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Restaurant | Cafe | Takeaway
Whether you own a cafe, coffee shop, take-away store or five-star restaurant, businesses in the hospitality industry are endlessly exposed to risk around-the-clock.
And while Public Liability claims are usually what comes to mind when considering the types of risks the food and beverage industry is exposed to (think food poisoning, slips, falls or scalding!), there are a number of other scenarios that are far more common.
Here are 3 real-life circumstances that cafes and coffee shops are likely to experience, which are likely to result in an insurance claim – and how having the right insurance has paid off for these business owners.
With the amount of machinery cafes and coffee shops are reliant upon to operate, there’s little wonder claims for Machinery and Equipment breakdown are on top of the list for common claims. Whether it’s ovens, deep fryers, dishwashers, refrigerators, freezers and coffee machines; or computers and POS systems, without this equipment your cafe would struggle to do or produce anything. Machinery Breakdown policies also allow for coverage of foodstuffs which have been disposed of due to the breakdown of refrigeration equipment.
One cafe owner in north-western Victoria was pleased to learn that he had included Machinery Breakdown cover as part of his Business Insurance policy when the compressor of his refrigeration unit suddenly failed, causing the temperature of the fridge to rise to 26 degrees. He immediately contacted a refrigeration mechanic to come and repair the fridge and was spared from having to pay $1,800 from his own pocket, as it was covered by his insurance policy.
Cooking is obviously one of the major hazards associated with any type of hospitality business, especially where deep fryers and open flame woks are used. However, a fire that breaks out in the kitchen isn’t the only disaster a cafe or coffee shop could face. With Australia being no stranger to wild weather events, it’s important to consider how your business would recover should it face a natural disaster.
A Melbourne cafe owner discovered the importance of holding the appropriate contents cover when a severe thunderstorm hit the area in December 2016. Torrential rainfall entered through the roof of her cafe and was unable to escape down the floor grates. The water built up on the floor which affected power-boards and electric appliances located on the tiled floor. They were instructed to isolate the power to all electrical items, which included the fridges, freezers and cooking equipment, until a plumber was able to extract the water and an electrician could conduct safety tests on the electrical equipment. All of their stock, including $5,000 worth of fresh meat, had to be disposed of after it had been left unrefrigerated for several hours. The floor of the cafe also had to be replaced, as the water caused significant damage to the adhesive beneath the tiles.
The cafe owner was able to claim $10,200 for loss of stock, which included fresh and frozen produce, and the replacement of take-away coffee cups, food containers and napkins. They were also able to claim $2,700 for cleaning of the premises following the storm; and $13,600 to replace the floor coverings.
Whilst cover for broken glass may seem more like a ‘nice to have’ cover, as opposed to essential cover, many cafe owners would be surprised to know the frequency and the average cost of glass claims in the hospitality industry. Consider the types and amount of glass that is present in your cafe or coffee shop – large windows, display counters and fridges, shelving, glass partitions or dividers. Even the repair or replacement of signage can be covered under Glass cover. Accidents and malicious damage can result in unexpected and expensive repair costs.
The owner of commercial premises located on the Sunshine Coast in which a coffee shop is located, stipulated that the tenant must have glass cover as part of the lease agreement. This turned out to be a blessing for the coffee shop owner after strong winds broke two of the large exterior glass windows causing $6,200 worth of damage. Fortunately the insurer paid $5,952, only leaving the coffee shop owner out of pocket for the $250 excess.