Restaurant owners in need of insurance typically buy separate policies to protect against a variety of potential business-related losses, including costs of a lawsuit brought by a patron who slipped on their floor, damage due to a fire, a data breach that compromises customer data or injury to employees.
Policies that cover these losses could include workers’ compensation, cyber liability and a business owner’s policy (BOP), which groups multiple coverage types and carries a median cost of $2,160 for $1 million in coverage.
If you own or operate a restaurant and want to make sure that you have adequate insurance, The Hartford is a great insurance provider that you should contact. The Hartford has many industry-specific insurance products including policies that are ideal for restauranteurs. Start by getting your free, no obligation quote in minutes.
How Restaurant Insurance Works
Restaurant owners face many risks, and no one restaurant insurance policy covers them all. Instead, most restaurant owners benefit from purchasing a BOP, which provides both commercial general liability coverage and protection from property damage. Plus, you can buy add-on coverage to protect you from such things as liquor liability and employee theft.
A BOP would cover you against any lawsuits arising from someone getting hurt on your premises, whether the injury is caused by slippery floors or a robbery gone wrong. If an employee breaks an expensive refrigerator or a stove is lost due to fire, your BOP’s property damage protections would provide coverage.
Buying a BOP is less expensive than buying commercial general liability and property damage policies separately. Restaurant owners can supplement their BOP with additional add-on coverage including:
- A cyber liability policy in case of a computer hack
- A liquor liability policy if your restaurant is sued because of a drunken patron
- Coverage for crime and employee theft such as an employee stealing from the cash register
- Workers’ compensation coverage in case employees suffer injuries
A liquor liability policy alone could run around $620 per year, while cyber liability coverage typically costs between $800 and $1,200, so these add-on policies can make restaurant insurance significantly more expensive.
Top Restaurant Insurance Providers
|The Hartford||Comprehensive bundled coverage, including liquor liability and data breach coverage|
|AP Intego||Work with nationally licensed agents to shop and compare rates from top-rated insurers.|
|Progressive Commercial||Discounts on auto insurance policies if you bundle with other coverage|
|Liberty Mutual||Obtaining necessary coverage easily with package solutions customized to your industry|
|AmTrust Financial||Affordable policies for low and medium risk businesses|
When simplicity is your goal, shop with The Hartford to get the most comprehensive bundled coverage. You can buy a BOP that not only includes commercial general liability and property damage coverage but also protects against lost income if the business temporarily closes. Optional add-ons include liquor liability, data breach, franchise upgrade and temperature change coverage in case food is damaged due to refrigeration issues.
If you aren’t sure what insurance provider you want to use, you can visit AP Intego to find a policy that’s right for you. Utilize AP Intego’s nationally licensed agents to shop and compare your coverage needs from top-rated insurance companies. Check out AP Intego and find the right insurance provider for you in minutes.
If you need commercial auto insurance and want a discounted policy for bundling with other coverage, turn to Progressive Commercial. You’ll save up to 15 percent on coverage when you combine commercial auto coverage with a BOP. You can also add on other policies to cover lost income and identity theft. This coverage is ideal for restaurant owners with a large fleet of vehicles like food truck operators or restaurants with delivery drivers.
When you aren’t sure exactly what coverage you need, Liberty Mutual is a great company to turn to because the insurer offers package solutions specific to your particular industry. Liberty Mutual caters to company- and franchise-owned restaurants; casual, fine dining or quick serve restaurants; independent chains and food management contractors. Liberty Mutual also has a wide network of local agents who will help you customize your coverage.
AmTrust Financial primarily offers policies to companies that present a low or medium risk. By limiting the types of businesses it covers, AmTrust is able to keep policy premiums lower. If you have a proven track record of running a restaurant without costly insurance claims and your restaurant doesn’t present any unusual risks, getting a policy through AmTrust should be especially affordable.
Types of Restaurant Insurance
Although you cannot just buy restaurant insurance, you can find many policies that provide protection against the most common sources of loss for businesses in the food-service industry. By purchasing a BOP and adding supplementary coverage, your restaurant can be broadly protected from injury claims, property damage, food spoilage and more.
