So many food enthusiasts and hospitality workers dream of opening their own restaurant someday. The idea of spending your day making delicious food and interacting with interesting people is certainly enticing. It can be a challenging way to make a living, however, with some inherent risks. If you own a restaurant or are considering opening a restaurant, you should consider protecting your investment with restaurant insurance.
What Is Restaurant Insurance?
Every business needs active insurance protection. Because restaurants deal with the general public and are more vulnerable to changes in the economy, restaurant insurance involves purchasing a business owners policy. A business owners policy, or BOP, includes two types of coverage: liability and property. Additional coverage, such as business interruption coverage, commercial auto insurance, cyber insurance, or employment practices liability insurance can also be purchased as necessary.
Why Do You Need Restaurant Insurance?
Not every business carries the same risks as restaurants do. Cooking is something of a risky endeavor because it involves fire and sharp objects as well as many people operating within a relatively small space. Let’s break down what restaurant insurance covers and why you should be insured for specific risks.
General Liability - Restaurants operate serving perishable food to the general public, so this is perhaps the most vital part of restaurant insurance coverage. If any customer becomes ill or says they became ill because of the food they were served, the restaurant is at risk of being sued. Liability insurance also typically covers the restaurant in case of injury or if someone else’s property is damaged.
Commercial Property Insurance - If your restaurant experiences a kitchen fire or the property is damaged, property insurance will normally cover this. Typically, this type of insurance does not cover crime-related damages that result from burglary, robbery, fraud, or employee dishonesty such as embezzlement. For protection against crime related financial losses, commercial crime insurance would have to be added.
Business Interruption Insurance - A kitchen fire can put your business out of commission for some time. This type of coverage can help replace lost income and cover other related expenses. A related type of coverage would be extra expense insurance. This would help cover expenses if your business needs to suddenly relocate.
Food Spoilage Coverage - If your restaurant loses power or your freezer fails and, as a result, your food spoils, this covers the cost to replace it.
Food Contamination Endorsement - This covers expenses related to a restaurant shut down due to food-borne illness, including replacing food, lost income, equipment cleaning, and medical care for employees.
Workers Compensation Insurance - Most states require businesses to purchase this type of insurance as it covers the costs of medical bills, lost wages, disability, and death benefits in case of an employee becoming sick or injured while on the job.
Like any other type of insurance, the costs of the above policies will vary depending on the size and location of your restaurant, the amount of coverage required, and the value of your property. However, since most restaurant owners are self employed without another source of income, it’s worthwhile to think about how long your family could financially survive if a disastrous incident like a kitchen fire happened. You do not want to spend your time, energy, and life savings building your restaurant business and lose it overnight because of an accident or because a customer became ill.
If you have a business or a restaurant or are considering opening one, please contact us at Navisure Insurance Group. We would love to discuss your needs with you and recommend the best solutions for your budget!
COREY VANDERMEER | PRESIDENT
Corey started his insurance career in the claims department for a national carrier and learned the basics of insurance coverage and how it’s applied. From there he decided to take the jump into sales and joined an independent insurance agency. Here he learned how to build coverage around the needs of each individual and cater to every client. When Corey decided to start an insurance agency he did so with the intention of simplifying the process of getting insured. With a focus on technology and simplicity; his goal was to create an insurance agency that was different from those currently dominating the market place.
When he’s not working, Corey enjoys golfing, fly fishing and spending time with his wife and kids. Together they enjoy traveling to Northern Michigan and to his wife’s hometown of San Francisco.