Your restaurant handles a lot. Some of your work is common to most companies, like managing employees and serving customers — but other tasks are unique to your industry. Owning a restaurant carries specific risks, as with all businesses. One of the best actions you can take to minimize your risk is to buy restaurant insurance.
Insurance for restaurants is vital, but it can be challenging to determine the coverage you need. This guide to restaurant insurance can help you understand your options, assess your needs and find the policy that works best for you.
Do Restaurants Need Insurance?
As a restaurant owner, you might be concerned about natural disasters, grease fires, food poisoning and other issues that could expose you to lawsuits. Restaurant business insurance is necessary to protect yourself and your restaurant from claims. Having the right restaurant insurance can give you peace of mind and protect you from specific perils.
The benefits of having the right coverage can far outweigh the costs if your restaurant is ever targeted in a claim or lawsuit. Having adequate coverage for your restaurant can:
- Protect against financial losses from claims of bodily injury or damage to property.
- Prevent issues with legal authorities.
- Help you recoup the loss of spoiled food because of a power outage.
- Keep your business open after a natural disaster or vandalism damages your equipment.
At some point, you’ll find yourself in a situation where you’re glad you have restaurant insurance.
What Types of Insurance Are Necessary for Your Restaurant?
Some kinds of restaurant insurance are required by law, while others are optional and may be better suited for one situation than another. To figure out which types of insurance are right for you, you need to be familiar with your needs and available coverage options.
What does restaurant insurance cover? Take a look at the most crucial kinds of restaurant insurance to discover the coverage they provide:
1. General Liability Insurance
General liability coverage is the bare minimum policy that all restaurants should have. An occasional slip is bound to happen with your employees rushing around serving customers. Employees and customers can fall in a restaurant, making general liability insurance necessary.
If an injury or accident occurs on your property, restaurant liability insurance protects you from financial losses due to a lawsuit, legal fees and other costs associated with a claim.
2. Workers’ Compensation Insurance
Your restaurant employees are vital for everyday operation. As a restaurant owner, you are responsible for providing your employees with a safe place to work. According to the Bureau of Labor Statistics, over 93,000 nonfatal injuries and illnesses occurred among workers in full-service restaurants in 2019. Workers’ compensation insurance for restaurants helps you and your employees pay for medical expenses that might arise from work-related injuries.
Workers’ compensation insurance also pays for the cost of rehabilitation and any lost wages. Each state has different requirements for workers’ compensation coverage, but nearly all restaurants must carry this insurance. If it is not required in your state, this kind of insurance is still beneficial to have.
3. Commercial Vehicle Insurance
If your restaurant has vehicles for catering, delivery or picking up supplies, you need protection from accidents that may occur on the road. Commercial auto insurance covers business-owned and -hired vehicles, as well as your employees’ vehicles they use to make deliveries for your restaurant. This policy can cover vehicle repairs if your employee is found to be at fault after being in an accident while driving a business-owned vehicle.
4. Product Liability Insurance
Your restaurant serves a large quantity of food and drinks every day. While you follow the proper sanitary procedures to provide your customers with the best dining experience, illnesses can still occur. If a customer consumes your food and gets sick, you might need product liability insurance against the legal costs.
Product liability insurance for restaurants protects you from claims resulting from food-borne illnesses a customer contracts. It covers all the food you sell, whether it is eaten on or off your restaurant’s premises.
5. Liquor Liability Insurance
If a drunk customer injures someone, your restaurant could be blamed for overserving alcohol. General liability coverage excludes legal costs arising from a situation where you caused or contributed to a customer’s intoxication. Liquor liability insurance covers these costs if your restaurant is named in a lawsuit. This optional coverage could be vital if your restaurant serves alcohol.
6. Property Insurance
If a grease fire, natural disaster or other disaster strikes your equipment, furniture or building, you could be looking at significant costs and downtime. Commercial property insurance for restaurants covers your physical business assets in case of accidents like:
- Sewer backup
- Utility interruption
- Equipment breakdown
How to Choose the Right Restaurant Insurance
With so many insurance options to choose from, getting your restaurant started can seem a bit overwhelming. Your restaurant has unique features that require tailored insurance solutions. Here are some guidelines for finding the best restaurant insurance policy for your needs:
1. Determine Your Risks
Restaurants share common risks with other industries, like slips and falls, automobile accidents and employee injuries. Other risks like food-borne illnesses are unique to the restaurant industry. You’ll want to purchase insurance policies that cover all your potential risks.
To discover your restaurant’s risks, look at what aspects of your daily operations are especially vulnerable to lawsuits and claims. For example, if deliveries make up a large portion of your sales, commercial vehicle insurance should be high on your priority list. If your restaurant serves a lot of alcohol, liquor liability insurance is a must. While many policies are put in place to protect your business from losing money, Commercial Fidelity Insurance is intended to help your business recover from crime and fraud losses from employees and restaurant guests.
Once you know your restaurant’s specific risks, make a restaurant insurance checklist. When you search for quotes, you’ll have everything you need in one place.
2. Gather Information
Before you contact any insurance companies, compile all the relevant information about your restaurant that could influence your rates. Insurers will ask for details like:
- The type of property.
- Your restaurant’s size in square feet.
- Your volume of sales.
- The activities and entertainment you host.
- Your hours of operation.
- The volume of alcohol sales.
- Your lease details.
3. Bundle Carefully
Many insurance companies offer coverage bundles, a combination of coverage that can be semi-customized to fit your needs. Carefully read the fine print and quality of these insurance options. In insurance, it can be incredibly costly to skip the terms and conditions.
Ensure that the bundled coverage is as sufficient as individual policies on their own. Compare prices, specifications and standards for both stand-alone and bundled policies. This can save you a lot of inconveniences later on.
4. Be Particular
The cost of insurance should be a factor in your choice, but only one of many. Your restaurant needs adequate coverage for all kinds of potential risks. The least expensive insurance policy might not be the best for your needs because it could exclude coverage for a specific threat to which your restaurant is especially vulnerable. The most expensive option might not be the best either.
Price does matter, so spend ample time shopping around and gathering quotes. You’ll want to balance cost with coverage to ensure your restaurant has the protection it needs.
Contact Strock Insurance for Restaurant Insurance
As a restaurant owner, you know how crucial it is to have business insurance for protection against potential accidents and injuries. You can’t always predict disaster, but you can lessen its impact with a restaurant insurance policy that helps you bounce back and keep your doors open.
Of course, every restaurant’s needs are different. Whether you rely heavily on deliveries or operate a particular type of restaurant, working with a local insurance provider can help you determine the best level of coverage for your needs.
Strock Insurance specializes in restaurant insurance and has been working with restaurant owners in central Pennsylvania since 1983. We are dedicated to providing the best insurance coverage on the market at competitive prices. Contact your local agent to learn more about our restaurant insurance options. You can also request a quote and let us help you find the right coverage today.
