The popularity of specialty coffees and the significant growth in the number of micro roasters over the past few years are undeniable. We are now finding increasing numbers of artisanal roasters across Quebec. Whether for the purpose of taste or novelty, or to support local businesses, many people choose specialty coffee products from Quebec.
Why is an insurance broker talking to you about coffee? When a new product or market gains popularity and increasing numbers of businesses work in the field in question, it becomes important for insurers to adapt to this change. This industry requires specific coverage that differs from that for the rest of the food market. As such, an insurance policy that includes coverage adapted to the greatest risks for these businesses becomes essential. To adequately identify risk-management needs, it is important to go slightly more in depth and to better understand the daily activities of micro roasters, the equipment they use and where it comes from, the origin of their raw materials, their production processes, their means of distribution, etc.
At Lareau, we have carried out this analysis to develop a customized insurance program for those in the coffee industry. Learn about the coverage you need to make sure that you have peace of mind as you roast your beans.
The roasting process necessarily includes high-temperature cooking. The frequency of use of your appliance may vary, but it may be used for many hours per day. Risks of fire are therefore inherent to this type of production. Regular maintenance and cleaning of equipment and of the venting system are essential prevention measures for all roasters. We recommend purchasing a “broad-form” commercial insurance policy, which includes replacement coverage to adequately cover your equipment, stock, and the other contents of your premises.
Investments to start a roasting business can be quite high. A coffee roaster can be very costly, especially when beginning your endeavour. In addition, in the case of equipment breakdown, parts can be rare or take long to receive, depending on where the equipment comes from. This means that production could be interrupted for several days, or even weeks, until the equipment can be repaired and you can go back to roasting your beans. It is important to purchase adequate equipment breakdown coverage that includes coverage for production machinery, as well as coverage for operating losses and indirect losses. Such coverage could provide you with compensation for the value of the coffee beans being roasted when the breakdown occurred if it is no longer possible to roast them.
Did you know that there are shared roasting spaces that can be used to reduce initial investments and help entrepreneurs? That being said, some still choose to have their own facilities.
As coffee bushes do not grow in our climate, the raw materials that you purchase either from a wholesaler or a distributor are imported from several different countries. If such a supplier experiences a loss and can no longer provide you with your raw materials, will you have access to other sources of supply? In the event that you are unable to obtain your supply elsewhere and your production is affected, contingent business interruption insurance that covers interruptions on the part of suppliers and of clients—for example, if you have a major buyer of your products who experiences a loss—is useful.
Commercial general liability insurance covers you for property damage, or bodily injury caused to third parties. As previously mentioned, the risk of fire is higher for coffee production than for other types of food production. Based on your location, there may be a greater potential for damage to adjacent buildings or to other tenants in the same building. It is important to ensure that your civil liability limit is adequate and high enough to cover the total value of possible damage to surrounding structures. For those who work in congested areas in major cities, this is a key issue for you. Tenants’ legal liability insurance must reflect the potential for damage to the premises you occupy. For example, if you rent an entire building for production, it would be preferable to have a tenant’s legal liability limit equivalent to the cost of fully reconstructing the building.
Online sales are very popular, and even essential, for roasters. Many micro roasters use known transactional platforms to reduce the risk of theft of computer data. However, some businesses may host financial data and personal information related to their clients. Is it possible for an intruder to disrupt the computer system and for this to stop production for several days? This is a possibility for a number of businesses. Cyber-risk insurance has become unavoidable these days, and many types of coverage are available, generally at a reasonable cost. Your insurance broker will analyze your needs in terms of the necessary coverage for your operations.
In the food industry, the risk of contamination or of needing to recall a product is present to a different degree depending on the type of product being sold. While coffee poses a lower risk in this regard, in comparison to ground meat, for example, the introduction of an external contaminant that renders the product unfit for consumption may occur, which could possibly ruin an entire production lot. It is also possible that a product already in the possession of the retailer or consumer will need to be recalled. The costs incurred for this process could be covered by your insurance policy.
In conclusion, micro roasters work in a field that they are passionate about and work hard at their craft to provide a high-quality product that is different and adapted to the tastes of consumers. To adequately protect your business and to be supported as you grow, contact a Lareau broker who, through risk-management expertise, will be able to identify your needs based on your roasting activities.
