When you discuss or hear about restaurant insurance, what is really being discussed is insuring all different types of hospitality businesses. This includes everything from entertainment venues and night clubs to sports bars, taverns, bars, quick service, and full-service restaurants, food trucks, caterers, delis, pizzerias, and more.
What Are the Basic Needs that Restaurant Owners Have?
There are four basic types of insurance that restaurant owners need to purchase. These include the following:
Property Insurance
This allows you to insure the things that your business owners, which include the food in your freezers, your restaurant equipment, the building your restaurant is in, and even insurance for business interruption if your restaurant is unable to open or operate because of some issue, like a fire. If a storm, theft, or fire results in property loss, having the right property insurance policy in place will ensure you are covered.
Liability Insurance
With liability insurance, you are protected from claims that come from others, including any lawsuit that may be filed. The most basic type of liability insurance is “general liability.” However, there are more specific options, too, including employer practice liability, liquor liability, and cyber liability.
Workers’ Compensation Insurance
In most cases, having workers’ compensation insurance isn’t an option – it is mandated by the government. This insurance provides coverage for medical benefits or wage replacement if an employee is injured on the job.
Commercial Auto Insurance
This is for all vehicles that are borrowed, rented, leased, or owned by the business. For example, if you have a restaurant and your workers use their personal vehicles for delivery, you should have a commercial auto policy.
What Factors Affect Restaurant Insurance Costs?
Insurance for restaurants is underwritten specifically for the type of restaurant that you have. When you fill out an insurance application, you will find there are dozens of different questions you must answer. The underwriters at the insurance companies will also do research and a bit of reconnaissance on the restaurant before determining the price they quote you.
While this is true, there are some general considerations that an insurance company will make when evaluating your restaurant’s coverage, including:
- The location
- Lease requirements
- Property type
- Coverage levels
- Volume
- Years in business
- Activities
- Loss history
- Alcohol sales (if any)
- Hours of operation
Keep in mind, if you are leasing the building for your restaurant, there will likely be specific insurance requirements written into your lease that you must meet or comply with to avoid being in violation of the lease.
What Type of Insurance Does Your Restaurant Need?
As you can see, there are several considerations you must keep in mind when purchasing insurance for your restaurant. While this can be confusing, there are professionals who can help you with this. Working with a restaurant consultant is the best way to ensure that you get the right insurance for your restaurant and that you are fully covered if an adverse event or situation occurs.