Most Common Types of Restaurant Insurance
|Business Owner’s Policy||Commercial general liability, property damage, and sometimes loss of business income.|
|Commercial Automobile Insurance||Damage to mobile food trucks or delivery vehicles|
|Liquor Liability||Claims against establishments that sell or assist in the purchase of liquor if an intoxicated person causes harm.|
|Cyber Liability||Claims arising from a data breach that exposes customer information.|
|Employee Theft Coverage||Losses caused by crime or employee theft.|
|Employment Practices Liability Insurance||Claims arising from employment violations, including discrimination or wage-and-hour law violations.|
|Workers’ Compensation||Claims arising due to employee injury.|
Business Owner’s Policy Insurance
A BOP bundles important types of restaurant insurance for cost efficiency. This includes general commercial liability insurance, which protects against third-party claims for injury or property damage; property damage, which covers damage to the restaurant space or equipment; and loss of income if a business can’t operate due to problems such as equipment damage or natural disaster.
Commercial Auto Insurance
Mobile food vendors and restaurants with delivery vehicles need commercial auto insurance to protect vehicles in their fleet. Policies can provide liability protection in case an accident occurs and results in injury claims made by third parties. Coverage also includes damage to company vehicles, including food trucks or refrigerated delivery transport.
Liquor Liability Insurance
In many states, restaurants and other establishments that serve or provide liquor are legally responsible for any injuries or property damage caused by intoxicated patrons. Liquor liability insurance protects your business from claims that arise under circumstances like these. With this insurance, your establishment will be covered for defense costs, as well as settlement or damage awards.
Cyber Liability Insurance
Most restaurants accept credit cards, so are vulnerable to data breaches. Cyber events cost an estimated $10 billion annually according to the Federal Trade Commission, and a breach could make your establishment liable for losses. Cyber liability coverage provides protection for regulatory actions, crisis response and PR efforts, claims against your business and network or data recovery efforts.
Employee Theft Coverage Insurance
Employee theft coverage may be provided as a standalone policy or as part of a broader commercial crime policy. It provides coverage for losses caused by employee dishonesty, including theft of funds or products from your business.
Employment Practices Liability Insurance
If your restaurant has employees, you’re vulnerable to claims or regulatory actions arising from allegations that you violated employee protection laws. This type of policy covers defense costs and settlement damages in the event of a wage-and-hour lawsuit, anti-discrimination lawsuit and other claims arising from allegedly unlawful employment practices. If an employee sues you and claims you failed to pay overtime for extra hours worked, for example, your policy will cover the costs of defending against the claim as well as any back wages you had to pay.
Workers’ Compensation Insurance
When employees sustain injury on-the-job, workers’ compensation provides payment for medical bills as well as partial or total disability benefits in the event injuries are long-term or permanent. Workers’ compensation insurance is required in most states as soon as you have one employee, although Texas doesn’t require coverage and other states only mandate you obtain a policy if you have a certain minimum number of workers such as at least three employees.
Restaurant Insurance Costs
A BOP offers cost efficiencies by allowing you to obtain a single policy instead of multiple policies for liability, property damage and business interruption. You can expect to pay around $2,160 in annual premiums for a BOP offering $1 million in coverage. Further savings are achievable by choosing an insurer offering add-ons for other coverage such as liquor liability, which will typically run around $620 for $1 million in coverage.
Restaurant Insurance Costs & Deductibles by Insurance Type
|Business Owner’s Policy|
|Commercial Auto Insurance|
Many different factors can affect costs including:
- The number of employees: The more workers your restaurant has, the higher the costs of workers’ compensation insurance
- The value of your property: If you have very expensive specialized equipment, such as an expensive commercial oven or refrigerator, your BOP may cost more because of the additional property damage coverage you require
- The number of vehicles in your fleet: If you have many delivery drivers who transport food to clients using company vehicles, you’ll pay much higher commercial auto insurance costs
- Your past claim history: If you have been in business for a while, insurers will take into account any past claims you may have made; a long history with no insurance claims will result in lower cost coverage while premiums will rise if you have had a history of costly claims during past operations
Tips on Getting & Applying for Restaurant Insurance
The U.S. Department of Agriculture has reported damages in food poisoning claims totaling hundreds of thousands of dollars. This is just one of many potential sources of loss restaurant owners face. To protect your business, apply for restaurant insurance before opening your doors. To ensure sufficient coverage is obtained from a trusted insurer, follow these simple tips.
