Small Business Brief


Keeping More Than Your Dishes Covered: 5 Restaurant Insurance Policies You Need

5 Restaurant Insurance Policies You Need to Cover Your Business

When it comes to restaurant ownership, there are plenty of risks to cover. Are all of them covered under your insurance? Find out the essential restaurant insurance policies every restaurant should own.

Opening a new restaurant can be an exciting new business venture. People are constantly looking for new and interesting restaurant experiences.

However, it’s no secret that running a restaurant comes with risks.

Before you can be successful in the restaurant industry, you need to know the costs of opening a small business. Although insurance is just one expense, it is vital that you have the proper coverage.

When it comes to restaurant ownership, there are plenty of risks to cover, from slips and falls to bar fights. Are all of them covered under your restaurant insurance? When are you liable for your employees’ actions?

When you speak with an insurance agent, make sure you ask these important questions.

Below you will find a list of five insurance policies you need before you can celebrate your grand opening.

The Importance of Insurance

Your restaurant is one of your greatest assets. You have an invested interested in making sure that it operates smoothly.

However, accidents do happen. You may likely have to deal with property damage, slip and fall cases, or even a tornado.

Above is just a small list of insurance policies that you should purchase before you open your doors to the public. You may wish to look into life insurance or loss of business insurance policies.

Bar and restaurant insurance is essential for a successful business experience.

Restaurant owners must worry about the safety of their customers, employees, and property. Although the price tag can seem shocking, you do not want to operate a restaurant without insurance. Without proper coverage, your restaurant could be destined for failure, a lawsuit, or both.

General Liability Insurance

As a food establishment, you are in direct contact with the general public. People from many different walks of life will walk through your doors on a daily basis.

Some people will take any chance they get to file a lawsuit. You want to make sure that your business is protected from the financial damage a lawsuit can bring.

General liability insurance will protect your business in the event of third-party claims. These can be as simple as a slip and fall or food born illness cases.

General liability insurance will cover the following:

  • Legal fees: If someone has filed a lawsuit against you, whether it be real or frivolous, the cost of the suit and judgment will be covered.
  • Property damage: Any property for which you are liable, such as buildings, furniture, or even rented property is covered.
  • Personal injury: You may be held liable for libel, slander, or any other damage to a person’s rights. For example, if you produce an advertisement that induces financial losses for another business or person, you may be held liable for their injuries.
  • Medical expenses: If a person other than an employee is injured in your establishment, your general liability coverage will cover the cost of any medical expenses, such as an ambulance ride.

Of course, you will only be covered up to the limits of your policy. Make sure to speak with an insurance agent to find out how much coverage you should purchase.

Property Insurance

Operating a restaurant is an expensive investment. You probably have a mortgage on a building as well as ovens, stoves, and other equipment.

Your livelihood depends on these investments.

What happens if restaurant property is damaged in the event of a fire, vandalism, storm, or any other event? This is every restaurant owner’s worst nightmare. Your livelihood has been destroyed.

Damage to equipment, furniture, buildings, or other property is covered by property insurance.

Each day of operation counts. Property insurance protects your livelihood by making sure that you can open your doors again after a tragic natural disaster or vandalism.

It is important to note, though, that not all natural disasters are covered by all property insurance policies. If you operate in California, you will want to make sure your policy covers fires and earthquakes. If you operate in Kansas, you will want to make sure your policy covers tornados.

Workers’ Compensation Insurance

Without employees, your restaurant cannot do any business. You need cooks, servers, dishwashers, managers, and any other staff your restaurant requires.

Sharp utensils, hot surfaces and liquids, slippery floors. These are all commonplace in a food establishment.

Accidents happen. Such is life, right?

What happens if an employee burns herself on a hot pan? She may need to seek immediate medical attention. Then, she may not be able to work for a week or two.

You want to make sure that your employees are taken care of. They are human beings with bills to pay and families to take care of.

Workers’ compensation insurance will ensure that you can cover any necessary medical expenses as well as lost wages. In the event that an employee cannot work for an extended period of time, the insurance will cover weekly wage payments until he or she is back to work or finds another job.

Additionally, workers’ compensation insurance protects your business from lawsuits. In exchange for paying medical expenses and lost wages, employees give up their right to sue businesses for negligence or personal injury.

Many US states require workers’ compensation insurance. Without it, you could be facing serious legal trouble.

Look into your state’s laws regarding workers’ compensation coverage. Some states, like Ohio, have state funds for workers’ compensation. Speak with an insurance agent to find out how much coverage you are required to have before choosing a policy.

Liquor Liability Insurance

If you operate an establishment that serves alcohol, you may be required to carry liquor liability insurance. You are liable for any injuries or property damages that result from serving alcohol to any persons in your establishment.

If one of your servers serves alcohol to an intoxicated customer and gets into an accident or starts a fight, you could quickly be facing a lawsuit.

Liquor liability insurance will cover any resulting legal fees, medical expenses, and settlements. Additionally, if you are caught without liquor liability coverage in a state that requires it, you could face even greater legal consequences.

These incidences will not be covered by your general liability insurance. You may need to carry both policies if you produce or serve alcoholic beverages.

The cost of liquor liability insurance will depend on your location, the type of business you operate, and the percentage of your sales attributed to alcohol. The more alcohol you sell, the higher your insurance premiums will be.

Additionally, look into your state laws regarding whether or bar and restaurant owners are responsible for third-party injuries caused by intoxicated persons. If you have any questions about your state’s laws, talk to an attorney or an insurance agent.

Umbrella Insurance

What happens if you reach the limits of your general liability or other liability coverage? For example, what if a slip and fall case costs you $500,000, but your policy only covers $400,000?

An umbrella insurance policy will cover the remaining costs. This will give you a little extra coverage.

Umbrella insurance is especially important for those businesses frequently take to the road. Catering businesses, for example, are at a higher risk for bodily injury claims that reach into the millions of dollars.

These policies can easily be added to your existing liability insurance policies. If you are unsure about whether umbrella insurance is necessary for your restaurant business, ask your insurance agent for more information.

Get Ready to Take That Leap

Operating a restaurant can be a fun and rewarding experience if done properly. You can build lasting relationships with customers that will make you and your business thrive.

However, you should be aware of all of the potential risks involved. You need to be protected from any possible risk you may encounter during the course of your operation. For that reason, you need to look into which restaurant insurance policies you will likely need and what they may cost.

There are many other aspects to running a restaurant to think about. Insurance is one major aspect of running your business that you should not cheap out on.

Otherwise, you could be facing legal trouble for devastating financial loss.

If you are just starting out and would like to know more about being a small business owner, check out our blog.

There you will find a host of tips to help you achieve your dreams. You can also visit our forum to discuss your thoughts and opinions with other small business owners.