Restaurants have very specific insurance needs compared to that of other types of businesses. There are varying factors that can be brought into a suit in the event of a claim. Each restaurant is different and has varying degrees of risk. We will discuss some of the common claims types and coverage options to protect you if you have a claim. There are so many different types of restaurants and there is no one size fits all policy for all restaurant types.
Some common restaurant types
- Fast Food
- Fine Dining
- Food Truck (check out our blog on food truck insurance)
- Night Club
- Lunch Counter
Restaurants have a large array of needs for insurance. It is important that you sit down with an insurance professional and discuss all of the liability exposures you may face. We will discuss some of the more common policy types that restaurants choose to cover themselves with.
You should choose a comprehensive general liability policy sometimes referred to as a BOP(Business Owner’s Policy) for your restaurant. You want to make sure you are covered adequately for most perils. BOP policies offer many endorsements that can be added to your policy to lower the likelihood of an uncovered peril.
Some of the common perils under this policy type include:
- Customer slip and fall
- Food spoilage
- Advertising liability claim
- Food poisoning illness
Any acts of dishonesty by one of your employees are covered under a crime policy. In many cases, this can be added as an endorsement under your general liability policy. These policies will pay out for losses you have incurred due to some of the following types of crime insurance.
- Theft of money or securities
- Employee dishonesty
- Funds transfer fraud
- Computer fraud
- Counterfeit money
If your restaurant sells alcohol of any kind, you need to have a liquor liability policy in force. Your general liability policy will exclude this type of loss. If a suit comes back in any way against an over-served patron it will also likely fall back on your establishment. Remember, your employee doesn’t even need to be negligent for you to get sued. A liquor liability policy will pay the costs to defend you as well. Discounts are often available if you have completed training with your staff on reading the signs of an inebriated customer. We recommend taking classes for this outside of just the discount offered.
Restaurants have quite a bit of business property that would need to be insured.
Some common types of property in a restaurant include:
- Interior additions and alterations
- Computer equipment
- Kitchen equipment
- Miscellaneous equipment
You should do a personal inventory of the items that would need to be replaced in the event of a loss, say a fire.
Even if you don’t own the building you operate out of, you still want to be covered for any interior permanently attached equipment. You may have sank quite a bit of money into what they call improvements that would need to be insured to put you back where you were before the loss.
Claims for workers compensation are not uncommon in this industry. Slips and falls are common, as are kitchen accidents. In NC, a business with 3 or more employees, including the owner, is required by law to carry workers compensation insurance. Workers compensation pays out not only for the medical bills of an injured employee, but it also covers any lost time at work. These expenses can get quite expensive and with the likelihood of a claim, workers compensation is essential.
Commercial Auto Liability
Many restaurants do outside catering and have a need for commercial auto insurance. This policy will cover any liability that results while a vehicle is being used for business use. Damage to the vehicle will also be covered if physical damage is chosen as well. In some cases, where an employee’s vehicle is being used instead of a restaurant owned vehicle, a non-owned auto endorsement would need to be added to the policy to cover that specific vehicle.
Business income is insurance that covers you for lost income due to a covered peril. If you had a fire and had to close your doors for several weeks or months to complete the repairs, could you withstand the loss of income? Your expenses such as salaries, rent, and taxes will still need to be paid even if you lose all of your income. A business income policy will assist in keeping you afloat during this time.
Cyber liability if one of the fastest growing insurance types. You will be handling customers payment info and if that were to get into the wrong hands it can be very expensive if a claim were to arise. For a more detailed listing of what is covered in cyber liability please view my blog from a couple of months ago on the subject.
You can also purchase a blanket umbrella liability insurance policy that will kick in and pay up to the limit of your choosing once the underlying limits for policies listed above are exhausted. Your commercial umbrella carrier will want to be made aware of any policies under the umbrella that will be covered. You will also have to meet the minimum underlying limits on those policies to meet the umbrella policy requirements.
You can see that restaurant insurance can be quite complicated with various types available. It is important to discuss your specific needs with an insurance expert in this industry. Please feel free to call us at 704-494-9495 and discuss any questions you may have with an agent specialized in restaurant insurance.