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September 23, 2020

Restaurant Insurance 101

What is Restaurant Insurance?

The restaurant industry is, without a doubt, one of the most challenging forms of business ownership. Restaurants experience a wide range of risks that make them vulnerable to lawsuits and other liabilities. In 2020, not only do restaurants have to manage food, kitchen, and equipment safety, but they must guarantee their customers and employees good health and protection during the COVID-19 pandemic. Restaurant insurance mitigates some basic risks associated with the industry and protects businesses by avoiding possible irreparable financial losses. 

With restaurant insurance, there are many different policies to consider and due to the abundant risks associated with the industry, costs can be greater than expected. It is important to point out that there is no one type of restaurant insurance. Restaurant insurance coverage will include a variety of different policies that are available to many other small businesses. 

Who needs it?

Any businesses that prepare and serve food should acquire restaurant insurance. These business types can include:

  • Pizzerias

  • Caterers

  • Ice cream Shops

  • Bars

  • Coffee Shops 

  • Diners

  • Fast food chains

  • Delis 

  • Cafeterias

  • Fine Dining facilities

  • Sandwich shops

  • And more

Types of Coverage:

At a minimum, your restaurant should acquire general liability and commercial property insurance. These two coverages can be bundled into a Business Owners Policy in order to reduce costs. This is a common practice amongst restaurant owners.  In addition, if your establishment has employees, you are required by law to purchase workers’ compensation insurance. 

There are many additional coverages that you will want to consider based on your restaurant’s needs: 

  • General Liability: Protects your business in the event that someone is injured on your property.

  • Property Insurance: Covers kitchen equipment, furniture, buildings, and other property owned by the restaurant. 

  • Workers Compensation:  Protects employees from the expense of work accidents, illnesses, and lost wages. Restaurants are required to purchase this insurance by law.  

  • Commercial Auto: If your restaurant owns vehicles for deliveries or event catering, you’ll need commercial auto insurance to protect you against the medical, legal, and repair costs from a car accident.

  • Business Interruption: Protects your business against closure for reasons such as fire, hail, windstorm, vandalism, equipment damage, and more. Restaurant losses due to the COVID-19 pandemic are covered by this type of insurance. 

  • Liquor Liability: Protects businesses that serve alcohol by covering legal fees, settlements, and medical costs associated with bodily injury or property damage caused by an intoxicated person. 

What Factors Affect Restaurant Insurance Costs?

Insurance costs in the hospitality industry are usually based on the specifics of your establishment. The cost of restaurant insurance depends on the policies you choose, the risks your restaurant faces, and the value of your business. Applications for restaurant insurance are very through and companies do their own additional research to determine the price of their quote. 

Factors that insurance companies consider when determining their price of coverage: 

  • Location of restaurant 

  • Years in business

  • Volumes

  • Number of employees

  • Annual revenue 

  • Hours of operation

  • Alcohol sales 

  • Prior claims history 

  • And more

Why Do I Need It?

You worked hard to build your business. Restaurant insurance will help protect your establishment and make sure it has the opportunity to keep growing. Unfortunately, accidents are inevitable. Problems are bound to arise and it is important to be prepared for when they do. 

The COVID-19 pandemic, for example, closed the doors of restaurants all over the country. Many would have been unable to recover from such an impactful and unforeseen event if it was not for their chosen insurance policies. Finding the right insurance coverage can act as a safety net and alleviate some of the stress that comes with running a restaurant. To learn more about restaurant insurance options for your business, contact I&E Insurance today.

This web site may contain concepts that have legal, accounting and tax implications. It is not intended to provide legal, accounting or tax advice.

You may wish to consult a competent attorney, tax advisor, accountant, or your own financial advisor. EMC Insurance Agency & Financial Services LLC dba I & E Insurance Agency & Financial Services is an Independent Insurance Agency, a Member of the Trusted Choice, Independent Agents of America & PIA contact your own advisors before making any financial decision. Services offered through independent NON-AFFILIATED ENTITIES

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