Types of Restaurant Insurance

You probably already know that choosing the right type of restaurant insurance is crucial for the survival of your food service business.

But how do you know what types of coverage and policies are needed for your particular business?

In this article, we will go through all the different types of restaurant insurance that will cover you for any unexpected event.

From general liability to spoilage coverage, by the end of this article you’ll have a clear grasp of the type of protection that’s needed in your food business.

Restaurant Business Insurance

Running a restaurant is an exciting venture, but it’s not without risks. The potential for unforeseen incidents is high, from property damage and auto accidents to workplace injuries and related lawsuits.

But fear not; restaurant insurance is here to provide peace of mind, securing your business against these various risks that are part and parcel of operating a food establishment.

A comprehensive restaurant insurance policy covers a wide range of incidents, including restaurant insurance covers for:

Property damage

Liability claims

Employee injuries

Food spoilage

Liquor liability

Business interruption

Whether you’re a food truck, cafe, or a large commercial restaurant, the right insurance policy can make all the difference when it comes to managing your unique demands and operational vulnerabilities.

Below, we will discuss the different types of Restaurant Insurance that you might need for your business.

General Liability Coverage

As a restaurant owner, there’s one type of insurance that you simply can’t afford to overlook, and that’s general liability insurance. This is your first line of defense against potential problems.

General liability insurance offers a safety net, covering customer claims of injuries, illnesses, and property damage. It even extends to specific protection against claims of foodborne illnesses, ensuring that you can mitigate costs arising from food poisoning incidents.

Think of it as a shield, protecting your business from the financial impact of legal claims.

Commercial Property Insurance

You have just made a substantial investment in your business. You need to protect your property and investment.

The following types of coverage will be available with your Restaurant Property insurance policy:

Building coverage

This is necessary if you own the building in which your establishment is housed. It will provide coverage for damages to the structure of the building.

Contents Coverage

This provides coverage for the property kept inside your restaurant even if you do not own the building. It is similar to the coverage you would have on your home. Special items or expensive items may require special endorsements to cover these items. This also covers your build out which in most cases is pretty expensive.

Equipment Breakdown Coverage

If you have cooler problems or kitchen equipment breaks down you can opt for this coverage. This coverage will compensate you for repair fees as well as lost income.

Food Spoilage Coverage

One of the biggest problems that restaurants deal with is food spoilage. If you have products that are worth thousands of dollars, would you be able to afford them if you lose them all in one night?

It only takes a couple of hours to lose your meat because of bacteria and consequently trigger a salmonella outbreak, which could destroy your reputation and, later on, your business.

Obtaining this coverage is not expensive, and it’s smart to protect your investment, so make sure you’re covered. An extended power outage or mechanical breakdown could cause you to throw away a lot of food. This insurance coverage will provide compensation for this sort of loss.

Lost Income Coverage

If your restaurant is forced to close temporarily because of an unforeseen event, this insurance will provide a continuation of income. Business interruption insurance is a type of insurance that covers the loss of income that a business suffers after a disaster.

These amounts can be significantly larger than the initial claim itself. Take for instance a small kitchen fire that damages a small portion of your kitchen. The damage claim may only be $50,000 but your restaurant may be closed for months as a result of clean up and repairs.

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

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

Fixed Costs. Operating expenses and other costs that are still being incurred by the property.

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

Extra Expenses. Reimbursement for reasonable expenses. This is in addition to fixed costs. It covers expenses that allow the business to continue operation while the property is being repaired

Assault & Battery Liability Insurance

If a fight breaks out in your establishment, you may be held liable if it can be shown that you failed to provide a safe environment for your customers.

Hiring security guards and bouncers can also increase your exposure to this type of claim in instances of assault and battery claims against you by acts of overzealous bouncers or security guards.

Theft Coverage

Nobody likes to think about the idea of having a dishonest person working for you, but unfortunately it happens. No one is exempt from suffering a theft, that is why we advise you to not disregard this coverage to protect your investment and in the worst case scenario be able to recover what you lost due to a dishonest person.

Liquor Liability Insurance

If your restaurant serves alcohol, liquor liability insurance is essential and not just an optional extra.

Liquor liability insurance coverage typically includes legal costs, medical costs for any injuries, and property damage that might arise from incidents involving intoxicated patrons.

Cost of Coverage

The cost of liquor liability insurance can range from $500 to $2,000 annually, varying with factors such as the type of alcohol served and the size of the business.

In many states, having liquor liability insurance is also a requirement for obtaining a liquor license.

Workers Compensation Insurance

Accidents can occur in the hustle and bustle of a restaurant’s daily operations. Workers compensation insurance is, therefore, a crucial policy for any restaurant with employees. It’s not just a good practice, it’s legally required.

