Whether you run a coffee shop or a fine dining restaurant, working in the food industry needs different insurance than other small business owners. With so many services offerings restaurants give to their customers, you must dot your i’s and cross your t’s as a sustainable restaurant business, especially where your insurance is concerned.
In the rest of this article, we will take you through understanding what insurance means to your restaurant business, the different types of restaurant insurance, and how to get your business covered the right way.
Commercial restaurant insurance provides all the protection you need to run your business safely and smartly for yourself, your employees, and your customers. But how much does this insurance cost, and what can it do for you?
How Much Does Commercial Restaurant Insurance Cost?
Like any other type of insurance, bakery insurance cost for restaurants will depend directly on the policies you apply to your insurance plan.
The most common type of insurance for restaurants is business owner’s policy insurance, which bundles general liability, commercial property, and business income coverage into one plan.
Bundling your insurance policies into a single plan can go a long way to making your restaurant insurance more affordable each month. Of course.
Hoe much restaurant insurance cost will be may of be determined by your state, your specific location, the operations of your business, the value of your property, and the value of the equipment used by your business.
How much will my restaurant insurance cost per year?
How much does the Restaurants Insurance cost depending on the size of the business? What is the average insurance premium at restaurants?
General liability insurance for startups is the average restaurant insurance cost or price range typically between $500 and $750 annually. Approximately $42-$92 each month. Restaurant insurance costs, therefore, vary enormously.
Most restaurants pay around $4,000 on average for restaurant insurance annually for combined business owners’ policies, workers’ insurance, and liquor liability insurance for their customers.
What insurance coverage do I need for my restaurant?
The selection of the insurance necessary requires a comprehensive examination of your operational risks and the types of policies available that may reduce these risks.
Although restaurants vary, many policies can be used – these are the two most widely accepted forms of restaurant insurance, general liability insurance, and commercial property insurance.
Business Owner’s Policy
The commercial property policies for the business include general liability insurance or customer slip as part of the package. In addition, it can often cover interruptions to business activities. It’s designed for small and medium businesses.
A BOP may also add coverage like breakdown insurance for machinery damage. A Business Owner’s Policy, or BOP, safeguards your buildings, equipment, and inventory if your restaurant is starting as a small business, protects you from liability claims and lawsuits, and provides financial protection if your operation is abruptly forced to close due to a covered loss.
They can also provide coverage for lost income and other expenses that may occur due to business interruption.
General Liability Insurance
This will take effect when the client falls or damages your property. Generally held liability may cover damages incurred in an accident involving an unsatisfactory parking lot; it can also cover damages when a customer files a complaint against them.
Commercial liability insurance can cover a broad spectrum of damages as replacement costs for you, including the loss or retribution for a copyright violation. The costs associated with food are also included in general liability.
General liability insurance will be part of your business owner’s policy and will provide coverage for injured employees, customer property damage, and advertising injuries.
Customer injury can refer to food poisoning or injuries a customer sustains on your property, such as a slip and fall, which are inherent risks. For a restaurant, this coverage helps you and your customer deal with the financial repercussions of an injury on your property.
Worker’s Compensation
In addition to a business owner’s insurance policy, your state may require you to have other insurance coverage. Workers’ compensation insurance is generally required by almost every state, as this will provide coverage for any medical fees and lost wages for workers’ compensation to those injured while working.
This worker’s compensation insurance also protects business owners against complaints about workplace injuries. Workers’ compensation insurance for small businesses costs about $125 per month.
Commercial Auto
Your restaurant has to have commercial automobile insurance to operate its vehicle when carrying out deliveries or business operations. Typically, this covers bodily injury and property damages liability, comprehensive and collision coverage.
Liquor Liability
If you offer liquor at your restaurant, your state will likely require you to have a special liquor liability insurance policy. This policy protects restaurants from intoxicated customers who may harm themselves or personal property.
A liquor liability policy may legally require you to have a liquor license. This policy generally costs about $45 per month. Liquor liability insurance helps you cover legal fees if a restaurant serves someone with drinks.
