Keeping the pizza fires burning

The number of pizza shops, from national franchises to local, familyowned restaurants, has grown over the last few years. The risk experts at Momentum Short-term Insurance look at the cover brokers should recommend for these businesses.

Increasingly hectic lifestyles in a fast-paced world have seen convenience emerge as one of the major consumer trends. Among the many fast and convenient food options, pizza remains a favourite. As a result, the number of pizza shops has increased in the last few years, including both national franchises and local, family-owned businesses.

For brokers who have pizza shops as clients, and for those who might target this growing market in the future, Momentum Shortterm Insurance highlights the potential exposures that must be considered when assessing the risk for a pizza shop. This analysis is based on the unique Momentum Short-term Insurance commercial product offering. Although the product is based on the traditional standard commercial cover used in the market, its structure and simplicity allows for great flexibility when designing a solution for a client.

Piping hot pizza

Of course, pizza must be piping hot, and an essential part of the experience is a traditional pizza oven. This however poses a significant fire risk, both in terms of traditional wood fires and the gas used in the cooking process. In addition, pizza shops will often store oil and other flammable items at the premises, increasing the fire risk.

On the other end of the spectrum is the risk of water damage caused by the possible bursting of pipes, geysers and water tanks or damage caused by a sprinkler system.

Add to this the risk of liability claims due to defective products or malicious damage caused by the potential vandalism of the shop, shop front glass and signage, and it is clear that comprehensive peril-based cover is required.

Comprehensive cover required

This insurance should incorporate the building, fixtures and fittings, contents, stock, electronic equipment and money and provide cover against any loss and damage due to:

* Fire, explosion or earthquake
* Wind, thunder, lightning, storm, hail, flood or snow
* Bursting of geysers and water pipes
* Malicious damage
* Power surges
* Impact by aircraft and articles dropped by them, impact by vehicles, impact by falling trees

Bear in mind that fire cover is conditional upon fire extinguishers being installed and serviced as per the National Building regulations.

For those who want more than pizza

While a pizza shop is unlikely to offer much to those who are looking for more than pizza, theft exposure does exist due to the contents, stock, money and electronic equipment kept on the premises.

In addition, pizza shop owners cannot expect free pizza to keep all their employees satisfied. Potential theft and fraud by employees is a risk that should be considered.

Theft cover is optional and will insure the fixtures and fittings, contents, stock, electronic equipment and money against loss or damage caused by theft. Theft cover, specifically for stock, can be provided on a full or first loss basis, depending on the needs of the client.

It must be noted that an alarm is typically required for theft cover, which is also conditional upon there being signs of visible, forcible or violent entry.

Cover for employee dishonesty will insure a business against losses following acts of fraud or theft by its employees.

A run in with the wrong pizza

A pizza shop faces potential liability claims from those ardent pizza fans who consumed pizzas that led to food poisoning and other illness, and are open to further liability claims for potential injuries to patrons impatiently waiting for their pizza.

There is also a risk of the stock being damaged as a result of a mechanical or electrical failure of cooling units.

Fortunately, cover is available for the deterioration of refrigerated stock, removing any temptation to use it as an "innovative" pizza topping. This optional cover insures refrigerated stock against loss or damage caused by the mechanical or electrical breakdown of the cooling unit. Of course, a proper maintenance plan must be in place for the extraction system and cooling units.

Defective products liability will provide cover against any damages caused by any pizza or other product sold.

Public Liability cover insures the business for damages it is liable to pay following an incident which occurres during the course of its business. The business is insured for:
* Death, illness or injury * Damage to property
* Additional legal defence costs
* Wrongful arrest
* Pollution

Facing a cold oven

A terrifying thought for pizza addicts, the inability to trade for a period of time is a risk faced by all pizza shops. For shop owners the result is a loss of profit due to the interruption in the business activity.

Businesses can insure their fixed expenses payable, their loss of operating profit as a result of a reduction in their turnover following the interruption in the business or the additional working expenses incurred following the interruption of the business. The business is insured against interruption that may occur due to loss or damage caused by:
* Fire, explosion or earthquake
* Wind, thunder, lightning, storm, hail, flood or snow
* Bursting of geysers and water pipes
* Malicious damage (unless by theft)
* Impact by aircraft and articles dropped by them, impact by vehicles, impact by falling trees
* Damage as a result of any of the above mentioned perils to any property within a 10km radius of the premises which results in access to the premises being restricted
* An interruption of the public supply of electricity, telephone services, water, sewerage or gas as a result of any of the above mentioned perils
* Future or postponed losses

Delivering smartly

It is standard practice for a pizza shop to deliver pizzas, a service highly valued by many stressed consumers and perhaps one of the reasons why pizza is so popular. As such, vehicle accident, theft and liability exposure for delivery vehicles used by the business is essential.

...and receiving smartly

Delivering pizzas is of course dependent on the stock arriving at the pizza shop. The loss of stock due to thefts or accident is a risk that could lead to no pizzas being delivered at all.

Stock in Transit cover insures the stock being delivered as part of the stated business activity. The stock is insured against loss or damage caused by:
* Fire, explosion and earthquake
* Wind, thunder, lightning, storm, hail, floor or snow
* Accidental damage • Malicious damage

Optional theft cover will insure the stock in transit against loss suffered due to theft.

Pizza in the face

Accidents do happen and accidental damage cover insures fixed glass and electronic equipment against loss or damage caused accidentally.

Preventing a riot

Sasria should be considered to cover the business against loss or damage caused by riots, public disorder and strikes.

To prevent any riots due to a shortage of pizza, all of the above covers should be considered following a physical risk survey. The necessary covers should then be activated to ensure that all exposures have been correctly identified and the risks mitigated.

When the unexpected happens, and it will, having the correct commercial insurance cover may mean the difference between the success and failure of a business.