This form of insurance covers the cost of medical expenses, rehabilitation, and lost wages for injured employees. Workers’ compensation insurance costs depend on the restaurant’s payroll amount and can range between $0.75 and $2 per $100 of payroll. Therefore, as a restaurant owner, you must be aware of your local laws and ensure that you’re fully compliant.

Specialty Restaurant Insurance Options

Every restaurant is unique, and so are its insurance needs. Whether you operate a mobile food truck, a theme restaurant, or offer upscale dining experiences, your insurance coverage should match your specific operational model.

Specialty insurance options are designed to cater to these varying needs, offering coverage to shield your business from the unique risks it faces.

Mobile food trucks and pop-up restaurants, for instance, require insurance that covers the specific risks associated with their mobility and temporary nature. On the other hand, restaurants in high risk locations such as high fire risk areas need specialized coverages that address the potential risks they face.

Commercial Auto Coverage for Food Businesses

For restaurants that use vehicles for delivery, catering, or for food trucks, commercial auto insurance is a must-have.

Hired and non-owned auto liability insurance is another key coverage. It shields against financial liabilities resulting from damages caused by vehicles not owned by them, such as rental cars or employee-owned vehicles.

While this insurance protects the business itself, employees must carry their auto insurance to cover personal damages.

Cyber Liability Insurance

In this digital age, cyber threats are a reality for every type of business, including restaurants. Cyber liability insurance offers protection against financial losses from data breaches, cyber extortion, and technology disruptions that could otherwise devastate a restaurant’s finances and operations.

This coverage extends to legal fees, customer notifications, and credit monitoring services to mitigate the impacts of compromised customer data. It also safeguards Point of Sale systems, offering financial protection in case of security breaches that could result in financial data compromise.

Furthermore, it assists in managing reputation damage through coverage for public relations efforts to rebuild customer trust.

Choosing The Right Insurance Policy For Your Restaurant

Choosing the right insurance policy might seem like a daunting task. However, an experienced insurance agent should be able to assess your restaurant’s unique risks, consult with an experienced insurance agent, and balance the cost with the right level of coverage.

A good insurance agent will begin by assessing your restaurant’s unique risks. They will consider factors like:

Your restaurant’s unique risks: From slips to food-related illnesses, all these risks can significantly impact your business. An accurate risk assessment requires detailed information about your restaurant’s space, operations, and assets.

Balancing costs and coverage: While ensuring that your restaurant is adequately covered is important, it’s equally important to consider the insurance cost. While bundled insurance packages may offer lower costs, they may not provide sufficient coverage. Therefore, comparing these packages with individual policies for equivalent protection is crucial.

Choose a reputable insurance company: It’s also important to do your due diligence with your chosen agent. Check reviews online, ask for customer references, and get multiple quotes to compare.

Frequently Asked Questions

What is the importance of general liability insurance for restaurants?

General liability insurance is crucial for restaurants as it protects them from various claims like injuries, foodborne illnesses, and reputation damage, helping to minimize potential financial losses.

Why is workers' compensation insurance necessary for restaurants?

Workers compensation insurance is necessary for restaurants because it is a legal requirement for any restaurant with employees and it covers medical expenses, rehabilitation, and lost wages for injured employees. This ensures compliance with the law and provides financial protection for workers and the restaurant.

What does property insurance cover in a restaurant?

Property insurance covers essential restaurant assets such as kitchen equipment, furniture, and the building itself, providing reimbursement for repairs or replacements in case of damage or theft. It is important to safeguard your restaurant's valuable assets.

How does cyber liability insurance protect restaurants?

Cyber liability insurance protects restaurants by offering financial coverage for data breaches, cyber extortion, technology disruptions, legal fees, and customer notification services to mitigate the impact of compromised customer data.

What factors influence the cost of restaurant insurance?

The cost of restaurant insurance is influenced by factors such as the type of facility, location, coverage needed, and the value of the business's property. These factors play a key role in determining insurance costs.

Get A Restaurant Insurance Quote Today

If you want policy advice or an exact cost for a restaurant insurance, we encourage you to get in touch with us. Why work with us? Many insurance agencies are equipped to deal with only the most basic insurance coverage, like general liability, auto insurance, and worker’s compensation.

We understand restaurateurs and the immense risks they take when they provide their necessary services. In return, we help them find the rates and policies that work for them. Our agents can reduce the prices through additional discounts of 10% to 15% from the instant quotes you receive, so please take the time to call us to review your quotes. We provide the finest Comprehensive plans for your restaurant business by providing: