What is restaurant insurance?
Every restauranteur wishes to see their restaurant to be the best in the business. Very often, they stick to what they seek – serving delicious food. But a restaurant’s priority shouldn’t just end there. A restauranteur will only have a foolproof plan if it includes restaurant business insurance.
Here are a few of the possible threats that restaurants may face-
- Food borne illnesses
- Workplace injuries / employee-related risks
- Fire and storm damage
For a business with frequent customer flow, it is prone to face multiple threats in a single day. These threats include burns from hot pans, injuries from a slip in the kitchen and cut from sharp knives. Restaurateurs try their best to prevent such risks. But if the risks do knock on your doorsteps, it can cost your business hundreds and thousands of dollars. To safeguard your business from such risks, you can opt for a restaurant business insurance.
In this article
Who needs restaurant insurance?
Businesses that center around cooking and serving food and drinks to its customers need restaurant insurance the most. Companies that commonly need restaurant liability insurance are:
- Bars and pubs
- Food truck
- Fast food franchises
- Coffee and gourmet drink shops
What policies does restaurant insurance cover?
Business Owners Policy (BOP):
A business owners policy is a package of three critical insurance policies, namely, commercial property, business interruption, and general commercial liability. The liability insurance covers claims against any bodily injury to third-party and their property.
Workers Compensation Insurance:
A workers compensation insurance serves to protect employees when they face injuries while on the job. With Texas as an exception, this policy is mandatory for all other states. It covers costs for all work-related injuries and expenses such as medical bills, legal fees, and lost wages.
As a restaurant owner, you are liable to face a multitude of risks – employee-related issues being on the top of the list. Be it getting injured while taking the food out of the oven or falling off the staircase while rushing to the pantry, this policy helps to protect and cover costs incurred against such risks.
Commercial Auto Insurance:
A commercial auto insurance makes sure to provide coverage for the medical bills, cost of property damage, and possible lawsuits caused during an accident. This policy is generally for businesses that own a vehicle.
According to Forbes, online food delivery will soon be a $200 billion industry. Most of the restaurants, especially food truck businesses, use vehicles to serve to their customers daily. This policy provides coverages for possible liabilities if your food truck is responsible for an accident.
Commercial Property Insurance:
A commercial property insurance helps to protect against damages of business assets.
Accidents happen – anytime and anywhere. For example- your chef is cooking the meat when suddenly a fire ignites in a flash, leaving the chef with burns and the kitchen tools ruined. At such cases, this policy helps to cover costs for the damaged kitchenware.
Commercial General Liability (CGL) Insurance:
A commercial general liability insurance serves to cover property damage or bodily injury claims that arise from accidents.
Restaurants face a myriad of risks and lawsuits against them. According to Eater, back in 1993, McDonald was filed for a coffee lawsuit by a woman who spilled hot coffee on herself. As a restauranteur, if you want to avoid covering for such third-party claims out of your pocket, you need to opt for CGL policy. You can endorse cyber liability insurance to your CGL policy to protect your customers’ sensitive information such as, credit card information.
Commercial Umbrella Insurance:
A commercial umbrella insurance offers to provide extra limits or extends liability coverages when the primary liabilities policies such as commercial auto, commercial property, and general liability policy fail to cover against the third-party claims.
For example- the chandelier placed in the center of your restaurant falls off, destroying all the valuables of your restaurant. When your commercial property insurance doesn’t suffice to cover up for the property damages it made, umbrella policy swoops in to clean up the remaining cost it incurred off the restaurant.
Product Liability Insurance:
A product liability insurance helps businesses cover claims if the food products that they sell were to make someone severely ill. This policy is mainly for businesses that manufacture or sell products.
Cases related to contaminated food served by the restaurants come up every now and then. As per Nolo, in 2015, Chipotle was sued for outbreaks of food-poisoning incidents from one of its Mexican restaurants. This incident best exemplifies why restaurant needs to have product liability policy with them.
According to USAToday, Burger King was sued by a vegan, Phillip Williams, for serving food that was cooked on the same grill where beef burgers are made. The customer claimed that the food was contaminated. If you want to prevent your restaurant facing lawsuits on food contamination, you can add food spoilage and contamination coverage as an endorsement to your product liability insurance.
Liquor Liability Insurance:
A liquor liability insurance helps to cover the cost of the damage brought by a third-party in an alcohol-related accident.
When it comes to serving alcohol to your customers, you need to be responsible in doing so, always. According to Tucson, North Italia restaurant faced a lawsuit for serving alcohol to an underage driver. If you don’t want your restaurant to get filed for such cases, make sure you have a liquor liability policy to get you covered.
Employment Practices Liability Insurance:
According to Iamagazine, data by the Equal Employment Opportunity Commission reports that 90,000 EPLI cases come out every year where each case charges an average of $450,000. Every restaurant should take it as a concern when it comes to issues raised by its employees. The higher the number of employees your restaurant has, the more the odds are for the risks to pop-up.
How much does the restaurant insurance cost?
Restaurant insurance considers several factors in determining its cost. It includes: