What Type of Insurance Do You Need To Run a Coffee Shop?

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Coffee shop insurance provides liability coverage for coffee shop owners in the event that they face legal issues due to injury of a customer or damage to their property. It can also cover vital aspects of your business such as equipment, furnishings and the coffee shop premises against a range of perils like fire or theft.

Learn about your coverage options as well as tips on how to save money on your insurance premiums.

Key Takeaways

  • Coffee shops face several types of risks, including claims involving slip and falls, food poisoning and damaged equipment.
  • A comprehensive insurance plan for a coffee shop may include coverage for commercial property, general liability, workers' compensation, equipment breakdown and cyber liability.
  • In general, it costs $365 per year for general liability insurance, $375 per employee for workers' compensation insurance and $500 for property insurance.
  • Enhancing safety on your business premises, training employees well and opting for a higher deductible may help lower your coffee shop insurance rates.

Do I Need Business Insurance To Open a Coffee Shop?

Coffee shop commercial insurance requirements will vary depending on the nature of your coffee shop. Specifically, in most states, businesses with employees will likely need to purchase workers' compensation insurance. Additionally, if coffee businesses are mobile, they must purchase their state's minimum commercial auto insurance before operating a vehicle on public roads.

What Types of Insurance Do Coffee Shops Need?

Below, we’ve compiled a list of essential coverages that can safeguard your business against several types of liability and property risks.

Commercial Property Insurance

Commercial property insurance covers the cost of repairing or replacing your business property in the event it was damaged by fire, theft or other covered events. This can include the building, as well as equipment, furniture, inventory and even outdoor signs. So, if your range top malfunctions after heating someone's breakfast wrap, causing a fire that destroys business property, you'll be covered. Remember: 61% of restaurant fires are caused by cooking equipment.[1]

General Liability Insurance

If a guest was injured or ill or their property was damaged while visiting your coffee shop and you’re held liable — a guest slips because of coffee your employee spilled or a customer gets food poisoning, for instance — general liability insurance will cover their medical bills and repair or replacement costs. Your legal expenses are also covered if the customer decides to sue you.

General liability insurance also covers personal injury claims. For example, this policy would cover you if a competing coffee shop sues you for slandering their business.

Workers' Compensation Insurance

Workers' compensation insurance can cover medical costs and lost wages for injured employees who become ill due to their work. Imagine the spill from the prior example caused both the customer and one of your employees to slip. The rehabilitation costs for your employee’s broken tailbone should be paid for by the workers’ compensation insurance policy. In most states, businesses with employees are required to carry this insurance.

Commercial Auto Insurance

Commercial auto insurance can protect coffee shops that own, lease or rent vehicles for business purposes, such as delivering supplies or catering events. This coverage is particularly valuable for mobile coffee shops relying on traveling between locations for their business.

Commercial auto insurance provides liability coverage for any accidents involving these vehicles as well as repair or replacement costs for the business vehicles. Most states have minimum auto insurance requirements.

Equipment Breakdown Insurance

Coffee equipment breakdown coverage covers the cost to repair or replace equipment, like your espresso machines, coffee grinders or refrigerators if they break down due to internal failures such as motor burnout, power surges and operator error. Keep in mind that commercial property insurance insures the physical structure of your business, not equipment breakdown coverage.

Cyber Insurance

Cyber insurance protects against data breaches and cyberattacks. For instance, if your point-of-sale system is hacked and your customer's personal information or payment details are stolen, cyber insurance will cover the costs associated with the breach. These costs can include notification expenses and credit monitoring services for affected customers.

To put it in perspective, the powerhouse Starbucks completes three million mobile payment transactions in a single week.[2] While smaller coffee shops may not handle as many transactions, it does highlight the growing need to have online and mobile transactions protected.

Additional Coverages To Consider

While the above business insurances are a good start, below are extra coverages that can help expand your protection.

