What type of coverage do you need for your restaurant?

It’s a special type of Business Owner’s Policy designed for restaurant owners. A BOP is simply a combination of Liability and Property Insurance for your business’s specific needs.

Property Coverage

Property insurance covers you in case of fire or burglary within your premises. Any loss that occurs in this way will be compensated, helping you avoid significant losses and allowing you to rebuild your business.

If you rent the establishment, you need to talk to your landlord about the contract specification regarding property insurance and determine who will be responsible for what. However, you must ensure the money you invested in building your restaurant is covered, and that’s the purpose of a Tenant Improvements & Betterments policy.

Types of Property Coverage:

Replacement Cost : Pays the cost of repairing or replacing the property regardless of depreciation or appreciation.

Actual Cash Value: Pays the cost of repairing or replacing the property minus depreciation.

Personal Property Coverage

Insuring your personal property will help to rebuild your business in case of loss. It will cover you for what’s inside your restaurant in case of peril. In other words, you will have coverage for your tables, chairs, kitchen equipment, etc.

Remember to take pictures of your items and ensure you have a clear idea of the price so you can get the appropriate coverage.

Personal Property Insurance Includes:

Stoves, Grills, Ovens and Other Appliances

Refrigeration and Air Condition Systems

Furniture and Furnishing

Commercial Auto Insurance

If your restaurant uses a vehicle for deliveries, catering, or any business-related transportation, a commercial auto insurance policy is essential. Personal auto insurance typically won’t cover accidents or damages that occur while using your vehicle for commercial purposes.

With commercial auto coverage, you’re protected against potential liabilities, property damage, and injuries resulting from a business-related driving incident.

Damage to Your Vehicles

Injury to Someone Else

General Liability Coverage

This applies to third parties within your premises, such as customers. They are liable for compensation if they get hurt or get food poisoning while in your restaurant.

General Liability Insurance is a must-have to protect yourself from this financial cost of Liability insurance will take care of your defense and settlement expenses.

General Liability Coverage covers your Customers within your premises from:

Getting Hurt

Liquor liability Insurance

Most restaurants serve alcohol separately. If you serve alcohol at your establishment, you need liquor insurance coverage in addition to your beer or liquor license.

So, if you are selling alcohol at your establishment, you will need this coverage to protect against the actions or eventualities caused by intoxicated people on your premises. This policy will be based on your gross liquor sales and the coverage limits you need.

Liquor Liability Insurance Protects any Restaurant that:

Serve

Sell

Distribute

Workers’ Compensation Insurance

Chefs are constantly exposed to hot surfaces, sharp knives, and open flames, increasing the risk of burns, cuts, and other injuries. Servers, bartenders, and kitchen staff often work in fast-paced environments where slips, trips, and falls are common.

Because your employees are essential to your operations, it’s your responsibility to protect their well-being. Workers’ compensation insurance provides financial support if a staff member suffers a work-related injury or illness.

Medical Care

Disability

Death

Food Contamination Insurance or Spoilage Coverage

Since restaurants buy food in bulk, they rely heavily on refrigerators and freezers to keep the food fresh. Power loss for long hours may cause these foods to go bad or cause losses. Food contamination insurance compensates the owner in the event of such a scenario, eliminating that genre of loss as a part of the restaurant’s financial vulnerability.

Food spoilage is crucial coverage for when your food goes bad, which could be a considerable expense depending on the type of food you serve. Imagine 50 steaks going bad; that is a horrible day as a restaurant owner.

Produce (Agricultural)

Dairy

Power Outage Coverage

Since restaurants buy food in bulk, they rely heavily on refrigerators and freezers to keep the food fresh. As power loss for long hours may cause these foods to go bad or cause losses, you must ensure that you can replace the products to continue with your business.

For example, if you have fish or raw meat products in your fridge, keeping the cold chain for each product is essential for safe consumption. Therefore, the policy must protect you when you lose power in your power box or from the power station because both can significantly impact your operations. 

Loss of Power From Your Power Box

Business Interruption Insurance

A minor disaster can lead to major financial setbacks. Business interruption insurance covers lost income if your restaurant has to temporarily close due to events like fires, storms, or other covered incidents.

For example, a small kitchen fire might only cause $50,000 in property damage, but if your restaurant is closed for months, the lost revenue could be much higher. This policy helps cover lost profits, operating expenses, and payroll during the downtime, ensuring your business can recover without severe financial strain.

The following are typically covered under a business interruption insurance policy:

Profits: Profits that would have been earned (based on prior months’ financial statements.

Temporary Location: Some policies cover the extra expenses for moving to, and operating from, a temporary location.

Bailees’ Liability

If you have a coat check-in, you can imagine giving the wrong mink coat to a customer could be a very costly mistake. Bailees Liability is specific coverage for such a case and any other that involves damage to the customer’s property while under the care of a bailee.