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What Type Of Restaurant Insurance Do I Need?

Like many other types of Businesses, Restaurants have specific needs when it comes to Insurance. While there are many important coverages to consider, what’s most important is having an advisor who knows you and your business to help you navigate the world of insurance!  Our InsureGood Advisors can help you determine the most important coverages to protect you and your business and support your values.

General Liability

General Liability Insurance is foundational coverage for most businesses, and if you are a tenant at your location, your landlord may require the range as part of your lease. Whether a tenant or owner of your building, we wouldn’t recommend that you operate without it.  

General Liability Insurance would cover you in the event of a lawsuit from a non-employee who claims that they suffered either bodily injury or property damage as a result of your business operations. There are four significant areas of coverage on a General Liability policy. Bodily Injury and Property Damage, Products and Completed Operations, Damage to Rented Premises, and Medical Payments.  

Restaurants are subject to frequent claims from slip and fall, foodborne illness claims, customer burns, or damages to customers’ personal property due to accidents. General Liability policies provide the coverage you need to cover the cost to defend a claim should it arise and pay any damages awarded.

Commercial Property Insurance

Commercial Property policies are often packaged with your General Liability Coverage, and it’s another coverage we highly recommend purchasing as part of your risk transfer program. You’ve invested a lot in the perfect presentation for your customers. In the event of a fire or other disaster, you want to make sure you haven’t lost out on that investment. Commercial Property coverage can cover the cost to replace part or all of:

• • • The building you occupy if you are a building owner
    • Renovations you have made to an existing building or permanent improvements to the building you have invested in
    • Specialty or General Restaurant Equipment
    • Furniture such as tables and chairs
    • Serving ware and linens
    • Food and all ingredients
    • Liquor and alcohol
    • Point of Sale systems and other electronic equipment
    • Loss of Business Income in the event of an interruption of operations

Workers Compensation

If you have any employees, it is required by state law to carry Workers Compensation Coverage.
This type of policy, while mandatory by law, also protects you from lawsuits from employees if they get injured on the job.

While it may be frustrating to buy insurance as required by law, it often does prevent you from getting sued if an employee is burned, twists an ankle (or worse) while on the clock. Whether they have separate health insurance, workers comp will cover the cost of their medical care and lost wages due to their injuries. It’s critical for restaurants because employees are constantly on their feet, often moving quickly, serving customers, and often performing job duties in which they could get hurt (hot stoves, sharp knives, and managing the obstacles of the dining area, to name a few).

Workers Compensation can be a daunting policy to juggle on your own without the assistance of an expert advisor who understands your business. Workers Compensation policies are auditable, employees need to be classified correctly, payroll amounts need to be estimated and adjusted, and each state has its own rules for Workers Comp. We can help you make sense of it all painlessly from the start! As your business evolves, we know just how to make sure your policy grows with you so you can stay focused on what matters most to you.

Liquor Liability

If your restaurant serves alcohol, Liquor Liability is crucial coverage to consider. A General Liability policy will not cover you in the event of bodily injury or property damage resulting from alcohol service at your establishment.

The most common claim that Liquor Liability policies can cover is bodily injury and property damage resulting from a drunk driving incident, in which the person at fault was served at your restaurant (at any point or in any amount that day). Some state laws, such as Connecticut, used to cap awards for suits to limit the risk to the restaurant or bar. Still, in the past few decades, these laws have been trumped by case law, often awarding multiple hundreds of thousands or upwards of millions to claimants. Therefore, a review of your serving practices as a preventative measure, as well as a Liquor Liability policy with appropriate limits, is highly recommended.

