Key Takeaways
- A Business Owners Policy with $1 million in general liability and $100,000 in property coverage runs about $2,149 a year, or $179 a month, for a small full-service restaurant.
- Revenue, payroll, location, the owner’s credit, and liquor sales drive the price.
- Multiple quotes, a clean claims history, fire suppression, a safety program, and bundling policies can all lower the premium.
Restaurant owners in the United States pay around $2,149 per year for a Business Owners Policy with $1,000,000 in general liability coverage and $100,000 in business personal property coverage, or about $179 per month.
Farmer Brown has placed restaurant insurance policies across all 50 states since 1996. Owners can get a quote in minutes using the form below.
That $2,149 figure is for a full-service restaurant with no employees and $150,000 in annual revenue. Prices go up with revenue, number of employees, and location. A restaurant owner with poor credit can pay two or three times that rate.
What restaurant insurance covers
A standard BOP has two main parts. General liability covers bodily injury, property damage, and personal and advertising injury. If a customer slips on a wet floor or gets food poisoning and sues, general liability is what pays for legal defense and any settlement.
Business personal property covers contents such as kitchen equipment, furniture, point-of-sale systems, and inventory. Over 7,000 restaurants catch fire every year in the United States. If a fire destroys the kitchen, this coverage pays to replace it.
Most restaurant BOPs also include a restaurant endorsement covering contamination and food spoilage, typically with a $50,000 limit and a $2,500 deductible.
Business income coverage is also typically included. If a covered event forces a temporary closure, it pays for the revenue lost during that period.
Two other policies come up often for restaurant owners. Liquor liability covers damages caused by intoxicated customers and runs around $538 per year. It is separate from a BOP and only applies if the restaurant serves alcohol. Workers compensation covers workplace injuries, medical bills, and lost wages. It is required in most states once a restaurant has employees, and it averages $1,359 per year across the industry. A worker is injured on the job every seven seconds in the United States.
Restaurant Insurance Cost and What Drives It
What affects the price
Revenue is the biggest driver. The more a restaurant brings in, the more exposure an insurer sees, and the higher the premium. Payroll works the same way.
Location matters more than most owners expect. Rates vary by state because average claim costs and legal environments are not the same across the country.
Credit is the factor that catches people off guard. Insurers run a soft credit check during the quoting process, and the result moves the price. Owners with poor credit can see rates two or three times higher than owners with clean credit profiles. The premium is not just about the restaurant; it is also about the owner.
Liquor sales push the number up further. Once alcohol crosses 50% of total revenue, carriers treat it as a different risk category entirely.
Food service, delivery, and staff
Firstly, the size and location of your restaurant play a significant role. Larger restaurants in areas with high real estate values typically have higher insurance costs due to the increased risk of property damage or theft. Additionally, if your restaurant is located in an area prone to natural disasters like floods or hurricanes, you may face higher premiums.
The type of food service you provide can also affect your insurance costs. For example, if you serve alcohol, you’ll likely need liquor liability insurance, which can increase your premium. Similarly, offering delivery services may necessitate additional auto insurance coverage.
The number of employees you have is another factor. More employees can mean higher workers’ compensation insurance costs. The experience and training of your staff can also impact your rates – well-trained staff can often help reduce the likelihood of accidents, potentially lowering your premiums.
Restaurant insurance costs by coverage level
| Coverage | Estimated Annual Premium |
|---|---|
| $1M GL / $100K property / $150K revenue | $2,149 |
| $1M GL / $200K property / $300K revenue | $3,284 |
| Business Owners Policy (BOP) average | $3,010 |
| Workers compensation average | $1,359 |
| Liquor liability average | $538 |
Note: Premiums depend heavily on location and the personal credit of the business owner. Rates can vary widely. Rates are subject to underwriting acceptance and review. Any quote is not an offer of insurance.
How to get a lower rate in restaurant insurance
While the cost of restaurant insurance is often seen as a necessary expense, there are several strategies you can implement to help reduce these costs.
- Implement a Safety Program: By implementing a comprehensive safety program, you can significantly reduce the likelihood of accidents and claims, lowering your premiums.
- Train Your Staff: Properly trained staff are less likely to make mistakes that lead to insurance claims. Regular training on safe food handling, alcohol service, and emergency procedures can be beneficial.
- Invest in a Security System: A robust security system can deter theft and vandalism, potentially reducing your property insurance rates.
- Bundle Your Policies: Many insurers offer discounts for bundling multiple types of insurance policies. For example, combining your property, liability, and workers’ compensation insurance with one provider can often result in savings.
You can get the most value out of your restaurant insurance policy by taking proactive steps to manage risks and working closely with your insurance agent. Remember, the goal is not just to find the cheapest policy but rather one that offers the best coverage for your needs at a price that fits your budget.
Getting quotes from multiple carriers is the fastest move. Rates vary by carrier even for identical restaurant profiles, so a single quote is rarely the best one available.
A clean claims history helps. Carriers look at how many times a business has filed, and a restaurant with no prior claims qualifies for better pricing than one with a pattern of losses.
Fire suppression systems can earn meaningful discounts. So can raising the deductible. Standard deductibles on restaurant policies run $500 for business personal property and $2,500 for the restaurant endorsement. Moving either of those up reduces the annual cost.
Owners who want to talk through their options before buying can schedule a call with a licensed Farmer Brown agent.
Understanding Restaurant Insurance Cost
Insurance is a crucial part of protecting your restaurant’s future, so it’s worth taking the time to understand the costs and make sure you’re getting the best coverage for your needs. If you’re interested in learning how much restaurant insurance will cost your specific establishment, contact Farmer Brown Insurance Agency today.
Restaurant Insurance Cost FAQs
A Business Owners Policy with $1,000,000 in general liability and $100,000 in business personal property runs about $2,149 a year, or $179 a month, for a full-service restaurant with no employees and $150,000 in revenue. The price goes up with revenue, employees, and location.
Only if the restaurant serves alcohol. It covers damages caused by intoxicated customers, is separate from a BOP, and runs around $538 a year. Once alcohol passes 50% of revenue, carriers treat the restaurant as a different risk category.
In most states, yes, once the restaurant has employees. It covers workplace injuries, medical bills, and lost wages, and averages about $1,359 a year across the industry.
Yes. Insurers run a soft credit check during quoting, and owners with poor credit can see rates two or three times higher than owners with clean credit profiles.
