If you own or plan to establish a restaurant, it's imperative to consider liability issues that may arise while running your business. Therefore, you should consider obtaining restaurant business insurance. Running a restaurant involves numerous risks, such as employee burns from using deep fryers, slip-and-fall accidents on wet floors, or allergen-related incidents.
These situations may result in a lawsuit or require you to compensate workers. For that reason, it's crucial to have restaurant insurance to ensure you're protected from unforeseen accidents and mistakes. In this article, we'll discuss what restaurant insurance entails, how much it costs, and where you can purchase it.
What Insurance Do Restaurants Need?
If you operate a restaurant, it's essential to have various types of insurance coverage to safeguard against potential risks and liabilities.
General Liability
General liability insurance for restaurants is an important tool to protect a business from unforeseen circumstances. This type of coverage provides financial reimbursement to customers who suffer bodily injury, property damage, or advertising injuries, such as copyright infringement, if they decide to take legal action against the restaurant.
If a client sustains an injury on your restaurant premises, such as slipping and falling due to a slippery floor or tripping hazard, general liability insurance may cover the cost of their medical bills, lost wages, and other related expenses should they decide to sue you. The policy also covers any associated legal defense costs.
Investing in quality general liability insurance is essential to protecting yourself and your business from potential lawsuits.
Commercial Property Insurance
Commercial property insurance covers your buildings and their content, including tools and other equipment, against various risks, including fire, explosions, burst pipes, vandalism, storms, and theft. In general, damages caused by earthquakes and floods aren't covered, but you may have the option to add them to your policy if you reside in an area prone to these natural disasters. As a restaurant owner, it's crucial to have commercial property insurance to safeguard your physical space and the equipment stored within it, regardless of whether you own or rent the space.
Liquor liability insurance
If your restaurant serves alcohol, you'll also need to obtain liquor insurance. Liquor liability insurance is defined as coverage for bodily injury or property damage that an intoxicated person causes to themselves or another patron after being served alcohol by a policyholder. The coverage varies from state to state because each state interprets who's liable for damages or injuries differently.
In many states, liquor liability insurance is required when you apply for a liquor license, so it's a good idea to make sure you obtain it before applying for a liquor license.
Commercial Auto Insurance
Commercial auto insurance is essential for anyone using a vehicle for anything related to their job. This type of insurance covers damages caused by an accident, medical expenses, legal fees, and more.
It also helps protect you from financial losses incurred by other drivers if they don't have sufficient insurance. Without commercial auto insurance, you could be liable for any costs that arise as a result of an accident.
In general, personal auto insurance policies don't cover any liabilities associated with the business use of your vehicle. And in some cases, an insurance company may even terminate your policy if they find out you've been using it for business-related activities. As such, it's essential to know what types of coverage are included in a commercial auto insurance policy before signing up to ensure all your needs are covered.
Workers Compensation Insurance
Working in the restaurant industry can be risky, and those working in commercial kitchens are prone to workplace injuries. According to the U.S. Bureau of Labor Statistics, restaurant workers experience higher rates of injury than any other sector of the economy, except for construction, manufacturing, and transportation. That's why it's so important for restaurant owners and operators to have workers' compensation insurance coverage to protect their employees and themselves.
Restaurant owners need to be aware that even if they're running the business themselves or with their family members as self-employed independent contractors, they still need appropriate workers' compensation insurance coverage in case of an injury, illness, or death at work. If someone gets injured on the job and the restaurant doesn't have proper insurance coverage, they could end up facing an expensive lawsuit or hefty medical bills that could cripple business operations.
When selecting a workers' comp insurance policy for your restaurant, choose one that provides comprehensive coverage tailored to your specific needs. Look for policies that offer protection against all types of employee-related accidents and illnesses, including damages from slips, trips, and falls, as well as chemical burns or long-term illnesses caused by exposure to hazardous materials. It's also important to make sure you find a policy with competitive rates so you can get the most bang for your buck without sacrificing quality coverage.
Employment Practices Liability Insurance
EPLI, or Employment Practices Liability Insurance, protects restaurant owners from claims and lawsuits related to harassment, discrimination, wrongful termination, and wage discrimination. Harassment and wage discrimination are among the most common lawsuits filed against restaurants, and obtaining EPLI coverage can help protect your business from these types of claims.
Business Owners’ Policy
Another option to consider is a Business Owners Policy (BOP), which can bundle property, general liability coverage, and business interruption insurance into one convenient policy. Some insurers may let you personalize business owner's insurance by bundling in additional policies, such as worker's comp, commercial auto insurance, professional liability insurance, and cyber insurance.
This is a good option for restaurants with less than $10 million in annual revenue and fewer than 100 employees. However, if your restaurant generates more than $10 million in annual revenue or employs more than 100 people, you'll need to obtain separate policies for general liability, commercial property, and business interruption insurance.
Keep in mind that these are only guidelines, and the actual eligibility requirements may vary by insurer. The ability to secure a business owner's policy may also depend on how risky the insurer views the business.
Garage Keepers Insurance
Garage keepers insurance is an important type of coverage for restaurants that offer valet parking services or have a parking lot for customers to use. This insurance protects the restaurant from financial loss in the event of damage or theft to vehicles parked on the property, including those that are valet-parked. It can also protect against third-party claims for vehicle loss or damage, which can impact the restaurant's reputation.
