Insurance is complicated, and for a business like a restaurant, finding a policy that suits you and your business can be confusing. For example, does your business have delivery vehicles? Do you serve hot beverages? Are clients working with hot frying equipment? All of these factors need to be taken into consideration when buying restaurant insurance. Fortunately, working with a good insurance agent can simplify this process considerably. However, it never hurts to have some information in advance about what you as a restaurant owner are looking for in a policy. So let’s take a look at some of the factors that make restaurant insurance a must-buy item.
The first reason restaurants need insurance is for general liabilities. These cover property damage risks that come from lawsuits that occurred from normal business operation. For example, a waiter spills a hot meal onto a customer. Or a customer slips on a slick floor and files a lawsuit. General liability insurance will protect a restaurant from these incidents. And generally speaking, liability insurance is for all situations where someone is suing the business. Yikes. No one wants that to happen. So to mitigate the cost of a lawsuit (if one ever occurs), general liability insurance is necessary for restaurants.
Secondly, a business would benefit from having some kind of commercial property insurance as well. This type of insurance is not just for restaurants but applies equally to restaurateurs. This type of insurance covers damages caused by theft, fire, and some forms of weather damage. Typically this type of insurance includes open perils and named perils. Open perils include losses not specifically named by your business (say someone gets creative vandalizing your business and your policy does not explicitly exclude this open peril, you would be compensated according to the policy). Named perils are spelled out in plain English—things like lightning, floods, and the aforementioned theft. Overall, having some commercial property insurance could help a business save-face during a hard time or misfortune. But what if something happens and you need to shut your restaurant down for a while?
Business Income Insurance
That question brings us to the third type of insurance that a typical restaurant will need: business income insurance. This type of insurance covers losses that occur when you can’t run your business because of covered damages. For example, your restaurant’s basement floods, and you are forced to close for a week to clean up, restore the building, and replace the food. If your policy covers this type of damage, you can recoup the money lost because of the loss of business that occurred over the week.
Business Owner’s Policy
We’ve already looked at several different kinds of insurance. So as a restaurant owner, you will want to start scrambling from company to company looking for the best price for each of these, right?
Thankfully, no—insurance companies have solved this problem by offering all three of these types of insurance under one umbrella. This umbrella is called a Business Owner’s Policy (BOP). A BOP is the easiest way to choose all three types of insurance that will work for your restaurant.
So now we’ve covered most of the basics. Let’s go a little deeper now. You will probably need the three types of insurance mentioned earlier, but there are some options that you may want to look into as well.
- Do you sell liquor? You may want to look into liquor liability insurance. Restaurant patrons that get into physical fights or drunk drive—whether it seems fair or not, sometimes the restaurant can be held liable. Liquor liability can help with legal costs (similar to general liability) and fees associated with these kinds of incidents.
- Restaurant crime/data breach—for whatever reason, sometimes a bad employee will go rogue on you. If they write phony checks in your name, steal social security numbers, or otherwise compromise the identity of other employees or the business, it can leave you with a damaged reputation and dinged bank account. You can purchase this type of insurance to mitigate the risk of hiring employees.
- Have expensive frozen cuisine that you want to cover? Get spoilage coverage in case one of your refrigerators goes down. You can buy this type of coverage so you don’t have to pay twice if expensive food goes bad due to a mechanical failure.
- Worker’s compensation insurance—A typical restaurant has a multitude of small risks in addition to the normal risks that most small businesses have. For example, the hot surfaces in the kitchen, friars, ovens, and sharp knives all pose risk to employees on a daily basis. If an employee needs to take time off due to an on-the-job injury, worker’s compensation can mitigate the cost.
Whew! That is a lot of coverage, isn’t it? Well, this is a good thing for you and your restaurant. You want to make sure you are prepared for emergencies if and when they occur. There are a lot of different coverage types, and it helps to have a competent insurance agent to help you navigate the confusing waters of restaurant insurance.
So let’s recap here: most restaurants will want a Business Owner’s Policy (BOP). This will supply them with general liability insurance, commercial property insurance, and business income insurance. In addition, there are many other options that you can add on to your overall policy.
As a restaurant owner, you care about your company’s image, financial well-being, and reputation. You want to make sure you can feel protected in case of a workplace accident, weather damage, or property damage. The good news is that for all of the risks that restaurant owner’s face, there is a corresponding insurance solution to protect you from the damage. G2’s insurance agents ask you what you want and need for your business and ensure that you are getting the most coverage at the best rate. If you have any questions, feel free to reach out to one of our agents today. And if you want to know more about the benefits of hiring an independent insurance agent, read this article