What Kind of Insurance Does a Restaurant Need?

On the business end of things, restaurants are as different as the type of food they serve. Your commercial insurance needs will depend on several factors including whether you have employees, provide food deliveries, and serve alcohol.

Regardless of the size of your restaurant and the volume it does, the primary types of insurance coverage all restaurants need are commercial general liability and property damage.

Commercial general liability covers your business for bodily injury which refers to any harm that you cause to someone else (excluding your employees). General liability coverage also covers damage to the property of others caused by you. Another thing liability covers is advertising injury which protects your business against claims of libel, slander, copyright infringement, invasion of privacy, stealing ideas, social media, etc.

In addition to general liability coverage, every restaurant business should have commercial property insurance. Property insurance covers your restaurant building and all the furnishings, equipment, and property inside the building. If your restaurant is burglarized or has items stolen, the loss would also be covered under property insurance coverage.

Restaurant owners often find that it’s more beneficial to get a business owners policy, which is commonly referred to as a BOP. A BOP policy combines general liability and property damage into one policy.

While general liability and property insurance are staples of all types of businesses, restaurant owners may opt to add certain coverages to protect other parts of the business. The following coverages may be worthwhile for your operation:

• Business interruption – replaces your income if you can’t open temporarily because of a loss.
• Food spoilage or food contamination – reimburses you for the cost of food and beverages up to the specified limit due to a covered loss. Your policy may also cover testing and equipment cleaning.
• Workers’ compensation – covers your employees if they get injured on the job.
• Liquor liability – covers restaurants for liability for guests who become injured or injure others due to intoxication.
• Sign and glass – covers signage and exterior window glass regardless of the cause.
• Fine arts-sports memorabilia – covers expensive paintings, collectibles, or sports memorabilia that are displayed inside the restaurant.
• Hired and non-owned auto liability – covers bodily injury or property damage caused by a delivery driver using their own vehicle or a vehicle owned by the company.
• Employee dishonesty – reimburses businesses for actions by employees that cause physical or financial harm to the business.

Because of the risks in the restaurant business, it’s important to understand commercial insurance coverages and how they can help your business at the time of a loss.