  • Business income insurance: Also known as business interruption insurance, this can replace lost income if your coffee shop needs to close for a covered reason, such as a fire or major equipment breakdown. Additional protection will also include the cost of temporarily relocating your business in the event of a covered loss.
  • Business owners policy: This policy bundles general liability insurance, property insurance and business income insurance into one convenient policy. It can be a cost-effective way for new businesses to buy multiple types of coverage.
  • Employment practices liability insurance: This can cover legal costs if an employee sues your business for wrongful termination, discrimination or other employment-related issues. This coverage is typically included in a workers’ compensation package.
  • Liquor liability insurance: If your coffee shop serves alcohol, this insurance can protect you if you're sued over damage or injuries caused by an intoxicated patron.
  • Cyber errors and omissions insurance: This coverage is an addition to cyber insurance, specifically handling the financial implications of legal actions stemming from data breaches, such as when a customer sues your business claiming your negligence caused the breach.
  • Commercial umbrella insurance: An umbrella policy provides additional liability coverage if a high-cost claim exceeds the limits of one of your other liability policies.

How Much Coffee Shop Insurance Do I Need?

The insurance coverage a coffee shop needs depends on factors such as size, annual revenue, number of employees and risk level.

Consider the fact that every cup of coffee poured or pastry served could be a potential catalyst for an insurance claim, whether due to a slip, burn, food poisoning or equipment issue.

Essential policies typically include general liability, workers' compensation, equipment breakdown, commercial property and cyber liability insurance, with additional coverage, like business income insurance or umbrella policy, recommended based on individual risk profiles.

How Much Does Coffee Shop Insurance Cost?

The cost of coffee shop insurance varies based on several factors, including the coverage types and amounts, your business's location, the value of your property and your claims history. Coffee shops and cafes can be covered by general liability insurance, workers' compensation insurance and commercial property insurance. Each of these coverage types will have their own pricing. Consider this:[3]

  • General liability insurance: $365 to $1,700 per year
  • Workers' compensation insurance: $375 to $1,400 per employee per year
  • Commercial property insurance: $500 to $3,500 per year

A policy with those three coverages could range in cost between $1,240 and $6,600 annually for a coffee shop with a single employee.[3]

Are There Ways To Get Better Insurance Rates for My Coffee Shop?

If you maintain your coffee shop well and prioritize safety, you can significantly lower the probability of accidents happening and subsequent liability and property damage claims. Taking precautionary measures that demonstrate proactive risk management are often rewarded with more competitive rates.

Some ways for coffee shop owners to do this is to install fire suppression systems, burglar alarms and surveillance cameras. In addition, invest in training your employees. Employees who are well-trained in safety protocols, equipment usage and customer service are less likely to be involved in situations that might lead to a liability claim.

Moreover, taking steps to better protect your coffee shop business gives you more wiggle room for increasing your deductible. A higher deductible, which is the amount you're responsible for paying in the event of a claim, can result in lower premiums.

How To Get Coffee Shop Insurance

Securing the right insurance for your cafe or coffee shop doesn't have to be a daunting task. An insurance company will require information about your business such as location, annual revenue and number of employees. Gathering quotes from at least three to five different carriers is recommended for the best comparison.

Or you can skip the tedium altogether and use SmartFinancial. By entering your zip code below and completing a single questionnaire, SmartFinancial can help match you with a policy that meets both your budget and coverage needs!

Receive Your Free Cofee Shop Insurance Quote


Do I need business insurance to serve food at a coffee shop?

Some local governments require certain coffee shop businesses to acquire insurance as a condition of getting their business license or use permit approved.[4]

What type of coffee insurance do I need to cover my espresso machines?

Business property coverage will insure your espresso machines against external perils like fire and theft, while equipment breakdown insurance covers internal failures such as electrical shorts.

Should I get LLC business insurance for my coffee shop?

Yes, owners of LLCs should buy business insurance. Forming an LLC can provide some legal protection for your personal assets but it does not replace the need for business insurance to protect against risks involving liability and property losses.

Should cafe owners purchase cafe insurance if I'm only open a few times a week?

Purchasing coverage is always recommended, as even part-time coffee shop owners face liability risks that include slip and falls and food poisoning. Make sure your cafe insurance policy includes at least general liability insurance and commercial property insurance.


  1. National Fire Protection Association. “Structure Fires in Eating and Drinking Establishments,” Page 2. Accessed August 4, 2023.
  2. Retail Dive. “Starbucks Generates More Than 3M Mobile Payment Transactions per Week.” Accessed August 2, 2023.
  3. AdvisorSmith. “Small Business Insurance Costs.” Accessed August 2, 2023.
  4. California Office of the Small Business Advocate. “Mobile Food Vendors,” Page 4. Accessed August 4, 2023.

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