A separate policy covers damages and medical expenses when a person is involved in an alcohol-related incident. A drink-drive incident is a criminal defense suit subject to liquor liability insurance policies in the case of an intoxicated motorist regarding the business owner’s policy.
Overall, the cost of your restaurant insurance will depend on your specific policy. If you start with business owner’s insurance, your policy will bundle in general liability, commercial property, and business income insurance, which can save you money in the long run.
Saving money may be important if your business needs additional insurance, such as liquor liability and worker’s compensation insurance. Such a business involves costs in which You may spend up to $300 to $400 per month for all the coverage your restaurant will need.
Commercial Property Insurance
Commercial auto insurance can help ensure that your restaurant’s business success primarily depends on the physical property in which your food is cooked, purchased, or consumed. Typical commercial property insurance policies will include your restaurant, food items, equipment, signage, and other items that you consider important to your business. In addition, your policy needs to match the risk you may experience at the restaurant.
Business Interruption Insurance
BOP is also covered by business interruption insurance of the business owners policy – sometimes dubbed business income & lost income. This policy will help you cover costs related to running a food shop for a prolonged period if you face closures or any other reason. If you want to keep your operations going while your business is closed, you could add additional expense coverage to the BOP.
Hired and Non-Owned Auto Liability Insurance
Providing employees with supplies for your restaurant is considered a business activity. You are liable to pay damages for the damages caused by accident. If a personal vehicle is used to operate a business and your business has not been registered, you will need an auto liability agreement as there might be risks involved.
Commercial auto liability damages, such as settlements or judgments, medical payment, attorney fees of the liability risks, and other factors of the court costs that result from an auto accident for which you or an employee are at fault, are covered by hired and non-owned auto (HNOA) insurance.
Think about including HNOA protection in your business auto policy. HNOA insurance can protect your business in case of a legal dispute stemming from an automobile accident that occurs while you or an employee are using a vehicle for restaurant purposes like food delivery.
Food Contamination Insurance
The food Contamination policy covers food loss due to contamination and equipment repair. When restaurants close their doors, you will also lose net earnings. Having food spoilage coverage and food contamination coverage in your business insurance policy can help in those situations.
It covers employee medical testing and equipment cleaning costs if your business is closed because of food poisoning or other illnesses. It can also reimburse you for lost revenue and pay for the costs of helping you restore your reputation.
Having food spoilage and contamination coverage can also cover the costs of legal advice that you may need to deal with any potential lawsuits that could arise from the incident.
Who Exactly Needs Insurance?
All business owners would be wise to set up an insurance policy for their business, regardless of whether or not their state requires such property insurance. This is especially true for restaurants that produce goods directly consumed by customers. Insurance coverage will protect you from food poisoning claims and other issues.
Your business will need food and restaurant insurance for small single-shop diners and restaurants with multiple locations. Some examples of small restaurants that will require insurance and workers’ compensation coverage include:
- Cafes and coffee shops
- Fast food restaurants
- Ice cream shops and creameries
- Fine dining establishments
- Cafeterias and buffets
- Pizzerias
- bakery insurance average cost
- Caterers
- Food trucks
- And more
If you work with food and have employees, you will need insurance. The size of your restaurant does not impact your need to have insurance, but it may impact how much your insurance coverage costs each month.
Why Is Insurance Important?
You can think of insurance as a safety net for your business. More than other small businesses, running a restaurant is a gamble and a huge financial investment. When you open a food establishment, you are counting on your recipes being popular enough to offset your operation costs (particularly the cost of your food inventory) each day.
About 60 percent of restaurant opening failures occur within the first three years of operation. The statistics continue, with almost 81 percent closing their doors before they’re five years old. Why are restaurants failing? When many new restaurants spring up, they measure their potential starter losses but fail to make plans for their accidental losses, which could have been covered with a good business insurance plan for insurance costs.
The best way to protect your business is with coverage for your restaurant. This insurance coverage will help you avoid massive financial pitfalls if injuries or property damage occur at your restaurant. With this protection, you can recover more quickly and keep your business moving forward no matter what.
