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July 30, 2014

The Importance Of Insurance

business fireBusiness insurance is one of those things that every food business needs to have.  It’s one of the things I talk about in my classes as being an expense you need to account for when starting up your business.   Why?  Well today’s example shows us one very good reason.

Having business insurance is not actually a requirement of starting and running your business.  Certainly, some of you may be required to have it if you sell wholesale or sell to corporations and others may be required to have it in order to work in your shared/incubator commercial kitchen.  The rationale there is that should someone get sick from your products then the kitchen/retailer/corporation will be protected under your insurance policy.

But there’s another very important reason why you should have insurance and that’s because we’re working in environments that essentially made up of gas and fire.  Business insurance can also help protect your business should you lose ingredients, materials, or even your kitchen itself, to a fire, flood, or other disaster.

The prompt for this post came about by a student from one of my Seattle-based classes where we were talking about crowd funding and I showed my favorite food crowd funding example of Kerfluffle Marshmallows who was looking to start a business and needed about $2500 in capital to get going.  As you can see from the Kickstarter page, she far exceeded that goal!  It’s a great heartwarming story about the power of crowd funding (and also serves as a warning about make sure you would be able to give your donors what you’ve promised!).

After the class the student sent me an email that contained a sad follow-up about Kerfluffle.  Apparently the building their kitchen and store was housed in burnt down one night and that caused Kerfluffle to shut their doors for the foreseeable future.   Please note, I have no idea whether or not Kerfluffle had insurance but bring this example up to illustrate how disasters like this can and do happen.   Business insurance can help you financially recover from these disasters and move forward.

It should be noted that there are many different types of business insurance such as business liability, business interruption, business continuity, etc., so it’s worthwhile to speak with a small business insurance agent or small business insurance broker to learn more about the options available to you and what makes the most sense for your business.

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