What is Restaurant Liability Insurance?

Your restaurant is growing and so are your liability risks. Use this as a guide to understanding what restaurant liability insurance you need.
Operating a Connecticut restaurant has a lot of risks. From navigating the rapidly rising costs of food to the challenges of finding and retaining staff – keeping everything going can cause some sleepless nights

One risk that no one likes to talk about is the risk of a lawsuit. Yet, its a very real risk. In fact, its estimated that 90% of all small businesses that reach 10 years old will be sued at some point.

Common restaurant liability claims include, employment and wage lawsuits, liquor related lawsuits, slip and falls, and claims related to food-born illnesses.

Thankfully, most of these restaurant risks can be managed with insurance and solid operational management. Read on for a quick primer on liability insurance basics for your restaurant.

customer slip and fall stats

What is Restaurant Liability Insurance?

Liability Insurance protects you from lawsuits. It covers the cost for legal defense and any monetary awards granted to a claimant as a result of a lawsuit against your business, There are several types of liability policies and each covers a different type of lawsiut you may find yourself in.

What Are the Different Types of Restaurant Liability Insurance?

  • Employers Liability coverage is part of a Workers Compensation policy. It provides protection if an employee sues because they feel the benefits provided to cover their workplace injury and lost wages were inadequate. These situations are usually triggered when the employee feels their employer caused the injury due to their negligence and seeks punitive damages.
  • Liquor Liability policies covers lawsuits resulting bodily injury or property damage due to your restaurant’s alcohol service. The most common claim is a drunk driving incident.
  • Cyber Liability policies protect you from a lawsuit against you or covers the costs associated with state Mandated reporting requirements in the event of a data breach that exposes the personally identifiable information of your employees, customers, vendors, etc.
  • Employment Practices Liability policies (also known as EPLI) cover you when there is legal action from an employee claiming harassment, discrimination, or wrongful termination. A comprehensive EPLI policy can also protect you from these same claims by non-employees- such as customers or vendors.
  • Professional Liability policies, sometimes also referred to as Errors and Omissions or E&O policy, provides coverage for claims made against you that an error you made caused monetary loss for your customer. As an example, if you offer catering services and made a significant error for an important event (such as a wedding or corporate event) that caused the event to fail and your customer lost money as a result – this coverage can help.
    An infographic showing critical types of restaurant liability policies.

    What Type of Insurance Protects Restaurants When a Food Borne Illness Breaks Out?

    Great question! The Product Liability coverage found on a General Liability policy would respond to a Food Borne Illness or Food Poisoning type of claim. However, there are exclusions (exceptions) to this coverage found within the contract of different General Liability policies, so it is essential to review the coverages with your Insurance Advisor when you purchase your policy and periodically at renewal or as your operations change or grow.

    What’s the Best Way a Restaurant Can Protect Itself from Lawsuits?

    The best way a restaurant can protect itself from lawsuits is by having a comprehensive loss control policy to prevent issues that lead to claims. A loss control policy is a formal risk prevention plan that addresses ways to prevent claims from happening in the first place. These plans often include developing processes on everything, including but not limited to safety manuals for staff, formal training for alcohol service, schedules for the service, cleaning and testing of equipment, formal harassment training and processes for reporting incidents, training on handling Personal Identifiable Information of clients (credit card info) and more. InsureGood’s Business360 program is designed to help you reduce the many risks your business faces in these areas and more.

    But even with the best policies and procedures in place, accidents still happen, human error occurs, or you can be wrongfully accused. In these cases, a comprehensive insurance plan is an essential part of making sure your business is protected if a suit does come your way.

    The Final Word

    You’ve worked hard to build a successful and growing restaurant that is positively impacting your community in so many ways. Protect yourself with the proper liability coverages and a tailored restaurant insurance program to manage the many risks of lawsuits you face.

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