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Cafes under-insuring themselves

Published: 8 January 2015

Most cafes will have at least basic level of insurance.

This is because they almost always operate from leased premises, and will therefore be required to hold public liability insurance as part of the lease.

In addition to public liability, the lease will generally also require that glass cover is in place, which covers damage to any glass within the premises.

But whilst these are important forms of cover, a cafe should really have so much more.

Dangers of under-insurance

Under-insurance is a term used to describe a business (or person) that has insufficient insurance to cover all of their potential losses.

For a cafe the number of risks is huge. Public liability insurance will cover some of these risks, but certainly not all.

Here are a just a few potential risks not covered by public liability:

  • Fire & storm damage
  • Loss or damage to your stock
  • Loss or damage to your contents (i.e. cafe fit out, equipment, furniture etc.)
  • Theft - including theft of money
  • Employee dishonesty resulting in a loss
  • Business interruption resulting in lost revenue

None of these events would trigger a public liability claim.

In fact public liability insurance does not cover any of your own losses. It is only designed to cover losses suffered by third parties as a result of your cafe.

Insuring your cafe properly

Of course you could go and take out every type of insurance under the sun to give your cafe maximum protection, but in the real world we know it doesn't work that way.

The key is insuring your cafe in a way that provides the best value without costing an arm and a leg.

To do this you need to look at which risks you most important to you and your cafe.

If you have invested a large amount of money into your fit-out, equipment and furniture, then it makes sense to ensure these are properly insured.

If you hold large amounts of food and perishables, then it makes sense to insure these against deterioration which may occur due to a power outage or similar.

Basically whatever you can't afford to lose or replace should be insured where possible.

Holding a level of cover any less than this is leaving yourself under-insured and at risk.

Getting advice for a better outcome

By speaking with a cafe insurance specialist you can get advice one what types of cover are going to provide the best level of protection whilst still meeting your budget.

Sure a basic public liability policy may be cheap, but if it's insufficient for your needs it will cost you a lot more in the event of a claim.

Don't risk everything you've invested into your cafe just to save a few hundred dollars a year on business insurance.


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