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 of the recipe for success. Knowing how competitive and fickle the restaurant industry is, you also need to take good care of the business side, which 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 in addition to all the risks that can affect any business. It is important to get insurance that covers the unique needs of a food business.

Although there is no specific type of insurance called “restaurant insurance,” many insurance companies bundle together applicable insurance policies under this name to make it easier and more convenient for restaurants to get all the policies they are most likely going to need. 

Some policies in those packages are primarily applicable to the food industry, such as spoilage insurance or food contamination shutdown insurance.

Why Take Out Restaurant Insurance?

As mentioned, running a restaurant comes with many risks. While it is important to have optimism regarding the future, it is not realistic to expect that every customer is going to leave with a smile on their face. Moreover, it only takes one unfortunate incident to financially ruin a business. 

A grease fire can ignite and spread through your flues, a customer can get food poisoning, or a waiter can scald their leg after dropping hot drinks. The business owner is liable for all of them. They may even lead to a lawsuit. Without adequate insurance, you are going to have to pay for all the damages. 

What Kind of Insurance Do Restaurants Need?

When running a restaurant, you need several policies. Here is an overview of the most important ones:

Commercial Property Insurance

A restaurant’s premises are one of the most valuable assets the business possesses. Whether rented or owned, commercial property insurance will cover damage to the building in the event of a fire, vandalism, or other disasters. However, it will not cover earthquakes and flooding. It will also include most of the building's contents, up to the limits of the policy.

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)

A BOP is a combination of commercial property insurance and general liability insurance, rather than purchasing the two policies separately. This will be the best option for most restaurants.

Workers’ Compensation Insurance

In the event that an employee becomes injured or ill because of their work, they will be liable for sick pay, medical fees, and can even file a lawsuit. If this were to occur, the insurance company would 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 have a significant online presence. 

Other Insurance Policies

In addition, to the above-listed insurance policies, there is a range of different 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. 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 hurts others or decides to drive.
• Commercial auto insurance – If you run a vehicle as part of a business, you will legally need commercial auto insurance.
• Umbrella coverage – If you want to extend your coverage beyond the limits defined in the policy, you can do so with 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. But you should still consider trying to save money on individual policies. Here are some tips to consider:

• 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 on the equipment. Keep the equipment well maintained and replaced if wear and tear risks injury or malfunction.
• Fire safety – Good fire safety is vital in a restaurant. Clean grease from the vents, install sprinklers, and have fire blankets and extinguishers to hand. Reducing fire risk will lower your premiums.
• Shop around – Get multiple quotes. Insurance companies differ in their risk assessment, and so quotes can vary by significant amounts.
• Raise your deductibles – Raising deductibles always reduces your premiums. However, when making a claim, you will need to find the cash to cover the difference.
• Pay in full – Paying the entirety of your insurance bill annually, rather than monthly, can save a significant amount of money.

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