Cafe insurance in Australia, what to arrange before opening

Public liability insurance, required before occupancy

Public liability insurance covers your cafe against claims from third parties, typically customers, for injury or property damage on your premises. If a customer slips on a wet floor, burns themselves, or suffers any injury your business could be liable for, public liability insurance covers the legal costs and compensation.

Commercial leases commonly require public liability coverage, typically $10 million or $20 million, as a condition of occupancy. You will need to provide a certificate of currency to your landlord before taking possession. Arrange this before your lease commencement date. Without it, you may be prevented from taking possession or be in breach of your lease from day one.

Contents, equipment, and fit out insurance

Contents insurance covers the physical assets of your cafe, fit out, equipment, furniture, and stock, against damage, theft, and other insured events. For a business that has invested $200,000 to over $1 million in fit out and equipment, the uninsured risk is significant.

Read your policy schedule carefully. Confirm that your fit out is covered as a tenant improvement, that equipment is insured at replacement value rather than depreciated value, and that your specific high value items are listed. If your espresso machine is provided under a coffee supply agreement, confirm in writing whether the roaster's insurance covers it on your premises or whether you must insure it separately.

Commercial equipment can be covered under a separate machinery breakdown policy. Consider this for your highest value and highest dependency equipment.

Workers compensation, compulsory once you employ staff

Workers compensation insurance is compulsory in Australia for any business with employees. It covers staff who are injured or become ill as a result of their work. The specific scheme varies by state, but the obligation is the same everywhere. Workers compensation must be in place before your first employee starts work.

Premiums are calculated on your industry classification and projected wages. Keep accurate wage records from day one, premiums are reconciled against actual wages at year end.

Business interruption insurance, protecting your income

Business interruption insurance covers your loss of revenue if your cafe is forced to close temporarily due to an insured event, fire, flood, major equipment failure, or other covered circumstances. For a business that depends on daily cash flow, a two week closure can create a financial crisis. Business interruption converts that risk into a manageable insurance claim.

In the Pathway

In the Pathway, insurance sits at the pre occupancy compliance stage. Public liability must be in place before occupancy. Workers compensation before your first employee starts. Contents insurance before fit out equipment arrives. Do not treat insurance as a post opening task.