The management of a restaurant is difficult. You can imagine how much time and effort things like taxes, insurance, consumer safety, profitability, and laws can consume. We wrote this page with it in mind. Think of it as a simple, five-minute primer to the types of restaurant insurance you require, the best insurance companies, and how to reduce your insurance expenses.
What types of insurance are required for restaurants?
Business General Liability
One of the essential coverage that any restaurant should buy is commercial general liability (often known as restaurant liability insurance). It provides you safeguard against harming clients physically or causing them property damage. To help you understand what we mean, we’ve gathered a few samples.
Slip and fall
This typically occurs when due to water or any other substance on the floor, a customer slips and hurts themself when they strike the ground. The majority of the time, this is a “medical payments” claim, which falls inside the policy’s limited limit and covers minor medical expenses up to $5,000 regardless of fault. These allegations, meanwhile, occasionally end up costing more or turning into a lawsuit. Almost always, the general liability insurance coverage will cover this incident.
When you run a restaurant, you always have to deal with claims of food poisoning. Some of these assertions might not be true, while others might. These claims may be covered by a restaurant insurance coverage if someone gets hurt after eating your cuisine.
The general liability policy will cover any bodily harm you cause to a customer, whether they are burned by hot liquid you spill on them or by touching a hot plate.
Commercial Real Estate
Check out our article, “Commercial Property Insurance: The Ultimate Guide,” for additional details on commercial property insurance, what it covers, and how to get the most of your coverage. Property insurance is a need because restaurants use ovens and open flames and are extremely visible to the general public.
An insurance called workers compensation insurance is typically required by your state’s government. It covers medical expenses linked with work-related injuries to employees. This is crucial for restaurants since staff members are frequently moving around, carrying items, climbing on seats, reaching up to the ceiling, and touching hot surfaces. If you serve alcohol, you may be held liable for it. It’s likely that your state will require you to retain this insurance in order to keep your liquor license if you serve any type of alcohol. This insurance shields your company from any resulting legal troubles if a customer is over served. If you get into an accident while helping someone, it also covers you.
The majority of these claims, in our experience, are brought by over served clients who have been involved in accidents caused by drunk drivers.You might be held accountable for it in some places, while in others you might be named in the case and have to battle your way out. Alcohol liability is a policy that covers these kinds of incidents as well as your associated legal costs (it is occasionally included in the general liability policy).
In the event that you choose a valet service, garage keeper liability
Do you have insurance to cover damage to a customer’s vehicle while it is in your care if you provide a valet service? We must look at a different policy to pay for this kind of accident because general liability insurance does not cover motor accidents. Enter the garage keepers insurance, which provides coverage for customer vehicles under your supervision. If your restaurant provides valet parking, you can be sure that some of the luxury vehicles that your staff parks are there. Therefore, restaurants with valet operations must have this coverage.
How much does restaurant business insurance cost?
Restaurant insurance premiums vary widely and frequently depend on the operations. A tiny submarine shop could be able to obtain all the necessary coverage for $1500 year (they probably wouldn’t require garage keepers or liquor liability), as opposed to a major restaurant that owns a building and has kitchen operations that might cost $6000 annually.
How can I lower my insurance costs for restaurants?
Even though insurance firms must collect a specific amount in premiums, some discounts are offered to clients who pose a smaller risk than their contemporaries. The following are a few other strategies to obtain further savings on your restaurant insurance policies:
Systems for suppressing fires
The solutions include everything from sprinkler systems in the building to ANSUL systems in the kitchen. Since fire is the main issue for restaurant insurance underwriters, the more fire safeguards you have, the better your property rates will be.
Reduce fall and Slip Risks
There are some eateries that report a few slip-and-fall claims on average each year. In general, insurance firms seek to steer clear of these claims. If you have a system in place to identify damp flooring or can demonstrate that you do, you can frequently receive a discount.
Keep alcohol sales (if possible) at no more than 50 percent of total sales.
Maintaining your alcohol sales below 50 percent of revenue will keep you in a lower cost category, unless you are operating a fine dining establishment. Insurance companies will start to view you as an alcohol establishment that also serves food if your sales of spirits or alcohol approach 50 percent. There are certain exceptions to this rule, including fine dining establishments (with pricey alcohol), breweries, distilleries, and vineyards.
Delivery of food inside the home raises insurance prices
We had to include delivery even though the majority of restaurants do not provide it because it may be a significant influence. You must acquire coverage that will cover any liability resulting from an automobile accident while a delivery is being made if your employees frequently transport food in their personal vehicles. The term “hired and non-owned auto liability” indicates to this insurance.
The cost of this coverage might start at around $1500 per year on the low end when you start using personal vehicles for deliveries. In conclusion, a crucial component of any successful restaurant is insurance. It enables you to pay a monthly premium rather of having to make preparations in case an accident hurts your company.