Whether you run a coffee shop or a fine dining restaurant, working in the food industry means that you need different insurance than other small business owners. 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 it cost and what can this insurance do for you?
How Much Does Commercial Restaurant Insurance Cost?
Just like any other type of insurance, the cost of coverage for a restaurant 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, the overall price may 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. On average, business owner’s insurance coverage for restaurants costs about $175 to $200 per month.
General liability insurance will be part of your business owner’s policy and will provide coverage for customer injury, 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. For a restaurant, this coverage helps both you and your customer deal with the financial repercussions of an injury on your property.
In addition to a business owner’s insurance policy, your state may require you to have other insurance coverage. Worker’s compensation is generally required by almost every state, as this will provide coverage for any medical fees and lost wages for workers who are injured while working. This insurance also protects business owners against complaints about workplace injuries. Worker’s compensation for small businesses costs about $125 per month.
If you offer liquor at your restaurant, then your state will likely require you to have a special liquor liability policy. This policy protects restaurants from intoxicated customers who may harm themselves or personal property. A liquor liability policy may be legally required for you to have a liquor license. This policy generally costs about $45 per month.
Overall, the cost of your restaurant insurance will depend on your specific policy. If you start with business owner’s insurance, then 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. You may spend up to $300 to $400 per month for all the coverage your restaurant will need.
Who Exactly Needs Insurance?
All business owners would be wise to set up an insurance policy for their business, regardless of whether or not such insurance is required by your state. 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.
From small single-shop bistros to restaurants with multiple locations, you will need food and restaurant insurance for your business. Some examples of small restaurants that will require insurance coverage include:
- Cafes and coffee shops
- Fast food restaurants
- Ice cream shops and creameries
- Fine dining establishments
- Cafeterias and buffets
- Food trucks
- And more
Essentially, if you work with food and you 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. Running a restaurant is also a huge commitment of time and energy.
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 occurs 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 a restaurant is the first step to making your business a sustainable enterprise. 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 insurance policy include:
1. Kitchen Disasters
Cooking at 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 the fact 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 errors by employees are made.
For example, an oil fire is common in a kitchen and often very difficult to put out. Kitchen fires can damage commercial equipment, the kitchen structure, and also prevent you from operating your restaurant until repairs are made. Part of your commercial property coverage will protect you from kitchen disasters such as this.
2. Staff Injuries
Both cooks and waiters in restaurants are at risk for injuries, particularly during peak operation hours. Hot food and beverages pose the risk of burns that may require medical attention. Kitchens also pose the risk of burns, cuts, and other injuries. Workers can be cut on broken glass or can burn their hands handling hot plates and other equipment, such as industrial coffee makers. Insurance helps you provide your employees with the medical care they may need if they are hurt while they are working.
Other injuries are very common when you are working in a restaurant. For example, carrying trays of food, heavy plates, and taking garbage out can be physically taxing on 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 food poisoning, there are other injuries customers can sustain while they are on your commercial property. 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 general liability insurance will cover any bodily injury for your customers.
That said, food poisoning claims are likely the most common customer injuries you will need protection for. The health codes put in place by your state are designed to prevent food poisoning, but it’s possible that a customer may make a food 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.
Some customers may seek financial compensation for injuries related to your restaurant, 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 the right insurance policy, 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
Your industrial kitchen is stocked with expensive equipment that may attract thieves or even need expensive repairs when parts are broken. Since you need your equipment to run your restaurant, it’s important that your policy has coverage for your equipment so you can be protected from theft, damage, and other issues.
You might not think about it at first, but even restaurants will need some form of cybersecurity coverage in this day and age. Because most customers will pay with credit instead of cash, you will need to have a policy that will cover your business in case of cybersecurity breaches. It’s all too easy for identity thieves to lift credit card information from cashier terminals, so insurance coverage to protect you in the case of breaches will allow you to keep your business going if a customer’s personal information is stolen during a transaction.
From the smallest cafe to the grandest fine dining establishment, restaurant insurance is a vital component to running any business in the food industry. With a business owner’s insurance, you can bundle in the best policies to cover your business operations, commercial property, income, employee health, and customer health. To learn more about restaurant insurance, please contact us.