Whether you’re a local diner serving breakfast and lunch, a full-service restaurant, or a local bar, your restaurant faces many of the same risk exposures. From a slip and trip in the kitchen, to food spoilage or a break-in after-hours, these incidents happen - and can be costly to your bottom line.
While, in some cases, you can’t prevent incidents from happening, you can prepare for them and protect your restaurant by offering the right restaurant insurance program.
No restaurant insurance policy is the same. Rather, it’s tailored to meet the specific and unique needs of your business.
Here’s the top common insurance coverages to consider including on your restaurant insurance policy.
Hired and Non-owned Auto
General Liability Coverage:
The only way to effectively protect your restaurant’s assets is to carry adequate commercial general liability insurance coverage. General liability protects your restaurant from damages caused by bodily injury or property damage, for which your restaurant could be legally liable for.
A typical general liability insurance policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations, and can be offered as a package policy with other coverages like the ones listed below.
For more information on General Liability Insurance Coverage, please visit our article: What is General Liability Insurance?
Business Property Coverage:
Property insurance is specifically designed to cover your restaurant’s building and the contents within it. A kitchen fire, for example, could destroy your restaurant in minutes. Worse, you could have trouble paying your employees during a loss because your funds are dedicated to repairing that damage. This is where property insurance comes into play.
Check out our article on Business Property Coverage for Your Restaurant Insurance Program in Ohio for specific information related to this coverage.
Business Interruption Coverage:
One brief business interruption can be incredibly costly for your company, often leading to serious reputational damages or long-term closures. Business interruption insurance is a form of coverage that protects against a variety of common interruptions, including natural disasters, equipment damage and vandalism.
The top benefits of business interruption insurance include:
Revenue: In the event of a disruption, business interruption insurance provides coverage for income your business would have earned during a closure period if it had been operating normally.
Rent or lease payments. Even if your premises are unusable following a disaster or other event, many leases still require you to make the payments. Business interruption insurance allows you to continue making rent or lease payments, even while your restaurant is not operating.
Employee Wages: If you’re unable to operate, it’s likely you will not be able to continue paying your employees. Business interruption insurance can help you avoid losing key staff while closed by ensuring that you make payroll. This is especially important, as finding new employees is often more expensive than keeping them.
Loan Payments: If you have an outstanding loan, you’ll need to continue to make payments even if your business isn’t fully operational. Business interruption insurance you never miss a payment until you are fully operational again.
To learn more about business interruption coverage for your restaurant insurance program, check out our article: Top Benefits of Business Interruption Coverage for Your Restaurant Insurance Program in Ohio
Equipment Breakdown Coverage:
Your restaurant depends on equipment to keep it operating and maintain your revenue stream. Whether it’s your refrigeration units, coolers, grills or deep fat fryers - these items are critical to the ongoing operations of your restaurant business.
Problems with your equipment can be risky, if you’re not properly insured. Equipment breakdown coverage, formerly known as boiler and machinery insurance, may cover you in the event of an equipment breakdown or damage.
For more information on Equipment Breakdown coverage, check out are article: Why Your Ohio Food Company Needs Equipment Breakdown Coverage.
Cyber Liability Coverage:
Cyber attacks are becoming all-too-common in the food and restaurant business today. If you accept credit cards, take online orders, or hold any customer data in your computer system - you’ll need to consider cyber liability insurance coverage.
Cyber liability insurance policies are tailored to meet your company’s specific needs and offer a number of important benefits, including the following:
Data breach coverage
Business interruption loss reimbursement
Cyber extortion defense
Coverage beyond a general liability insurance policy
For more information on Cyber Liability coverage for your restaurant, check out our article: Top Benefits of Cyber Insurance in Ohio.
Liquor Liability Insurance Coverage:
If your restaurant serves alcohol, you may want to consider adding liquor liability insurance coverage to your policy. This type of insurance covers damages that result from things like fights, careless behavior or auto accidents caused by customers who have consumed alcohol.
Liquor liability insurance coverage protects you against clients suing your restaurant for damages related to their intoxication. Often times, this coverage is not included in your general liability insurance policy - and is an additional, stand-alone coverage that can be added to your restaurant insurance program.
For more information on Liquor Liability Insurance, visit our article: Everything You Need to Know About Liquor Liability Liability Insurance For Your Restaurant in Ohio.
Product Liability Insurance Coverage:
Your customers expect you to have safe products, and failing to meet these expectations can lead to huge financial losses. If one of your products harms a customer in any way, they can sue your restaurant, leading to costly legal fees and settlements. These costs can easily reach six figures.
While you may be doing everything in your power to ensure your products are safe, mishaps can still occur without warning. That’s why, to protect against claims and ensure longevity of your restaurant, you should consider product liability insurance.
For more information about product liability insurance, visit our article: Why Your Business May Need to Consider Product Liability Insurance
Hired and Non-Owned Automobile Insurance Coverage
If your staff is out on the roads in their personal vehicles during work hours, running errands for the business or delivering food (for example), your restaurant is at risk.
Your restaurant could be held liable if your employee is driving their personal vehicle for business purposes on the job, and got into a car accident, your restaurant could be held liable.
Your best protection: hired and non-owned automobile insurance coverage.
Typically, your employees auto insurance coverage will cover the primary insurance for both vehicles involved in the accident, but if his/her limits are not high enough to cover the damage - the liability will be passed to your restaurant.
For more information on non-owned and hired automobile insurance coverage, visit our article: If Employees Drive their Personal Vehicle for Business Purposes, You May Want to Consider Non-Owned and Hired Automobile Insurance Coverage.
The purpose of this article was to help restaurant owners understand the significance of their restaurant insurance program - and the many different coverages available to ensure their restaurant is safe and protected against financial risk.
As a food and agribusiness insurance specialist, I work across the industry from farm to fork, ensuring business owners and those that operate the business understand the risk exposures they face, and also have the protection they need to cover them in the event of a catastrophic loss.
I’d love to review your restaurant insurance program to ensure you have the right insurance protection in place. Call me at (330) 331-7960 or email me at email@example.com.
Components of this article were adapted from Zywave. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.