What Types of Insurance Do I Need To Run a Restaurant?

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Restaurant owners should buy a policy that includes general liability, liquor liability, commercial property, business interruption, workers’ compensation and commercial auto coverage. In addition, there are several other coverage types that are worth considering when looking for the right restaurant insurance package.

Keep reading for an overview of the major types of restaurant insurance coverage and how you can make sure your business is covered against the biggest risks associated with running a restaurant.

Key Takeaways

  • A restaurant insurance package should include coverage types like general liability, liquor liability, commercial property, business interruption and more.
  • Workers’ compensation and commercial auto insurance are usually required by law for businesses, while other optional coverage types can account for the specific liability risks that restaurant owners face.
  • A typical restaurant insurance policy costs around $4,000 per year.
  • You can buy insurance products tailored to the needs of restaurants from insurance providers like Geico, Farmers, Nationwide, State Farm and The Hartford.

What Types of Insurance Should a Restaurant Have?

The following types of commercial insurance all have the potential to be useful for restaurant owners.

types of restaurant business insurance coverages infographic

General Liability Insurance

General liability coverage insures your business against claims of bodily injury, property damage and personal or advertising injury. It can pay for medical treatments and property repairs if someone is injured or has their belongings damaged on your property, while also covering legal expenses that arise from these situations or instances where your restaurant is accused of defamation or violating copyright law.

Depending on your insurer, a general liability policy may also automatically include product liability coverage.[1] This coverage type protects your business in case you are accused of causing harm to a patron through a defective product. For example, it might cover the costs of a hospital stay for a customer who got food poisoning after eating at your restaurant.

Meanwhile, public liability insurance is an alternative to general liability insurance that provides less coverage at a lower cost. Public liability insurance only covers medical bills, repair costs and legal expenses related to bodily injury and property damage claims. However, many insurance companies don’t offer this coverage type anymore, so it’s generally recommended that you buy a general liability policy instead.[2]

Liquor Liability Insurance

Liquor liability insurance provides coverage for injuries, damaged property and lawsuits related to an intoxicated guest who you served alcohol to. This coverage type is crucial if your restaurant includes a bar or otherwise sells alcohol since most states allow restaurants to be held legally liable for a drunken person’s actions if the restaurant served them alcohol while they were already visibly intoxicated.[3]

Business Owners Policy

A business owners policy (BOP) combines general liability insurance with commercial property insurance. As a result, it insures the structure of your restaurant, attached fixtures and any property you store inside of the restaurant against perils like fire, theft and vandalism. For example, commercial property insurance could pay to replace any cooking equipment that gets destroyed by a kitchen fire.

BOPs also typically include business interruption insurance, which makes up for lost revenue and temporary relocation costs if you have to shut down your restaurant due to a covered loss. After a kitchen fire, business interruption insurance could pay your employees’ wages while your business is closed or cover the extra costs associated with operating out of a temporary rental space.

Other Types of Food Liability Insurance

Other types of food liability insurance that may be worth purchasing for your restaurant include communicable disease liability coverage, errors and omissions (E&O) insurance and contamination and spoilage coverage. Depending on the terms of your policy, you may need a communicable disease endorsement to extend your restaurant liability insurance to include outbreaks of COVID-19 or other infectious diseases at your restaurant.

Also known as professional liability insurance, E&O insurance covers legal expenses if your business is accused of being negligent or failing to perform its professional duties. For example, E&O insurance might cover a legal settlement if a customer has an allergic reaction after ordering a dish with walnuts in it because your menu did not list all of the dish’s ingredients.

Finally, you will be covered by contamination and spoilage coverage if your food or beverages go bad and become unsellable for reasons ranging from a power outage to employee error.

It can cover the costs of replacing spoiled food, cleaning storage areas, providing medical tests or vaccinations for your employees and improving your restaurant’s reputation through an advertising campaign.[4]

Workers’ Compensation

Workers’ compensation insurance protects your business in case an employee is injured or becomes sick on the job. This type of policy can pay for an employee’s medical treatments and rehabilitation while also covering lost wages, disability payments and death benefits if necessary.

Employment Practices Liability Insurance

Employee practices liability insurance (EPLI) covers legal expenses related to claims that you treated your workers unfairly or otherwise violated their rights. For example, EPLI could fund your legal defense if a manager at your restaurant was accused of sexual harassment, discrimination or wrongful termination.

Commercial Auto Insurance

You will need to purchase commercial auto insurance to cover any cars your company owns and uses to conduct business activities, especially if you operate a food delivery service. If your employees deliver food in rented cars or their own personal vehicles, you should consider buying hired or non-owned auto coverage.[5]

Specialty Insurance

Your restaurant may have specific insurance needs that require specialized insurance products. For example, you may need to purchase outdoor signage coverage to insure any signs that aren’t directly attached to your restaurant. Meanwhile, if you have lots of sports memorabilia on display, you might want to purchase commercial collectibles insurance.[6]

Additional Insurance Policies To Consider

Other types of insurance for restaurants that you may want to add to your policy include the following:

