What insurance coverage do you need to open a Restaurant?
Whether you are in the beginning stages of opening a restaurant or are a 30 year veteran in the business, this article is a good breakdown of the insurance coverage you need to own and operate a restaurant.
Now I am not going to include the obvious one like you need Worker’s Compensation and Disability Insurance as soon as you have employees. But, in case you are new to operating a business, as soon as you hire your first employee you will need Worker’s Compensation, Disability and Paid Family Leave Coverage in New York.
Instead, I am going to go through 5 coverage’s that you need to make sure you have built into your current insurance protection or ones you need to add.
Liability Insurance
Business General Liability Insurance for a restaurant is going to protect the business from bodily injury or property damage that it causes to others.
The two most common claims we see for restaurants are:
Slip and Falls
A very common claim we see with restaurants are slip and falls. Whether it is inside your restaurant or in the parking lot, you as the restaurant owner, are responsible for any medical expense that arises from something happening on your property.
Food Sickness
Your liability protection is also going to protect you in the event someone gets sick on your food.
Business Income Coverage
Business liability coverage is pretty basic for most businesses as is the next one, Business interruption coverage or loss of business income. This coverage is usually built into your liability policy as an endorsement.
Loss of business income coverage comes into play after there is a covered property loss and your establishment needs to shut down for repairs. A great example of this, a restaurant has a fire and is shut down for a few months while it repairs the kitchen. The income the business would have normally collected during that time can be replaced.
This coverage will help you cover your operating expenses including, but not limiting
- Payroll
- Mortgage or rent payments
- Loans
- Taxes
- Relocation costs- if you have to set up a temporary location
- Lost Revenue
Food Spoilage
Just like business interruption coverage, food spoilage is also an endorsement that needs to be added to your business insurance package.
If there is a fire in your kitchen or your walk-in freezer stops working. Food spoilage coverage will help reimburse you for all the damaged product you have.
Building or Business Personal Property
Building and contents coverage is built into most business owners’ policies as well, but you need to make sure that you have the appropriate limits. If you own the building, you got to make sure that you have enough building coverage to replace it on a replacement cost basis.
If you don’t own the building, but say, you’ve invested a lot of money on betterments and improvements into that restaurant, you want to make sure that you can get that money back in case you lose everything that you put into it.
And lastly, you got to make sure that you have enough for contents, the amount of equipment and furniture, and all the certain stuff, not including just food, that is inside your restaurant will add up significantly if something happens.
You need to make sure you have an appropriate amount of coverage, so if the whole place is a total loss, you’re rebuilding, that you have enough to replace what you need.
Liquor Liability
And lastly, and probably one of the most important ones that a lot of restaurants and taverns overlook is liquor liability coverage.
Liquor liability coverage is going to protect you if somebody gets hurt in an accident after they leave your establishment after having alcohol to drink and causes any bodily injury or property damage.
If you’re responsible for serving that person, maybe serving that person too much, you could be brought in on that lawsuit. Liquor liability is a very overlooked coverage and really should be added to any establishment that serves alcohol.
What all restaurant owners should do?
When you own and operate a restaurant, you have tons of things going on. And one thing that you shouldn’t have to worry about is figuring out what type of insurance is needed.
Restaurant owners need to have a trusted relationship with an independent insurance agent who can guide them through the setup and maintaining the appropriate insurance protection.
If you don’t have a relationship with an agent or want help with your restaurant insurance then click the button below to schedule a review with one of our trusted insurance advisors.
