Running a restaurant is all about dedication to amazing food. Whether the restaurant has been a neighborhood icon for decades or just opened its doors, customers expect its food to delight their senses and take them on a culinary journey. However, that is only one ingredient in the recipe for success. Knowing how competitive and fickle the restaurant industry is, you also need to take good care of the business side. That includes finding the proper insurance.

There are dozens of different policies and packages on the market. To understand the various types of restaurant insurance, why you need it, and how to save some money on it, continue reading this article. 

What Is Restaurant Insurance?

Running a restaurant comes with a unique set of risks: from food poisoning to knife injuries. That is in addition to all the other risks that can affect any business regardless of its industry. It is important to get insurance that not only covers typical business risks, but also the risks unique to a food business.

Although no specific insurance is called “restaurant insurance,” many insurance companies create bundles that are specific to restaurants. Those bundles include insurance policies useful for food businesses and make it easy and convenient for restaurants to get all the policies they are going to need. 

Those packages include policies that are most applicable to the food industry, such as spoilage insurance and food contamination shutdown insurance.

Why Take Out Restaurant Insurance?

As mentioned, running a restaurant comes with many risks. While every entrepreneur needs to have faith in their business and an optimistic view on the future, it is as important to prepare for mishaps and losses. Not every customer is going to love the place and it can only take one unfortunate incident to financially ruin a business. For example, a grease fire could ignite and spread through the kitchen flues, a customer could get food poisoning, or a waiter could scald their leg after tripping and dropping hot drinks. The business owner is liable for all of those instances. Not to mention, people might sue the business for the damage they have incurred. Without adequate insurance, the restaurant is going to have to pay for all the damages and related expenses in full. 

What Kind of Insurance Do Restaurants Need?

When running a restaurant, several policies are needed to fully protect it. Here is an overview of the most important ones:

Commercial Property Insurance

The premises of a restaurant are one of the most valuable assets of the restaurant owner. Whether rented or owned, commercial property insurance will cover damage to the building in the event of fire, vandalism, or some other disaster. It also covers most of the building's contents up to the limits of the policy. However, it does not cover damage resulting from earthquakes and flooding. 

General Liability Insurance

General liability insurance covers bodily injury or property damage to a customer, including food poisoning, irrespective of blame. It will also provide funds in the event of a lawsuit or out-of-court settlement.

Business Owners’ Policy (BOP)

The BOP combines commercial property insurance and general liability insurance, making it unnecessary to buy them separately. This will be the best option for most restaurants.

Workers’ Compensation Insurance

In the event that an employee gets injured or becomes ill because of their work, the business will be liable for their sick pay, medical fees, and can even face a lawsuit. If the company has workers’ compensation insurance, the insurance company will cover the costs irrespective of blame.

Restaurant Crime Insurance

Crime can take many forms: employee dishonesty, theft, counterfeit currency, forgeries, and more. These can be covered under crime insurance or another similar policy. Additionally, consider cyber liability insurance if you conduct a significant amount of your business online or use several data management systems for everyday business purposes. 

Other Insurance Policies

In addition to the above-listed insurance policies, there is a range of other insurance policies specifically geared towards restaurants. These include:

• Equipment breakdown coverage – Covers any failure of equipment, such as a cooker or fryer, for damage or lost income.
• Spoilage insurance – If a refrigerator breaks down and you lose stock, you will be covered for the cost of lost food.
• Food contamination shutdown insurance – If you are forced to close down because of contamination, you will be covered for the lost income. Depending on the specifics of your policy, you may even be covered for the cost of improvements.
• Liquor liability insurance – If you serve alcohol on the premises, consider carrying liability insurance in case a customer drinks too much and then causes harm to other customers.
• Commercial auto insurance – If you run a vehicle as part of your business, you will legally be required to have commercial auto insurance.
• Umbrella coverage – If you want to extend your coverage beyond the limits defined in the policy, you can get umbrella insurance.

How to Save Money on Restaurant Insurance?

Purchasing insurance can feel like an expensive endeavor, however, it can save you a fortune in the long run. Nevertheless, you should still consider saving money on individual policies. Here are some tips for that:

• Follow best practices – When handling food, you will want to ensure your restaurant follows the highest standards of safe food handling. 
• Consider employee safety – Purchase high-quality safety equipment and ensure your employees receive regular safety training. Keep the equipment well-maintained and replace it as often as needed to avoid injuries caused by equipment malfunction. 
• Fire safety – Good fire safety is vital in a restaurant. Clean grease from the vents, install sprinklers, and have fire blankets and extinguishers on hand. Reducing fire risk will lower your premiums.
• Shop around – Get quotes from multiple insurance companies. Insurance companies differ in their risk assessment, so quotes can vary by significant amounts.
• Raise your deductibles – Raising deductibles always reduces your premiums. However, you need to have more savings on hand when claims are made.
• Pay in full – Paying your entire insurance bill annually, rather than monthly, can help you save a considerable amount of money over time.

If your (future) restaurant business is still without insurance or you are thinking of switching out your existing one, you can consult our experts by sending us an email or filling out the free quote form on our website.