  • Commercial crime insurance: Commercial crime insurance covers financial losses that stem from employee dishonesty or criminal acts like forgery, robbery and burglary. It can also include money and securities coverage, which may be necessary to fully insure any cash you keep in an on-site safe or cash register.[7]
  • Cyber liability insurance: Cyber liability insurance protects your business in case you are the victim of cybercrime. For example, if you save customers’ credit card numbers, cyber liability insurance could cover any legal costs that arise after a data breach.
  • Environmental insurance: Also known as pollution liability insurance, environmental insurance covers medical bills, legal expenses and repair or cleanup costs if your company is responsible for damaging the environment.
  • Equipment breakdown coverage: If any of your kitchen equipment breaks down due to a sudden mechanical or electrical failure rather than an external peril, equipment breakdown coverage can pay for you to repair or replace the equipment.
  • Ordinance or law equipment coverage: A commercial policy that includes ordinance or law equipment coverage can help you cover the costs of upgrading your refrigerators and other equipment to meet local health and safety regulations.[8]
  • Umbrella insurance: Commercial umbrella insurance provides extra money for liability claims if you exhaust your standard policy limits. For example, if your commercial auto policy includes $25,000 in property damage liability coverage but your delivery driver gets into an accident and causes $30,000 worth of damage, your umbrella insurance could cover the outstanding $5,000.

Is Insurance Required To Run a Restaurant Business?

While you likely won’t be required to purchase insurance specific to the needs of the food industry, you may be required to purchase certain types of general commercial coverage depending on the state you operate in. For example, workers’ compensation insurance and commercial auto insurance are required by law for most businesses in most states.[9][10]

Of course, the minimum coverage required by law can still leave you vulnerable to numerous sources of financial loss.

As a result, it’s recommended that you purchase more insurance than is required in order to provide an appropriate financial safety net for your restaurant business.

What Are the Potential Risks That Restaurant Owners Face?

Read below for examples of potential risks faced by restaurant owners and what types of restaurant business insurance would cover them.


Covered by

A server drops a bowl of hot soup onto a customer and burns their skin

General liability insurance

The bartender overserves a patron who leaves the restaurant and gets into a drunk driving accident

Liquor liability insurance

You need to restock your refrigerators after an overnight power outage causes most of your food to go bad

Contamination and spoilage insurance

A vandal breaks into the restaurant and smashes your ovens

Commercial property insurance

You need to close the restaurant for a few days after a thief breaks in and steals your point-of-sale system

Business interruption insurance

One of your chefs breaks their toe by accidentally dropping a heavy pot on their foot

Workers’ compensation insurance

A hostess accuses you of paying her less than you pay another host for the same work

Employment practices liability insurance

Your delivery driver runs over someone’s mailbox while delivering an order

Commercial auto insurance

How Much Does Restaurant Insurance Cost?

It costs about $4,000 a year for a restaurant to maintain a business owners policy plus workers’ compensation insurance and liquor liability insurance.[11] Of course, a policy that includes more coverage types will naturally be more expensive. In addition, you may end up paying more or less than this amount depending on factors like the size and location of your business.

How Do I Get Insurance for My Restaurant?

Major insurance carriers like Geico, Farmers, Nationwide, State Farm and The Hartford offer insurance products tailored to the needs of the restaurant industry. In addition, you can find even more specialized coverage from specialty providers like Huckleberry, biBERK, Markel Insurance and the Food Liability Insurance Program.

It’s important to compare commercial insurance rates using an insurance marketplace like SmartFinancial to find the restaurant business insurance policy that best suits your needs. Each insurance company has its own unique formula for evaluating the risk of insuring your business, so it’s likely that one insurer could provide your restaurant with a more favorable rate than another insurer.

Buy Coverage for Your Restaurant Business


Why do restaurants need insurance?

Your business may be required by law to purchase coverage types like workers’ compensation insurance and commercial auto insurance.[9][10] Meanwhile, liability insurance and other coverage types are important to protect yourself against common risks associated with owning a restaurant.

How do I show proof of insurance for my restaurant?

You can request a certificate of liability insurance from your insurance carrier in order to show proof that you have purchased coverage.

Does restaurant insurance cover special events?

You may need separate event insurance to cover costs associated with event cancellation and any added liability concerns that come with hosting a special event.

Does restaurant insurance cover my business’ signage?

Signage that is attached to or inside of a building you own should be covered by your commercial property insurance. However, you may need a signage insurance endorsement if you lease the building your restaurant is in or if the sign is outdoors and detached from the building.


  1. The Hartford. “What Is Product Liability Insurance?” Accessed May 29, 2023.
  2. The Hartford. “What Is Public Liability Insurance?” Accessed May 29, 2023.
  3. Justice Guardians. “Every State’s Dram Shop Law, Explained.” Accessed May 29, 2023.
  4. Allstate. “Food Spoilage and Food Contamination Coverage.” Accessed May 29, 2023.
  5. The Hartford. “Hired and Non-Owned Auto Coverage.” Accessed May 29, 2023.
  6. Farmers Insurance. “What Kind of Insurance Do You Need for a Restaurant?” Accessed May 29, 2023.
  7. Nationwide. “Commercial Crime Insurance.” Accessed May 29, 2023.
  8. Huckleberry Insurance. “What Kind of Insurance Does a Restaurant Need?” Accessed May 29, 2023.
  9. National Federation of Independent Business. “Worker’s Compensation Laws – State by State Comparison.” Accessed May 29, 2023.
  10. Nationwide. “Commercial Auto Liability Insurance.” Accessed May 29, 2023.
  11. Huckleberry Insurance. “How Much Does Restaurant Insurance Cost?: Business Owner’s Guide.” Accessed May 29, 2023.

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