Restaurants are some of the most popular public spaces where consumers meet, engage, and consume food and beverages. Restaurants come in several different formats. These include delis, sandwich shops, bars, diners, fast food franchises, take-out/food delivery services, lounges, pizza shops, and cafes. All these establishments are vulnerable to the financial impact of everyday occurrences. These include third-party lawsuits due to bodily injury, property damage, and vehicle collisions.
For instance, a customer could consume a meal and experience food poisoning.
Damages can prove expensive. However, owners with the right insurance for restaurants can face these lawsuits without spending out-of-pocket.
This article explains the various insurance lines applicable to restaurants and how restaurant insurance can protect the business from financial losses.
Snapshot of Potential Liabilities
Several things could go wrong while running a restaurant business. Here's a list of potential risks:
- Restaurant business owners invest in several appliances, furniture, bar equipment, cutlery, and other equipment on the premises to successfully run their establishments. Appliances can include grills, ovens, refrigeration units, and air-conditioners. If lightning strikes the building, a fire breaks out, or the restaurant is vandalized, these incidents will result in extensive property damage. If there is a burglary, property may go missing out altogether.
- Restaurants are also prone to food spoilage.
- Restaurants employ staff across various functions. These include chefs, cooking assistants, customer service staff, accountants and cashiers, bouncers, and drivers. At times, staff members may sustain injuries on the job. For instance, cooks may sustain cuts or burns on their arms, or a server may tumble over and injure themselves while in the serving area.
- Customers may also be involved in accidents. If they are badly injured, they may sue the restaurant for damages, which can come at a high cost.
- Restaurants engaged in home delivery may have business-owned vehicles for transportation. The company vehicles could pick up food orders and other supplies. There is potential for the vehicles to get damaged in an accident, be stolen, or catch on fire. Vehicle drivers may also suffer injuries.
Restaurant owners will be in a position to protect their establishments from financial fallout by buying appropriate small business insurance.
Comprehensive Insurance is Key
The restaurant insurance costs can vary based on a restaurant's unique needs. Here is a snapshot of commercial insurance that can serve restaurant businesses adequately:
A Business Owner’s or Package Policy is known in the food and beverage industry. It combines property and general liability into a package policy protecting the business from common hazards and accidents. Read on for more details on the lines of insurance included in a BOP or Package.
If you serve alcohol at your establishment, don't forget about this valuable coverage. Standard General Liability does not cover a restaurant for liability arising from serving alcoholic beverages. Unknowingly serving a minor or serving an intoxicated person who then leaves and drives away only to be involved in a fatal accident may get your business into trouble.
Business Owner's Policy
This is another comprehensive policy that covers both general liability and commercial property insurance. Restaurant premises house a mix of appliances, equipment, and furniture, which can be potentially damaged due to a storm, a fire, or a vandalism case. A business owner's policy prepares restaurants to face these outcomes. This insurance category also helps protect restaurants through additional insurance benefits such as auto liability and crime insurance. For instance, a restaurant may have stolen assets such as money and property. A business owner's policy protects restaurants from these various risks.
Another valuable type of insurance for restaurants is workers' compensation insurance. This type of business needs to hire employees for various functions. Restaurant staff may be working in the kitchen, serving customers their meals, and operating the cash register. There is a potential for accidents that can result in physical injuries, disabilities, and even death. Businesses should prepare for such eventualities. Investing in workers' compensation insurance is just one solution, among others. This type of commercial insurance covers the cost of ambulance services, medical expenditures, a percentage of lost wages, and a death benefit for the family. It mitigates the potential for employee lawsuits.
Restaurants use transportation for various purposes. If the restaurant offers home delivery, it may use its vehicles to deliver its orders. The potential loss scenarios include damage to the owned vehicle. When the company's driver is at fault, there is a financial duty to the owner of the damaged vehicle and to the occupants of that vehicle when injured. This is why most states require some minimum limit for Auto Liability insurance. Comprehensive and Collision physical damage, Auto Bodily Injury and Property Damage Liability, Rental Car Reimbursement, and Uninsured Motorists coverage can all be included on a Business Auto policy just like you have on your personal auto policy.
The restaurant business is one of the most challenging businesses to run. The legacy of the restaurant is nurtured over time. But it is easy to face financial setbacks due to various risks in a matter of weeks. Investing in multiple restaurant insurance policies can safeguard the business from significant financial losses. Insurance is a stepping stone toward building a restaurant legacy and a profitable business.
Restaurants can partner with an insurance provider such as InsuranceAdvisor to access affordable business insurance for restaurants to meet their unique requirements.