Coffee Shops: Key Risks & Insurance Tips


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Few business ventures are more rewarding than a well-run restaurant or coffee shop. The development from hopeful idea to fully-fleshed reality rests on the your ability to please customers while working long hours to grow your brand. For restaurant owners, there’s little more satisfying than to have your brand both recognized and appreciated in your community. Yet that kind of success takes hard work and an extensive amount of management to get there. From hiring and managing employees to staying abreast of food shipments, expiration dates, important purchases, marketing, and regularly updated menu items, restaurant and coffee shop owners must constantly juggle a seemingly impossible number of important tasks. At the heart of all of these, however, is the struggle to mitigate the risks involved, making insurance a necessary part of doing business.

What Common Risks do Coffee Shops Face?

Restaurants and coffee shops have very similar exposure concerns. Those concerns are almost always related to the following:

  • Employee management (including hiring and firing)
  • Food management (including purchasing new food items and ensuring food stocks are fresh)
  • Marketing
  • Customer care and service (including prioritizing allergy concerns)
  • Licensing

Any one of these areas carry their own, unique liability risks. For example, firing an employee could result in a wrongful termination lawsuit. A crafty, well-planned marketing campaign could potentially offend someone, or even result in a false advertisement suit. More recently, allergy concerns have resulted in lawsuits against a number of restaurants for perceived carelessness.

Insurance Checklist for Coffee Shops

A handful of insurance products are perfectly designed to help mitigate the risks that exist for restaurants and coffee shops. Some of these you may have heard of. Others may be new to you. However, each can help cover the most common issues coffee shops and restaurants face on daily basis.

Workers Compensation
One of the most common types of insurance, Workers Compensation helps restaurants avoid the expensive payouts for employees injured on the job by covering medical costs and offering protection in case of lawsuits. This insurance may be required, depending on the specific laws in your state, but usually is necessary if you have at least 2-3 employees.

Business Owners Policy (BOP)
This insurance covers a variety of liability concerns for restaurants and coffee shops. A BOP will help mitigate risks typically covered by General Liability Insurance, Commercial Property Insurance and Business Interruption Insurance. As a whole, this means a BOP will protect your business against personal injury claims, reimburse you should your property suffer damages (for example, due to a fire in the kitchen) and provide your business with an income should you have to close down for a short time due to a natural disaster or other instances.

Commercial Auto Insurance and Hired & Non-Owned Auto Insurance
Although not all businesses have their own vehicles, those that do will require a Commercial Auto Insurance policy. These policies are designed specifically for businesses that utilize vehicles solely for the business. If your restaurant owns delivery cars or trucks, this insurance is a must.

On the other hand, you may need to purchase Hired and Non-Owned Auto Insurance if your business either rents vehicles, or if you have employees using their own vehicles for businesses purposes. This is often the case for delivery services. This will help with liability claims against your business should the employee get in an accident while on the job.

Liquor Liability
While this isn’t necessary for all coffee shops, if your business serves alcohol on your premises, this insurance policy is a must. A Liquor Liability Insurance policy will help mitigate the risks associated with the over-consumption of alcohol, protecting your business against claims that may result should someone get and cause injuries or property damage to your establishment or others’ property. If your business does not serve alcohol, this is not a concern.

In general, all restaurants and coffee shops will need several forms of insurance. All restaurants will need a BOP, but not all restaurants will require Liquor Liability policies or even Commercial Auto Insurance. Some restaurants may be able to avoid purchasing Workers Compensation if it is not required by your state based on your total number of employees, although even then it may be wise to purchase a policy nonetheless.

Discussions — One Response

  • Mariana Bolivar November 14, 2016 on 4:48 pm

    Nice article!!!

    Reply