Restaurant owners have endured an interesting few years. The pandemic, supply chain disruptions, staffing shortages, and the inflated economy have all made an already challenging type of business almost impossible to maintain.
Those who’ve made it through the turbulence have come out on the other side stronger, more cautious, and perhaps a little weary. After all, in 2020, restaurant closure rates increased by 95%, causing the closure of nearly 160,000 eating and drinking establishments across the U.S.
Thankfully, industry experts noted that restaurant closures in 2021 were less than pre-pandemic levels. Because in addition to pent-up demand, consumers have been on a spending spree since the start of 2021, and they love to eat out.
Nearly half of all Americans dine out once a week. This presents a considerable opportunity for restauranteurs, but only if they’re running their businesses properly. To do so, they need excellent leadership, a top-notch team, and the right insurance coverage to protect their establishment from accidents and unforeseen events.
But there are specific policies restaurants need. Still, trying to figure out where to start? An insurance professional can help you find the best coverage for your business. In the meantime, here are a few types of insurance every restaurant needs.
General Liability Insurance
Every restaurant needs general liability insurance, whether fast food, fast casual, or fine dining establishments. General liability is the starting point for every business owner’s insurance policy because it covers the basics.
Think about all the things that could possibly go wrong. For example, a customer gets up to go to the bathroom, but the busser recently mopped the floors. They slip and fall on a tile floor, breaking a bone. You’re on the hook for their medical expenses (at the very least). Can you afford it?
For most restaurateurs, the answer is no. And that’s why general liability is so significant. This policy protects you if a customer is injured on your property, lawsuits of any kind, reputational harm caused by a disgruntled employee, and advertising injury.
Workers’ Compensation Insurance
But what about employees? What happens when they get hurt on the job? In the restaurant business, it certainly happens. For instance, a line cook gets burned by a hot grill, a dishwasher slips and falls in the cleaning bay, or a bartender slices their finger on a broken glass.
These scenarios play out in restaurants across the country daily. And every day, workers’ compensation insurance covers the costs associated with workplace accidents. In addition, workers’ compensation pays for medical expenses, lost wages, retaining, permanent disability, and survivor benefits.
As important as these benefits are for restaurateurs and their employees, they’re actually mandated by law. And although these laws vary slightly from state to state, businesses with one or more employees must carry workers’ compensation insurance.
Commercial Property and Auto Insurance
Do you own or lease your location(s)? Either way, you need a policy to protect your building and its contents. And that’s precisely what commercial property insurance does. So if a fire, flood, or other natural disaster damages your property, commercial property insurance covers you.
These policies also come in handy in the event of a break-in or other accident, like a patron accidentally driving through your front door. But what about vehicles? What protects your business’ vehicles used for catering services or your food truck?
Commercial auto insurance can help. These policies cover everything from fender benders to car-totaling accidents and will even cover resultant property damage, rental cars, and towing.
Tools and Equipment Insurance
It takes a lot of equipment to do what you do well. You have industrial fryers, commercial grills, and flat tops, sophisticated computer systems, and more. What happens when they get damaged or stolen? Tools and equipment insurance has you covered. These policies reimburse costs associated with broken or stolen equipment.
Let’s say your dishwasher unexpectedly conks out. These machines start at $5,000 but can easily cost thousands more depending on the size and scale of your operation. Unfortunately, few restaurants have the cash to replace one immediately, yet functioning without a dishwasher isn’t an option.
Tools and equipment insurance will cover the costs of getting a new dishwasher. So, depending on your deductible, that $5,000 dishwasher suddenly costs much, much less, and you can get back to what you do well—serving customers delicious meals.
Liquor Liability Insurance
You don’t need liquor liability insurance if your establishment doesn’t serve liquor. However, liquor liability is definitely a policy you should consider if you do. In fact, most states require restaurants serving alcohol to carry liquor liability as a condition of their liquor license.
This policy protects your business from the actions of intoxicated patrons. Liquid liability will cover the costs if they punch another customer in the face or damage your property by ripping a mirror off the bathroom wall. Liquor liability also prevents accident victims from suing the restaurant should an intoxicated customer get into an accident on the way home.
You’re building a legacy with your restaurant, but if you want to make it last, you’ve got to protect it. So make sure your business has the coverage it needs to survive and thrive far into the future.
