All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A CAT CAFE
Example 1: A customer comes in and is scratched in the eye while trying to comfort a cat. Even though they signed a waiver, you may be held liable for damages if the cat had an infection that was then transferred over to your customer. General liability insurance will likely cover damages if your business is sued.
Example 2: After a server pours a fresh cup of coffee for a customer, a cat jumps up on the table and spills the hot liquid into their lap. If the spill results in severe burns, you could be found responsible for their injuries. With general liability coverage, you can protect your business in the event of a lawsuit.
Example 3: You've set up a photo booth as a treat for your customers during the holidays. As a group walks into the studio area for their photo, someone trips over a cord for the flash and falls down hard on the floor, breaking their wrist. The customer then sues your business for damages. General liability coverage will likely cover the costs associated with the claim.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
The average cat cafe in America spends between $500-$1,200 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all cat cafes should obtain:
Workers’ Compensation Insurance
Most states require that businesses carry workers’ compensation coverage if they have part-time or full-time employees. This coverage is designed to help cover medical bills and lost wages in the event that an employee is injured or becomes ill while on the job.
Commercial Property Insurance
If you own the building that you operate your cat cafe out of, you’ll likely want to invest in commercial property insurance. This coverage works to protect your building and the contents inside it in the event of a fire, natural disaster, or instance of theft and vandalism.
In addition to the policies outlined above, there are a few other types of coverage your cat cafe may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Data Breach Insurance
Many cat cafes offer customer loyalty programs that work to reward returning customers for their patronage. But if your computer systems are hacked or otherwise compromised, your customer's private information like addresses, phone numbers, and credit card details could be stolen. Data breach insurance can help to protect your business and your customers in the event of a system breach.
Business Interruption Insurance
If you ever have to close your doors for an extended period of time due to an incident like a fire or inclement weather, business interruption coverage is a must. This coverage can help to make up some of the losses associated with closing your doors.
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.