Read Policies Carefully and Get the Best Coverage You Can Afford
The policies you purchase are the only protection your company has in the event something goes wrong, so it’s important to be covered fully for likely losses and to understand the protections your policy provides fully.
“Get the best insurance you can afford with the lowest deductible because cash will be tight during a disaster,” advised Janice Jucker, owner and president of Three Brothers Bakery. Jucker’s location survived four floods, a hurricane and a fire. She stresses the importance of comprehensive coverage, including a policy that will pay for business interruption and payroll for up to 12 months.
Jucker also advises reading your policy carefully, “You don’t want to be reading it for the first time after the disaster as I did with Hurricane Ike,” she said. “I read my policy cover to cover, and then review all changes with my agent.”
Look for an Insurer Offering a Package Program for Restaurants
While all the different options for restaurant insurance seem overwhelming, choosing the right insurer makes the process of getting comprehensive coverage simpler.
“Applying for coverage can be a challenge, especially if the owners are new to the business and the insurer doesn’t have access to claims records,” advised Sonny O’Steen, a retired risk manager and marketing director at Insurancequotes2day.com. “It makes better financial sense to do business with a company that has a package program specific to restaurateurs.”
Choosing a provider offering BOPs with add-on coverage addressing the needs of restaurant owners should allow you to get all your insurance needs met in one place.
Don’t Choose a Policy Based on Price Alone
Restaurant owners should typically get quotes from at least three different providers to get a clear idea of the average restaurant insurance cost. However, choosing the cheapest policy isn’t always best.
“Not all policies are equal,” advised Paul Gaglioti III, certified insurance counselor and president of Diversified Risk Solutions, LLC. “You can buy filet mignon or ground beef, and both are technically beef, but clearly there’s a difference. Insurance is the same, in that the pricing is typically indicative of what coverage is being afforded and the exposure presented to the insurance company.”
If you skimp on coverage by foregoing an essential policy, opting for a low policy limit or choosing a deductible that’s too high, you could end up with substantial out-of-pocket losses in the event a claim is made or disaster strikes.
Finding the Best Policy Takes Time
Experts all advise restaurant owners to get covered before opening their doors, which means starting to shop for coverage early.
“The process can take up to two months to procure a good complement of coverage with the best value,” advised Matthew Struck, an insurance and risk management professional and co-founding partner of Treadstone Risk Management.
Struck also advised getting your paperwork together when shopping for coverage so you can provide the necessary information to get prompt, accurate quotes. “The process may require a copy of your business plan, resume of the owner to establish expertise and any track record of prior ventures,” he said.
Restaurant Insurance Frequently Asked Questions (FAQ)
Still not certain what coverage your restaurant needs? You can use the FitSmallBusiness forum to ask any questions you may have about restaurant insurance and can check out the answers to a few frequently asked questions below.
If My Employees Use Their Cars to Do Deliveries for My Restaurant, Do I Still Need to Insure Them?
Personal automobile insurance policies typically don’t cover cars used for commercial purposes. Because drivers likely won’t be covered by their insurers if they cause an accident, someone must pay the bills. Agency laws in most states make business owners responsible for employee actions, so your restaurant could be liable. You need coverage to protect you.
Am I Covered for Spoilage If a Refrigeration Problem Occurs?
To ensure coverage in the event of a problem with your refrigerator or freezer, you may need a spoilage coverage endorsement on your BOP. Spoilage coverage, sometimes referred to as temperature change coverage, kicks in if heating or cooling equipment breaks down or if a power outage shuts down your system and food spoils. It pays out to replace perishable items.
Does Property Insurance Provide Coverage for My Restaurant in the Case of Natural Disasters?
BOPs generally provide coverage for damage caused by hurricanes, tornadoes and other natural disasters. However, flooding is often excluded from commercial property policies. If your restaurant is located in a flood-prone area, you will need special coverage to ensure your space and equipment is protected in case of a flood.
The Bottom Line
Buying a BOP — along with additional coverage for risks specific to the restaurant industry — is important to protect your company and your finances. Shop carefully for insurance options that bundle policies for convenience and cost savings.
Restaurant owners should make sure that they purchase a policy that meets the needs of their industry. The Hartford is one insurance company that tailors policies specifically to help restaurant owners and managers. Get a free, no obligation quote in minutes from the Hartford.