Are you planning to open a restaurant soon? While it’s an exciting venture, especially if you’re a foodie or someone who loves cooking, running a restaurant comes with various risks. Some of these risks include accidents in the kitchen or serving area, fire, and theft.
When it comes to minimising the risks of having a restaurant, there are many things you can try. One of which is getting business insurance. In doing so, especially if you’re a start-up, and don’t have any background in business insurance, it’s best if you can hire an insurance broker.
An insurance broker is a professional who knows everything you need to know about insurance. In your case, it’s best if you can hire an insurance broker specialising in restaurant or food business insurance. However, even if you’re planning to hire an expert, knowing the basics of restaurant or food business insurance is recommended.
In this article, we’ll discuss everything you need to know about restaurant and food business insurance.
1. Why is Insurance Essential for Food Businesses?
As mentioned, restaurants often encounter various challenges, including employee injuries, property damage, and customer lawsuits. If you don’t have comprehensive business insurance, one accident can be the end of all your hard work.
Although there are areas where business insurance is required, some restaurant owners settle for the basic coverage, which, in the end, can’t help them at all due to limited coverage.
2. Types of Insurance Coverage
Business insurance comes with a lot of types of coverage. As a beginner in the restaurant industry, it can be difficult to find the right coverage. This is why it’s recommended to work with an insurance broker. They’ll assess your needs and recommend the types of insurance and the coverage you need.
a) General Liability Insurance
General liability insurance covers third-party claims, which include property damage, advertising lawsuits, and customer injuries. For instance, if the customer gets burned by an extremely hot soup, they can sue your restaurant, and you can file claims for financial assistance against that lawsuit.
b) Commercial Property Insurance
Food establishments, including restaurants, have furniture, equipment, and inventory. If some of these properties get damaged or lost due to fire, theft, or other causes, you can file for claims, given that you have commercial property insurance.
c) Workers’ Compensation Insurance
One of the required insurance coverages for businesses is the workers’ compensation insurance. It offers financial assistance to employees who encounter injuries or sickness while working. For instance, if one of your kitchen staff slips, they can file for claims that can help with their medical fees.
d) Food Contamination & Spoilage Insurance
The food contamination and spoilage insurance covers the losses in case of equipment malfunction or food contamination. So, if your refrigerator is broken and you fail to save all your inventory, you can file for the said claims.
e) Liquor Liability Insurance
Are you planning to serve alcohol in your restaurant? For instance, if you specialise in Spanish cuisine and you’re planning to open a Spanish restaurant, availing of liquor liability insurance is a must. It allows you to serve wine and other alcoholic drinks that go well with the dishes.
f) Business Interruption Insurance
In case you need to pause your operations for a while due to various reasons such as natural disasters, fire, or theft, having business interruption insurance can significantly help you move forward.
g) Commercial Auto Insurance
Are you planning to include food delivery as one of the services you provide? Availing of commercial auto insurance is a must. It covers vehicle damages, accidents, and liability claims.
h) Cyber Liability Insurance
Nowadays, restaurants offer online reservations, deliveries, and other transactions. By availing of cyber liability insurance, you can ensure that you have an additional layer of protection that will prevent hackers from stealing your restaurant’s customers’ information.
3. How to Choose the Right Insurance Policy?
Choosing the right insurance policy can be a daunting task, which is why it’s recommended to hire an insurance broker. They have all the information you need and are updated about the best insurance policies that various insurance providers offer. However, even if you’re planning to hire an insurance broker, you should still know the things to consider when looking for the right insurance policy. Some of these include:
a) Assess Your Risks
Identifying the risks that your restaurant or food business may encounter should be the first thing to do. Besides, if you don’t know your risks, you can’t prepare for them in advance.
b) Compare Policies
Different insurance providers offer different business insurance policies, which is why you should compare their differences and identify which policy fits your needs and preferences.
c) Review Policy Exclusions
Just because an insurance policy covers all aspects of restaurants and food businesses doesn’t mean they cover everything. You should still analyse the policy and understand what it covers and what it doesn’t.
d) Update Coverage Regularly
Even if your restaurant is a start-up, you should also give way to its possibility to expand and grow. Take some time to update your coverage regularly so you won’t have to waste your money and your restaurant is comprehensively covered by your chosen business insurance.
Final Thoughts
As a restaurant owner, investing in the right insurance coverage allows you to focus on the improvement of your restaurant and have peace of mind. By understanding the things listed in this article, you can have a basic knowledge about the things you need when deciding on business insurance.