Insurance Requirements for a Restaurant Business

Fran
Fran Majidi
April 4, 2019

More than your average business, restaurants need comprehensive commercial insurance to prevent tremendous losses, which can be the result of one bad accident without the proper coverage. Restaurant insurance can protect a restaurant owner against heartache and financial ruin. After all, a busy restaurant poses several risks.

Take a look at all the potential disasters: There are people rushing around cooking (fire, flying grease, spills, etc.) while servers and waiters run back and forth (and possibly into each other) from the kitchen to various tables. The bartender, meanwhile, is serving folks lots of booze in very breakable bottles and delicate glass. And remember, food is not only perishable but can be toxic if it’s accidentally served after its shelf life has ended (yes, it’s happened to the best restaurateur).

As a restaurant owner, you have the potential for serious slips and falls, cuts and burns and food poisoning. Plus, what if the guy at the bar drives home drunk? That’s a lot to worry about -- unless you have solid restaurant liability insurance as well as some coverage to protect your employees and yourself in case your staff gets hurt.

Buying solid business insurance for a restaurant  is just about all you can do, aside from providing your staff with some good training about food safety and how best to avoid body slamming while running tables.

Other businesses that also need restaurant insurance are bars and taverns, cafes and coffee shops, diners and delis, lounges, pizzerias and sandwich shops and pretty much any place that serves anything you can eat or drink. To find a reliable and trustworthy agent to help you customize a plan for your special eatery, contact us here.

How Much Is General Liability Insurance for a Restaurant (GLI)?

Every restaurant is different but the average cost of business insurance for a restaurant is about $200 a month for a business owner’s policy (BOP) or general liability bundled with property insurance. Not every restaurant qualifies for a BOP, however. Also remember that rate vary according to the location of the restaurant and the value of the business based on the property and professional equipment. Deductibles at this price are usually set at $1,000.

Public Liability Insurance for Restaurants (PLI)

This is one form of protection many restaurant owners decide to buy to offset the cost of legal claims and compensation claims for injuries and/or damages to personal property. Also included in the cost are medical costs and transportation costs. PLI differs slightly from GLI and has its own advantages. Having only this type of coverage, however, is considered minimal and somewhat risky.

One con with PLI is that it doesn’t cover claims filed by employees and/or vendors. As you can imagine, this type of policy alone will not fully protect a restaurant.

General Liability Insurance for Restaurants (GLI)

This form of protection costs less than $100 a month for most restaurants. It covers a business for claims for injuries and/or damages to personal property. It also protects against workplace accidents, negligence and injuries to employees and people on the restaurants’ premises. Often medical and legal expenses are also covered by this coverage.

The con with GLI is that it is more expensive than a PLI policy, but it is much more comprehensive. For cheap restaurant insurance, visit here.

Insurance for Fast Food Restaurants

Fast food restaurants may be more standardized than other types of restaurants and are therefore a little less complicated to insure but even they benefit from the following types of insurance:

  • General and Product Liability Insurance
  • Excess Liability Insurance (in case your general liability limits are not enough to cover costs)
  • Employment Practices Liability Insurance
  • Commercial Property Insurance
  • Food Spoilage Insurance
  • Workers Compensation
  • Franchisee Certificate Compliance (all franchises require this)
  • Business Interruption Insurance (in case your shop needs to be closed for an extended amount of time during which business is halted)
  • Liquor Liability (if your fast food restaurant serves alcoholic beverages only).

Restaurant Equipment Insurance

Most insurers offer some form of equipment breakdown coverage. This form of protection would cover you if there is an electrical problem that interrupts normal business operations. Mechanical problems with kitchen equipment may also be covered. Also known as “boiler and machinery” coverage, this is an important coverage for air conditioning and refrigeration systems that will make or break a restaurant (especially in the summer!). Also imagine if you lost all electricity? What would do without your point of sales system?

Workers Compensation Insurance for Restaurants

Insurance for restaurant employees is important too. Workers comp for restaurants is required in most states. This is the protection that pays for medical costs and lost wages if something happens on the job. It also protects you if an employee files a claim against the restaurant. The median cost for this type of coverage is about $125 a month. Again, rates vary according to location and the business operations.

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