Cyber Liability

Another essential coverage to consider is Cyber Liability Coverage for your Restaurant. General Liability Policies only cover bodily injury and physical property damage claims. It will not protect you in the event of a cyber claim, so you need separate coverage to address this need. Most restaurants’ primary payment source is credit cards or debit cards from their customers. Mistakenly, many restaurants assume that their POS provider is the company that carries all the risk in this area. If there is an identity theft of a customer or a cyber breach, isn’t it the responsibility of the POS Vendor? After all, they are the tech company. Unfortunately, the answer is most often no.
Read the fine print on your contract…most of the POS companies will only assume as much risk for cost due to a data breach as what is equal to your price of subscription- which is minuscule compared to the actual cost of a cyber claim. Navigating a cyber liability claim without this coverage is something no business owner wants ever to encounter. We recommend leaving the work and the cost to the professionals and getting Cyber Liability coverage so you can stay focused on what matters most to your business.

Employment Practices Liability (EPLI)

If your restaurant has employees, we highly recommend an EPLI policy. A Workers Compensation policy will only cover you if your employees become physically injured on the job. It will not respond to claims of harassment, discrimination, or unfair labor practices. In today’s litigious environment, this coverage is paramount to a comprehensive insurance plan.

Even if you have all the best rules concerning employee treatment, anyone can still accuse a restaurant owner of mistreatment. State and federal laws protect many classes of employees- whether it be age, race, religion, etc. The best part of an EPLI policy is that it will cover your cost to defend these claims and provide you with the legal representation and expertise to do so. A quality EPLI policy can also offer you coverage if a non-employee (3rd party) brings similar claims against you; for example- a customer who claims harassment based on their race or a vendor who claims sexual harassment by a member of your staff.

Commercial Auto Insurance

If your restaurant owns or leases vehicles registered in the Business name, you will need a Commercial Auto policy to cover those vehicles. Like Personal Auto Insurance, Commercial Auto Insurance provides Liability and property damages to protect the business from liability claims and the cost to repair or replace physical damage to your owned vehicles.

But what about owners or employees using their cars to deliver food– what kind of policy covers that? Here’s where the advice of a professional insurance advisor at InsureGood comes in handy. Commercial Auto Insurance can provide liability coverage that follows vehicles owned by the business, vehicles hired by the company, vehicles not owned by the company, and more. How you build your Commercial Auto Insurance policy should be reviewed with an advisor at InsureGood to ensure that your restaurant is adequately protected depending on how you use vehicles in your business operations.

Is Business Insurance Required in Connecticut for Restaurants? 

In Connecticut, the only mandatory Business Insurance is a Workers Compensation Policy if you have employees. The definition of “employee” for Workers Compensation purposes can differ from the definition of “employee” for tax purposes, so even if you only have 1099 contractors working for you, they may still be considered an “employee” for Workers Compensation purposes. We recommend a review with your InsureGood Insurance Advisor to ensure you are compliant in this area to avoid fines or worse.

Other states, such as New York, require additional insurance. For example, new York requires a particular New York State Disability policy in addition to the Workers Compensation Coverage. If you are a Connecticut Restaurant but have employees in New York, a review with your InsureGood insurance advisor will help to ensure you are compliant with State Laws.

How Much Does Restaurant Insurance Cost?

Unfortunately, there is no one answer to this question. The answer is “it depends.” Many factors determine the cost of insurance, but all involve the amount of risk you ask an insurance company to take on if you have a claim. The more risk, the higher the cost. For example, a deli with one location, two employees, no frying operations, limited hours, no alcohol service, and in a sprinklered building will pay much less for their insurance policies than a larger restaurant with multiple locations, 30+ employees use deep fryers and multiple open flames, is open until 2 am, has 30% or more of their income from alcohol service, and is in a wood frame non-sprinklered building. In these examples depending on the coverages purchased the deli’s insurance costs may start as low as $1,500 while the multiple location restaurant maybe $20,000 and up.

When considering cost- it’s also essential to make sure you are getting what you pay for. A policy is only as good as responding to a loss if you need to make a claim. If your policy doesn’t cover you for the losses you think it will, the money you paid for the policy can seem wasted.

The best way to determine the cost of your insurance is to work with an advisor at InsureGood to establish the coverage package that works best for you and obtain a quote!