What You Need To Know About Insurance For Restaurants
Dan Levenson July 07, 2016
It might not be the most exciting part of opening a restaurant, but one of the most vital steps in opening a new eatery is getting insurance coverage.
There are many potential problems that you need to be prepared for in the food industry, ranging from equipment failures to slip-and-fall lawsuits. Depending on your restaurant’s location, you will need certain types of insurance to comply with local laws. You may also need insurance to qualify for bank loans and mortgages.
Common Types Of Restaurant Insurance
These types of insurance should be seriously considered when opening any type of restaurant.
Commercial Property Insurance
This is important for protecting your restaurant from property damage resulting from a variety of disasters such as fire, wind/hail storms, vandalism, or smoke damage. Unfortunately, for coverage in the event of natural disasters such as earthquakes or floods, you may need to get specific types of insurance that cover those circumstances.
General Liability Insurance
This probably goes without saying, but liability insurance is needed in case any person is harmed in your restaurant. Whether you or your staff are to blame or not, if a person gets sick after eating at your restaurant, you will want to be protected by liability insurance.
Liquor Liability Insurance
A restaurant has much greater potential to make profits when offering alcoholic beverages on its menu, but with this advantage comes additional risks. Most states require businesses that have a liquor license to carry liquor liability insurance. Also, liability coverage is important to have in case an intoxicated customer drives away from your establishment and comes to harm or hurts others.
Commercial Auto Insurance
You may want to have this insurance if your business has a company vehicle. Many restaurants use promotional vehicles and company cars. This may be covered by your general liability policy, but you should ask your insurance agent to be sure.
Most states require employers of any type of business to carry workers’ compensation. Workers’ comp protects the business when an employee gets injured at work. Check your state laws so you are aware of your compliance obligations. For example, it is required in New Jersey.
This may not seem directly relevant to the operation of a restaurant, but it may be necessary for you to carry life insurance to satisfy the requirements of your mortgage. Also, life insurance is important if you have a family and you want to make sure they are taken care of should something tragic happen to you.
The purpose of this insurance may be somewhat self-explanatory, but it is nonetheless worth mentioning. It’s vital for a restaurant to be covered against fire damage, especially considering the added risks involved with operating gas cooking appliances.
Other Types Of Insurance For Restaurants
Depending on your circumstances, you may find that the standard types of insurance may not completely meet your needs. Luckily, there is an insurance policy for just about any type of object or circumstance. Just be sure to weigh the additional costs against the benefits of carrying these additional types of insurance.
Food Contamination Insurance
Occasionally there are situations beyond your control where food either spoils or is exposed to various types of contamination. This insurance may not protect you from a class-action lawsuit, but it will help you recoup losses if you need to replace the food in your walk-in refrigerator.
Loss of Business Insurance
Under some circumstances, when your business loses sales, this type of insurance may compensate you for financial losses. It’s important to understand the likely return on investment with this, given that in many cases the aggregate cost of the insurance payments may exceed the claim payouts. If you feel your business is at a particular risk for this type of loss, it may be a smart investment.
When looking over all these various types of insurance, the task of insuring your restaurant may seem somewhat daunting. When opening a new restaurant, it is important to have a knowledgeable and trustworthy insurance agent in your corner to guide you through the process. Experienced agents know the local laws and regulations, and can help you make the best decisions about the types of insurance that will safeguard yourself, your restaurant, and your customers.