Restaurant Insurance

Insurance On The Menu!

What is Restaurant Insurance?

Insurance may not be the most delightful thing to think about when you’re setting up a new business, but it plays a vital role. Because as a restauranteur, you aim to provide quality service and food to your guests. But your priorities shouldn’t just end there. Without restaurant insurance, restaurants are vulnerable to various risks, such as:

  • Foodborne illnesses
  • Workplace injuries/employee-related risks
  • Fire and storm damage
  • Theft

Restaurants do their best to prevent such risks. However you, unfortunately, cannot prevent everything! Therefore, restaurant insurance covers you and your business against a multitude of problems from property damage, guest and employee injuries to liability lawsuits.

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Who Needs Restaurant Insurance?

Businesses that serve or sell any form of food or drink need restaurant insurance the most. Hence, companies that need restaurant liability insurance are:

  • Cafes
  • Bars and pubs
  • Caterers
  • Food truck
  • Hotel
  • Diners
  • Pizzerias
  • Lounges
  • Bakeries
  • Delis
  • Fast food franchises
  • Coffee and gourmet drink shops
  • Breweries
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What Does Restaurant Insurance Cover?

The most common list of general policies that restaurant insurance covers are:

Business Owners Policy (BOP)

Business owners policy is a combination of commercial property, business interruption, and commercial general liability insurance. This affordable insurance package covers property damage, third-party bodily injury, theft, and vandalism.

Workers Compensation Insurance

Workers compensation insurance covers employees when they face injuries during their work. Although, with Texas as the sole exception, this policy is mandatory in all states. It provides coverage for all work-related injuries and expenses such as medical bills, legal fees, and lost wages.

Imagine your employee gets injured while taking food out of the oven or slipping down the stairs. This policy helps to cover costs incurred against such risks.

Commercial Auto Insurance

Commercial auto insurance ensures to cover medical costs, property damage, and possible lawsuits arising from a car accident.

Forbes states that online food delivery will soon be a $200 billion industry. Therefore, as many restaurants use vehicles to serve their clients and customers, commercial auto insurance is a must. Furthermore, it is mandatory in all states except Virginia and New Hampshire.

 Commercial Property Insurance

Commercial property insurance offers coverage for a business’s tangible assets against fire, theft, or natural disaster. For example, a fire in your area destroys your restaurant. Furthermore, this leaves your property, the furniture, fixtures, and equipment completely destroyed. During such a scenario, this insurance will help you restore your restaurant to its former state.

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Commercial General Liability Insurance (CGLI)

General liability insurance policy covers any third-party injuries, property damage, or unexpected lawsuits that arise due to accidents.

As reported by Eater, in an infamous 1993 lawsuit, Stella Liebeck filed a lawsuit against McDonald’s after spilling coffee into her lap and suffering from third-degree burns. She required multiple surgeries and was permanently disfigured. During the suit, it was found that McDonald’s was serving its coffee at near boiling point and that 700 other people had also suffered burns. She eventually won her suit against McDonald’s for $2.7 million. While an extreme example, if you want to protect your business and pocket from such third-party claims, a CGLI policy is a must.

Additionally, you can add commercial cyber liability insurance to your CGLI policy as an endorsement to secure your customer’s sensitive information such as credit card information. In the event of a data breach, your business will be covered.

Commercial Umbrella Insurance

Commercial umbrella insurance provides extra limits or extends liability coverages when the primary liabilities policies such as commercial auto, commercial property, and CGLI fail to fully cover against third-party claims.

For example, the chandelier placed at the center of your restaurant ceiling falls and destroys multiple tables, chairs, and place settings. Sometimes, commercial property insurance is not sufficient to cover the entire cost of the damage that occurred during an event. This is when your umbrella policy swoops in to cover the remaining costs incurred.

Product Liability Insurance

If the food products that your business sells make someone severely ill, product liability insurance will cover such claims. This policy is mainly for a business that manufactures or sells products.

Cases related to contaminated food served by restaurants occur now and then. Eat This, Not That mentions how the fast-casual Mexican restaurant, Chipotle has faced several lawsuits due to outbreaks of foodborne illnesses from multiple sites across the country. This incident best exemplifies why a restaurant needs to have a product liability policy. 

Liquor Liability Insurance

Liquor liability insurance covers the cost of damages made by a third party in an alcohol-related incident. If your food establishment sells alcohol, your business could be held liable in the event of an alcohol-related accident.

For instance, a report by Tucson mentioned how a North Italian restaurant faced a lawsuit for serving alcohol to an underage driver that led to a fatal crash. You not only want to prevent such incidents but also save your pocket from hefty medical and legal bills.

Employment Practices Liability Insurance (EPLI)

Employment practices liability insurance protects your business from lawsuits filed by employees. These include claims relating to discrimination, workplace torts, and sexual harassment.

An employee can file a case for workplace discrimination or harassment leading your restaurant to incur a significant cost to fight it. Therefore, having EPLI and taking precautions can protect your business from massive losses.

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How Much Does Restaurant Insurance Cost? 

Several different aspects determine the premium for restaurant insurance. These include:

  1. The type of food sold
  1. Cooking methods
  1. Number of employees
  1. Value of business equipment and property
  1. Value of structure

Find the right insurance policy for your restaurant with a local insurance agent.

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