Restaurant Insurance Basics
Types of Insurance You Need For Your Restaurant
Not the sexiest topic to think about when opening a new restaurant, but one that is vitally important: Insurance. It is one area in the restaurant business you do not want to skimp. Insurance can protect you and your business for a myriad of problems, from broken equipment to liability lawsuits. Depending on where you live, you will need certain types of insurance for your restaurant. You will also need to carry certain types of insurance to satisfy your bank loans and mortgage.
Common Restaurant Insurance
Property Insurance- – Protects your property in case of fire or other events. It may not cover natural disasters, such as floods or earthquakes (see below for a policy that does.) If you have any kind of mortgage on your business and/or equipment, then you should carry a property insurance policy.
General Liability – This is the umbrella policy that protects you in the event someone slips and falls in your restaurant, gets sick after eating there (whether it was your fault or not). This is a must have in today’s sometime sue-happy world.
Liquor Liability – Most states require that any establishment holding a liquor license carry liquor liability as part of their insurance. It helps protect you if a customer has too much to drink and drives and hurts themselves or someone else.
Automobile Liability – If you have a company vehicle, this is a good insurance to have.
It may be covered in your general liability, but always check with your insurance agent first.
Workers Compensation – Protects you if an employee is hurt at work. Most states require that all employers carry some type of workers comp.
Unemployment Insurance – Is for your employees who no longer work for you until they find employment.
Life Insurance – Depending on your mortgage and financing you may need to carry a hefty life insurance policy to satisfy your lender. It is also a good idea to have life insurance, in case something does happen to you and your family isn’t left with a restaurant they don’t know how to run and bills they can’t pay.
Fire Insurance - This one is pretty self explanatory, but here is a helpful article about how fire insurance works for your small business.
Other Restaurant Insurance
There is insurance for just about any object, action or person out there. Here are some other types of insurance you can purchase for your restaurant. But keep in mind, these extras will cost you as much or more than whatever it is you are insuring.
Loss of Business Insurance – If you lose sales through a specific cause, this type of policy can recoup some of the income. Keep in mind the premiums and deductible may make you break even, depending on how much you lose.
Food Contamination Insurance - If you lose power, because of fallen power lines or a storm, and the entire contents of your walk-in and freezer spoil, this policy would pay to replace the food.
Specific Peril Insurance – This covers many natural disasters that general liability insurance doesn’t.
Events like earthquakes, floods or power outages due to either, may be covered under this insurance.
Use a trusted insurance agent when buying insurance when you are opening a new restaurant. They will know the local and state laws pertaining to how much insurance you need and can help you decide how much more you want to carry. Buying restaurant insurance may seem like a lot of money for little to no return, but it is always better to be prepared when it comes to your business.