As a restaurant owner, you are a passionate entrepreneur who invests your time, money and talent into managing your business. The process of insuring your restaurant, however, is probably not on your list of favorite things to do.

While you are a successful at delivering exceptional food and service to your customers, the hospitality industry can be unforgiving when it comes to liabilities. Working in the industry also exposes you to many risks.

Incidents related to injuries, property damage, crime and liquor liability are all risks common to restaurant owners.

In this article, we’ll explore these common exposures for restaurants and help you identify what to look for in a comprehensive insurance and risk management strategy for your establishment.

Common Exposures When Insuring Your Restaurant

Property

Equipment failures, food spoilage, natural disasters, customers, employees and other third parties are the many faces of property exposure for restaurants.

Restaurants assume an elevated level of risk due to factors such as the wide use of combustible items around open flames and active water lines that could cause flooding.

The risk management strategy and insurance program for your restaurant should address these issues and provide you with sufficient liability coverage should property damage occur as a result of business operations.

Equipment Breakdown

As a restaurant owner, your equipment is fundamental to day-to-day operations. Without it you are rendered unable to serve your customers effectively.

In the event of an equipment breakdown, your restaurant could experience severe business interruptions and even prolonged closures. If this is a risk that could have severe financial consequences for your restaurant, talk to us about insuring for lost revenues as a result of equipment failure and breakdowns.

Crime

Your restaurant’s steady cash flow can easily become a target for thieves. Without adequate insurance in the event of a robbery, restaurant owners are left to recoup any funds or equipment lost as a result. Your comprehensive restaurant insurance policy should include coverage for financial losses due to theft.

Inland Marine

Not all properties are covered by traditional property insurance. It is your responsibility as a restaurant owner to be aware of the property coverage you have under your restaurant insurance policy.

Property that’s unique or valuable, in transit, in your temporary care, stored at a fixed location or used to transfer information is typically not covered under property insurance.

However, inland marine insurance can provide much needed protection for these items. Property such as accounts receivable, computer equipment, data and records, food transported to various locations and food trucks can all be covered with a inland marine insurance policy.

Premises

You may be held responsible for any injury to a patron that occurs at your restaurant. Accidents like slips, trips, falls, burns, scalds and cuts happen to customers everyday and can lead to costly claims following the accident. Including premises liability insurance in your comprehensive policy is essential to mitigate such risks.

Food and Product

Food safety is your number one priority and also one of your primary liabilities. No matter how hard you try to avoid it, the risk of food poisoning, contamination, spoilage and allergic reactions is always looming in a restaurant.

In the event that one of your customers becomes ill from your food or accidently ingests a foreign object found in one of your menu items, your restaurant could face legal ramifications and suffer reputational damage as a result. Food and product liability insurance can help you alleviate the financial strain that comes with this situation.

Liquor Liability

Lawsuits are often filed against restaurants for their role in serving a customer who is then involved in an alcohol-related accident. Liquor liability insurance helps mitigate these types of risks. Its purpose is to provide protection to restaurants against lawsuits and other financial liabilities resulting from incidents that arise from an intoxicated patron causing injury or property damage to themselves or a third party.

Business Interruption

Business interruptions can happen as a result of natural disasters, fires, food recalls, cyber events, staff shortages, supplier issues, or a global pandemic.

We’ve seen the effects of business interruption throughout the COVID-19 pandemic. Many businesses, especially restaurants, were unprepared for the closures required during quarantine.

These interruptions can be incredibly costly for your restaurant and lead to serious reputational damage and long-term closures. Continuity is critical in the hospitality industry, so work with your insurance advisor to make sure you’re adequately insured to recover if and when these events occur.

Cyber

Your restaurant likely processes a high volume of debit and credit transactions. For this reason, your establishment is an ideal target for cyber criminals. Even if your employees have been properly trained on computer and data safety, you may still be vulnerable to malware, ransomware, viruses, and phishing scams. Cyber insurance is one of the fastest growing areas of insurance for all industries, so consider including it in your policy when insuring your restaurant.

Automobile

If your restaurant offers a food delivery service or any service that requires a vehicle to operate, you are exposed to automobile risk. Automobiles are indeed important for daily operations, but also they are dangerous and can lead to accidents that result in lawsuits.

Moreover, if you allow your employees to use their own vehicles for work, standard auto policies often do not cover their usage during work hours.

Read more about Personal Vehicles for Business Use

You should also consider this additional coverage if you offer valet parking in case of damage to a patron’s vehicle.

Workers’ Compensation

Workplace accidents can happen to your employees in the kitchen and on the floor.

These might include cuts and burns; slips, trips and falls; ergonomic-related hazards; workplace violence; and drive-through exposures.

Improper techniques, poor safety and inadequate training can all cause your employees to suffer an injury on the job. This causes disruption to your business and negatively impacts your bottom line when costly claims arise. Make sure your workers’ compensation policy has you covered when insuring your restaurant.

We Have Your Back

No system is 100 percent effective for maintaining an accident-free workplace no matter how many risk management practices are in place to reduce exposure.

As a restaurant owner, play it safe and connect with us about obtaining coverage against all of the exposures that could potentially affect your business. Even if you have an existing policy in place, sit down to review it to make sure that you are insured for everything you need.

We’re here for you and we have your back when it comes to managing and mitigating your risk.