Why Do Restaurants Need Insurance?
Business insurance for the restaurant industry is the first step to making your business sustainable. Running a restaurant is often a much bigger responsibility than running other types of small businesses, particularly because there are so many moving parts behind the scenes that are required to keep a restaurant running smoothly. Some reasons you may want a robust property insurance policy include the following:
1. Kitchen Disasters
Cooking in your home kitchen and cooking in a commercial kitchen are two very different things – and to be sure, a commercial kitchen can be a very dangerous place. One thing to consider is that commercial kitchen equipment uses open flames and advanced heat settings that can make for fast disasters if the equipment isn’t working properly or if employee errors are made.
For example, an oil fire is common in a kitchen and often very difficult. Kitchen fires can damage the kitchen structure and commercial equipment which prevents you from operating your restaurant until repairs are made. Part of your commercial property coverage will protect you from kitchen or food truck disasters such as this. To keep the restaurant owners’ business running.
2. Staff Injuries
Restaurant cooks and servers are at risk for workplace injury and should be given workers’ compensation, particularly during peak operation hours. Hot food and beverages pose the risk of burns that may require medical bills at their temporary locations for most periods.
Kitchens also pose the risk of workplace injuries such as burns, cuts, and other injuries. Employee injuries can be a cut on broken glass or burning their hands improperly handling hot plates and other equipment, which risk inherent, such as industrial coffee makers.
Other injuries are very common when you are working as a restaurant employee. For example, carrying trays of food and heavy plates and taking garbage out can physically tax the body and cause issues such as back strains. While some injuries have faster recovery than others, restaurant owners do themselves and their employees a favor when they have the appropriate insurance necessary for staff injuries.
3. Customer Injuries
Aside from the risk of poisoning and foodborne illnesses, there are other injuries customers can sustain while they are on your commercial property, such as a car accident, and a restaurant liability insurance cost is necessary. For example, spilling a hot drink can cause superficial burns, slip and fall accidents can cause bruises and bone injuries, and other injuries caused by your employees or your food products can happen. Part of your product liability insurance will cover your customers’ bodily injury as workers’ compensation.
That said, poisoning claims are likely the most common customer injuries you will need protection to make necessary insurance costs arrangements. The health codes put in place by your state are designed to prevent poisoning, but a customer may make a poisoning claim against you even if you follow the health code to the letter. Again, general liability insurance will help protect you from these claims as a general liability insurance policy.
4. Lawsuits
Some customers may seek financial compensation for injuries related to your restaurant, which is to be provided by the restaurant owners, particularly in the case of food poisoning allegations. A single lawsuit can put a small business under and cause a restaurant to close, even if your business is successful.
However, with restaurant liability insurance, not only will you be able to make a settlement with a customer, but you will also be able to pay for legal costs related to the case.
5. Equipment Coverage
Equipment breakdown insurance is mandatory for a restaurant; for example, our industrial kitchen is stocked with expensive equipment that may attract thieves or even need expensive repairs when parts are broken; therefore, there is a need for equipment breakdown insurance and equipment breakdown coverage by the restaurant owner.
Since you need your equipment to run your restaurant, you must have proper restaurant insurance that has essential coverage for your equipment so you can be protected from theft, damage. Simply having cheap restaurant business insurance won’t cut it for most restaurant owners. One
6. Cybersecurity
You might not think about it at first, but even restaurants will need cybersecurity coverage in this day and age. Because most customers will pay with credit instead of cash, you need a policy that will cover your business in case of cybersecurity breaches.
It’s too easy for identity thieves to lift credit card information from cashier terminals; legal fees and insurance coverage to protect you in the case of breaches will allow you to keep your business going and reduce lost wages if a customer’s personal information is stolen during a transaction.
From the smallest cafe to the grandest fine dining establishment in the restaurant industry, restaurant insurance is vital to running any food industry business. With a business owner’s insurance and liability coverage, you can bundle the best policies to cover your business operations, commercial property, income, employee health, and customer health. To learn more about restaurant insurance, please get in touch with us.