This type of insurance covers specific risks, including fire, theft, vandalism, and collisions. It can also provide coverage for the cost of defending against a lawsuit if a customer or other third party files a claim against the restaurant for damages to their vehicle while parked at the restaurant's parking lot. Without this coverage, a restaurant may be held liable for any damages to a vehicle while it's in its care, custody, or control.
What Is Restaurant Liability Insurance?
Restaurant liability insurance safeguards a restaurant against financial losses from general third-party claims of bodily injury or property damage. It also includes coverage for product liability and liquor liability within a general liability insurance policy. In general, restaurant liability insurance is intended to protect a company's finances in the event of a lawsuit against the business.
These policies may be comprehensive, but the term also may be used by some insurers to indicate any of the insurance types that fall under this category. They cover incidents such as slip-and-fall accidents, food poisoning, property damage, advertising injury, and medical payments.
6 Tips for Shopping Restaurant Insurance
Here are some tips for shopping for restaurant insurance:
- Assess your risks: Before shopping for restaurant insurance, you need to identify the potential risks and liabilities your business could face. This includes risks related to property damage, liability claims, worker's compensation, and other risks specific to your restaurant. By assessing your risks, you can determine what types of coverage you need and how much coverage you require.
- Research insurance providers: Take the time to research insurance providers that specialize in restaurant insurance. Look for providers that have experience working with restaurants and offer policies tailored to the specific needs of restaurant owners. Read reviews and ask for recommendations from other restaurant owners.
- Compare quotes: Get quotes from multiple insurance providers and compare coverage and costs. Be sure to ask for a detailed breakdown of coverage and any exclusions so you can compare policies. Don't just choose the cheapest policy, as it may not provide the coverage you need.
- Work with an insurance agent or broker: Consider working with an insurance agent or broker who specializes in restaurant insurance. They can help you assess your risks, identify coverage needs, and navigate the insurance buying process. An insurance agent or broker can also help you find the best policies at competitive rates.
- Understand the policy terms: Read the policy carefully, and make sure you understand the terms and conditions. Be sure to ask questions if anything is unclear. Pay attention to coverage limits, deductibles, and any exclusions. Make sure the policy provides the coverage you need at a cost you can afford.
- Review and update your policy regularly: Once you've purchased a policy, review it and update it as needed. As your restaurant grows and evolves, your insurance needs may change. Make sure your policy provides the coverage you need and that you aren't paying for coverage you don't need.
Best Restaurant Insurance Providers
Simply Business
Simply Business is an insurance provider that offers a range of policies to meet the needs of small business owners, including restaurants. It's an excellent choice for restaurant owners looking for affordable and customizable coverage.
One of the main advantages of Simply Business is that it offers simple policies tailored to the needs of business owners. This means restaurant owners can customize their policy to meet their unique needs and budget. For example, they can add coverage for liquor liability, equipment breakdown, or business interruption insurance.
CoverWallet
CoverWallet is an insurance brokerage and a recommended option for restaurant owners who want to compare quotes from multiple insurance carriers. The platform provides a streamlined process for getting insurance quotes, with the ability to compare coverage and rates from a variety of insurers.
This can save restaurant owners valuable time and effort in the search for the best insurance policy to meet their specific needs. CoverWallet offers a user-friendly interface, making it easy to understand policy options and coverage terms.
The Hartford
The Hartford is a trusted name in the insurance world, offering reliable coverage and service to its customers for over two centuries. With an impressive track record of successful client relationships, The Hartford continues to be one of the most sought-after insurance carriers.
Restaurants can feel secure choosing The Hartford for their business needs, as it offers comprehensive coverage with customizable options that can be tailored to fit any situation. Whether it's property damage protection, liability coverage, or something else, The Hartford has you covered.
Plus, with convenient payment plans and friendly customer support staff, you'll never have to worry about being left on your own when filing a claim or negotiating policy terms. With The Hartford's commitment to quality and reliability, you know your restaurant is safe from any unfortunate accidents or incidents.
NEXT
NEXT Insurance is a great choice for restaurants looking for a digital service provider that offers comprehensive coverage at competitive rates. With its user-friendly platform, restaurant owners can obtain quotes and purchase policies tailored to their specific needs.
The company provides general liability insurance, property insurance, professional liability insurance, worker's compensation, and commercial auto insurance, all under one roof. It understands the unique risks associated with the restaurant industry and offers coverage options that address them. NEXT's policies are designed to be flexible, allowing restaurant owners to make changes to their coverage as their business evolves.
Carefully Consider the Best Insurance For Your Restaurant’s Needs
Restaurant insurance is a critical investment for any restaurant owner, as it protects their business and assets from various risks and liabilities. With so many types of insurance available, restaurant owners must evaluate their needs and choose the right coverage that will give them peace of mind and protection. By working with reputable industry leaders, such as Simply Business, CoverWallet, The Hartford, and NEXT, restaurant owners can get the coverage they need to safeguard their businesses and thrive in a competitive industry.
About The Author
Edited by:
Lisa Koosis
•
Insurance Expert
