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What Types of Insurance Does a Frozen Yogurt Shop Need?

What Types of Insurance Does a Frozen Yogurt Shop Need?

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What Types of Insurance Does a Frozen Yogurt Shop Need?

What Types of Insurance Does a Frozen Yogurt Shop Need?

When starting a frozen yogurt shop, it’s important to make sure you have the right insurance in place to protect your business.

insurance is a necessary part of operating a business. Not only does it protect against potential liability claims, but it can also help to cover the cost of repairs or replacement in the event of damage. 

When it comes to choosing the right insurance for a business, there are a number of factors to consider. Read on to learn more about what insurance is needed for a frozen yogurt business. 

Related: Guide to opening a frozen yogurt shop

What Are Some Risks For a Yogurt Shop?

Some risks that a frozen yogurt shop will encounter includes:

  • Customer injuries
  • Equipment failure
  • Fire damage
  • Employee injuries
  • Extended closures

Even when precautions are made, accidents still happen, a frozen yogurt shop needs insurance to protect against liability arising from accidents, injuries, and property damage. 

Customer Injuries

Customer injuries can occur from slips, trips, and falls, especially during peak hours when customers crowd inside the building. In addition, frozen yogurt shops with indoor or outdoor seating have an added liability risk resulting from injuries due to broken or unstable furniture.

Glass cases, doors, and sliding windows are frequently used in a froyo shop to display the products and broken glass can cause injuries.

Illness is another risk to customers. Food products contaminated by bacteria and foreign particles can cause serious illness. Consequently, some of the more expensive claims result from customers who consume contaminated food.

Equipment Failure

Frozen yogurt shops require freezers and refrigerators to keep products from spoiling or melting. For example, broken freezers will cause the yogurt shop’s products to melt, thereby spoiling the store’s inventory. Not only is the product expensive to replace, but the freezers themselves are expensive to repair.

In addition to freezers and refrigerators, a frozen yogurt shop may have other specialized equipment such as soft-serve dispensing machines, blenders, soda dispensing machines, and carbon dioxide tanks. The breakdown of specialized equipment can eliminate the store’s product availability, causing the shop to lose valuable income.

Fire Damage

Fire is a substantial threat to the business, whether machinery malfunctions or arson. A fire that damages the building could shut down the store for an extended period while repairs are made. 

Employee Injuries

Employees can suffer injuries from slips, trips, and falls, especially during peak times when regular cleaning and maintenance may be skipped. Another injury risk is back strains from lifting heavy objects. Also, electrical shock from malfunctioning equipment can injure an employee, particularly if an untrained employee attempts to fix a broken machine.

Extended Closures

Closures and disruptions in business are mainly harmful during peak seasons. It is not uncommon for a shop to make most of its annual sales during the peak season. The breakdown of refrigeration equipment and substantial losses to the building can cause an interruption in the business. 

Another interruption happens when there is a delay in the supply deliveries. Without the necessary inventory, the business is also at risk of income loss.

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What Types of Insurance Should a Frozen Yogurt Shop Consider?

Business insurance is an essential aspect of any business plan as it offers protection for the business’s assets and financial well-being. A frozen yogurt shop should consider adding the following insurance policies:

  • General liability insurance 
  • Commercial property insurance
  • Equipment breakdown insurance
  • Workers’ compensation insurance
  • Business interruption insurance

General Liability Insurance 

General liability insurance coverage protects the business from lawsuits involving bodily injury or property damage that occurs on the business property or due to the business’s functions. For example, a general liability policy insures claims for injured customers who slip on a wet floor. 

Coverage for liability exposures is a central policy to have in your insurance portfolio as it offers protection for expensive claims. This policy includes coverage for expenses including:

  • Medical payments
  • Property damage repairs
  • Legal fees
  • Settlements

Commercial Property Insurance

Property coverage is another essential policy that covers business-owned structures and property (i.e., equipment, inventory, and supplies) for the following perils:

  • Fire
  • Wind
  • Hail
  • Theft
  • Vandalism
  • Water from leaking pipes

A business personal property policy covers facilities and contents up to an agreed policy limit, determined by the building’s size, condition, permanently affixed furniture, and customization. Additionally, this policy covers business property up to an agreed policy limit, determined by an estimated total value (and usually includes a deductible).

Equipment Breakdown Insurance

The frozen yogurt shop’s refrigeration equipment will be one of the larger assets needing coverage. Walk-in refrigerators, freezers, batch freezers, and display fridges are expensive to replace, and without insurance, the business pays for replacements on its own. A typical property insurance policy excludes coverage for sudden breakdowns and mechanical failures,  which is why adding equipment breakdown coverage is essential. This policy covers the cost of replacing equipment, spoiled food, and lost income.

Equipment breakdown coverage protects business equipment from otherwise excluded perils, such as:

  • Mechanical failures
  • Sudden breakdowns
  • Losses due to electrical arcing

This policy does not cover gradual wear and tear on equipment; rather, this policy insures the sudden breakdown or failure. Ideally, the same insurance company covers both property damage and equipment breakdown to avoid claim settlement disputes. Regardless, equipment breakdown coverage is a beneficial policy for a frozen yogurt shop, whether covered by the same company or a different one.

Workers’ Compensation Insurance 

A yogurt shop with employees will benefit from a workers’ compensation policy because it pays for expenses following an employee’s injury. Without this crucial coverage, the frozen yogurt shop could be held responsible for the medical bills and lost income for the injured employee.

A workers’ compensation policy offers employees coverage for expenses involving:

  • Lost income
  • Medical bills 
  • Ongoing rehabilitation care
  • Disability income
  • Legal expenses
  • Funeral expenses

A shop with regular maintenance and cleaning can prevent most injuries. However, if an incident occurs, the workers’ compensation policy covers the employee’s expenses and protects the business from lawsuits.

Business Interruption Insurance

Business interruption insurance is typically an additional coverage added to a business owner’s policy. This line of insurance offers coverage for expenses resulting in a loss of income, employee wages, and payment on regular bills and loans while the business is closed.

During normal operations, the frozen yogurt shop’s income is based on consistent, repeat clientele, which will be altered due to the new location. So, although a temporary relocation is possible (and a business interruption policy helps cover the costs of moving to a temporary relocation), the business may still experience a reduced income. 

Business interruption also covers losses due to incidents such as a power outage. If this were to happen and your inventory spoiled, the insurance would be there to replace your ingredients.

How much does frozen yogurt shop insurance cost?

The cost of insurance varies depending on the unique needs of your frozen yogurt shop. Coverage amounts and risk exposures are the key factors in determining the annual premiums. Ideally, bundling policies with the same company reduces claim disputes, simplifies renewals, and is recommended to reduce insurance costs.

Risk factors that influence insurance prices include:
– The size and condition of the yogurt shop’s building
– The condition of transportable equipment (i.e., yogurt stands)
– The number of employees on the payroll
– The security and safety precautions in place to reduce theft
– Any current or past insurance claims and lawsuits

Frozen yogurt shop insurance is a proactive way to protect your business’s assets and finances, making it an essential part of any business plan. Indeed, pricing is important, so, on a final note, the best way to verify your insurance rate is reasonable is to compare the types of coverage and obtain multiple quotes from different insurance companies.

What Types of Insurance Does a Frozen Yogurt Shop Need?

What Types of Insurance Does a Frozen Yogurt Shop Need?

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