothing else, then a basic public liability policy with added glass cover will generally meet the minimum insurance requirements for a lease.
This level of cover can be comfortably had for less than a thousand dollars in most cases, unless there is something particularly high risk about your business.
If you wish to protect your investment more comprehensively there are a number of additional forms of cover available.
Some of these options for a cafe include contents, stock, general property, theft, machinery breakdown and business interruption.
It should be no surprise to read that the more of these options you choose, the more you’re going to pay for your insurance.
Ultimately it’s all about much you’re will to spend in order to cover your risks, and how much risk you’re willing to take on yourself without insurance.
In a perfect world you would cover every possible risk, but as business owners we understand that insuring every possible risk is not always feasible.
Making sense of it all
If you’ve read this far you’ll now know that there are a lot of different factors affecting the cost of cafe insurance.
It certainly isn’t a case of being able to say that a cafe of a certain size will always pay a certain premium.
The best option to find out exactly what your cafe insurance cost will be is to speak with an insurance broker.
Most insurance brokers will have dealt with plenty of cafes and other hospitality businesses, and will be able to help you with a range of quotes.
You can deal with the insurance companies directly in some cases, however by taking this option you won’t have the expertise and experience of a broker to run through all available options.
To be put in touch with a broker please click on the quote button below, or call us on 1300 542 245.