Restaurant owners may need separate insurance policies to protect their businesses against losses. Common losses that restaurant owners require protection against include fire damage, customer data compromises, and employees’ injuries. A good restaurant insurance policy covers these and other losses. Most restaurant owners get liability and commercial property coverage by buying a business owner’s policy (BOP). However, some restaurant owners get a standard package policy.
How it Works
Any restaurant faces numerous risks. No single insurance policy covers all the risks faced by restaurants. Therefore, the majority of restaurant owners purchase BOP. This protects against property damage and general liability coverage. Restaurants can also purchase add-on coverage that protects them from things like employee theft and liquor liability.
A BOP covers a restaurant against lawsuits that may arise from a person being injured within their premises. Such injuries can arise from a robbery or a slippery floor. It also covers incidences like an employee breaking an expensive appliance or a stove damaged by fire.
Purchasing a BOP is a cost-effective option when compared to buying property damage and general liability policies separately. A restaurant can supplement BOP with add-on policies.
These can include:
- Cyber liability plan that covers incidents like computer hack (Applicable for restaurants with websites that allow online ordering)
- Liquor liability policy that protects a restaurant against lawsuits arising from drunk patrons.
- Employee theft and crime policy that covers incidents like a worker stealing from the restaurant’s cash register.
- Worker’s compensation policy to cover claims arising from employees that are injured within the business premises.
Major Types of Insurance for Restaurants
There is no single restaurant insurance policy that’s fit for all restaurants. However, several insurance policies protect restaurants against common losses incurred by food-service industry operators. Buying a BOP and supplementary coverage provides broad protection for a restaurant against property damage, injury claims, and food spoilage among others. Here are some of the most common insurance policies for restaurants.
Business Owner’s Policy
This insurance policy bundles different types of insurance coverage for restaurants more cost-effectively and efficiently. It includes general liability coverage that protects a restaurant against third-party claims arising from property damage or injury. Property damage covers damage to restaurant equipment or space. It also covers income loss if problems like natural disasters or equipment damage make the business inoperable.
Employment Practices Liability
If you have employees in your restaurant, you are vulnerable to regulatory actions or claims arising from the allegations of violating the employee protection laws. With this policy, your settlement damages and defense costs will be covered if your restaurant faces an anti-discrimination lawsuit, a wage-and-hour lawsuit, and any other claim relating to unlawful employment practices. If a disgruntled employee sues your restaurant claiming that you didn’t pay for the extra hours they worked, this policy will cover the defense costs.
Commercial Auto Insurance
If you run a mobile restaurant or food vendor’s business, you most likely have delivery vehicles. In that case, you need a commercial auto insurance policy to protect your vehicles. This insurance can protect your restaurant in the event of an accident that might lead to third-party injury claims. The coverage provided by this insurance also includes company vehicle damages like food trucks and refrigerated transport.
Cyber Liability Insurance
If your restaurant accepts payments via credit cards, it might be vulnerable to customer data breaches. The Federal Trade Commission estimates the loss caused by cyber crime to be $10 billion every year. Your restaurant can be liable for significant losses in the event of a customer data breach. A cyber liability policy protects a restaurant against regulatory actions, PR efforts, and crisis response, as well as, claims against a restaurant and network or efforts to recover data.
Workers’ Compensation Insurance
This insurance policy pays for medical bills and total or partial disability benefits in case a restaurant employee sustains an injury at the job site. This insurance is a requirement for most establishments with employees in most countries and states.
Employee Theft Insurance
Employee theft policy can be a standalone plan or part of larger commercial crime policy. It covers losses caused by dishonest employees. Some of the damages covered by this insurance include theft of products or money from a restaurant.
Cost of the Insurance for a Restaurant
BOP insurance for a restaurant costs around $2,160 in annual premiums with coverage of $1 million. This option is more cost-effective because it provides a single plan instead of several policies for property damage, business interruption, and liability. A restaurant can save more money by choosing an insurer with add-ons to this coverage.
Other factors that determine the cost of insurance for a restaurant include the value of the property, the number of business employees, the number of vehicles owned by the establishment, and claim history.
In a nutshell, the best restaurant insurance suits the budget and other needs of the establishment. Therefore, shop for the insurance policy for your restaurant wisely.
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