Discover why restaurant insurance is crucial for protecting your business from potential risks and liabilities. Learn about coverage options and how to choose the right policy.
Sponsored by The Conley Financial Group
Owning a restaurant is a challenging but rewarding way to make a living. As you build your restaurant business, it is important to have the right insurance in place to protect your investment.
You can get restaurant insurance by buying a business owners policy (BOP), which packages together three essential coverage types for less cost than buying them separately:
Property insurance
Business interruption insurance
From there you can add on customized coverage for your restaurant business.
What Does Restaurant Insurance Cover?
General liability insurance is perhaps the most important coverage in a restaurant insurance policy. Because your customers are consuming foods and beverages, you’re always at risk of being sued if someone says your food made them sick.
Liability insurance also covers you if someone is injured in your restaurant, or if your business is legally liable for property damage to someone else. The liability portion of a BOP can also provide you with funds to pay a settlement or court judgment and can cover your lawyer fees.
A BOP also provides commercial property insurance. This covers damage to the restaurant building if you own it, and other property, such as kitchen equipment.
Other coverage types that you may want for restaurant insurance are:
Business interruption insurance. If your business cannot open due to a problem covered by your policy (like a fire), business interruption insurance helps replace your lost income and other expenses, such as relocation costs to a temporary location.Commercial crime insurance. Crime-related problems such as burglary, forgery, fraud (including computer fraud), robbery and employee dishonesty are typically not covered by commercial property insurance. Commercial crime insurance covers these types of problems and can help your restaurant recover from crime-related financial losses.
Extra expense insurance. Pays expenses, such as rent for temporary quarters.
Food contamination endorsement. If your restaurant is shut down by a health board due to a food-borne illness outbreak, this covers expenses such as lost income, replacing contaminated food, medical tests and vaccinations for employees, equipment cleaning, and advertising to restore your restaurant’s reputation.
Food spoilage coverage. Covers the costs of food you lost to an incident beyond your control, such as a long power outage or refrigerator equipment failure.
Liquor liability coverage. Liquor liability insurance covers bodily injury or property damage caused by a drunk customer who was served the liquor at your business.
Mechanical breakdown. Covers the cost of repairing the breakdown to everything from your boilers and piping to electrical machines.
Workers compensation insurance. If your employee gets sick or injured while performing job-related duties, workers compensation insurance helps cover the cost of expenses such as medical bills, physical therapy, lost wages, disability and death benefits. Most states require businesses to buy workers comp, even if you only have one employee.
What Other Types of Insurance Does a Restaurant Need?
You may also need these insurance types:
Commercial auto insurance. You’ll need commercial auto insurance if you have a work vehicle. It includes liability coverage, which pays for property damage and injuries you accidentally cause to others. You can also get coverage for injuries to you and your passenger as well as coverage to repair or replace your work car if it’s damaged in a car accident or other types of problems, like theft or severe weather.
Cyber liability insurance. If your restaurant is the victim of a cyber attack, such as a data breach or cyber extortion, cyber liability insurance helps cover expenses such as data recovery, investigative services, lost income and lawsuits due to privacy breaches.
Employment practices liability insurance. Protects your restaurant from employment-related claims, such as discrimination, harassment and wrongful termination. Employment practices liability insurance should not be confused with employer’s liability insurance.
How Much Does Restaurant Insurance Cost?
Expect to pay about $175 a month for a business owners policy with $1 million in liability insurance, according to Insureon.
The cost of restaurant insurance varies depending on several factors, including the type of facility you own, where the restaurant is located, the amount of coverage you need and the value of your business’s property.
Why Is Restaurant Insurance Important?
If you own a restaurant, the odds are good that it is a main—or only—source of income in your life. Imagine an event that caused the restaurant to suddenly shut down or be sued: Could you financially survive? If so, for how long?
With proper business insurance, you can financially recover in the wake of a disaster, such as a fire that destroys your business.
In addition, restaurant insurance provides the funding to keep your business afloat if someone sues you.
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