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Here’s what you need to know about restaurant insurance

Here’s what you need to know about restaurant insurance

By Jonathan Bender
Jun 23, 2022
6 min read

You know that opening a restaurant isn’t only about getting the food right. If you want to protect your investment and your employees, restaurant insurance is an important piece to have in place ahead of opening your doors. 

This is when you may be wondering what kind of insurance does a restaurant need? Property owners and local governments will often require you to get insurance before you start serving customers. The key is to find the right coverage that protects your staff, customers and dining establishment. 

Read on to discover common types of business insurance and how restaurant business insurance can help you manage risk and focus on building your business. 

What should you know before looking for restaurant insurance?

There are a number of factors that determine the insurance you need. Perhaps you added outdoor seating or pivoted to delivery during the pandemic. Here’s what to consider to properly assess your risks. 

  • Restaurant operations.Consider the type of restaurant you own. Is it a ghost kitchen, or will you be hosting guests in the dining room? 
  • Physical location. Look at where your restaurant is located. Are you in a building you own or renting a space? 
  • Employees. Determine the number and type of employees you’ll have on staff.
  • Added services. Do you have amenities or extras at your restaurant? For example, figure out if you’ll need a company-owned vehicle for deliveries or to transport equipment. 
  • Finalize your food and drink licenses. While your staff will likely have to secure food handler licensing, this is also where you decide if you’re serving alcohol. 

General liability insurance

Restaurants are busy places with a lot of people moving in and out during the lunch or dinner rush. That’s why most restaurant owners – 95% – have general liability insurance, which can cover medical expenses and the cost of property damage in the event of an accident involving someone other than your employees. 

Restaurant liability insurance would likely cover a customer’s medical bills if they slipped on a wet floor and you were held responsible. Or it could cover the costs associated with a lawsuit if you accidentally used a copyrighted image in a social media post. 

General liability might also cover replacing a customer’s property, like a cell phone, if a server accidentally spills a drink on them. Our general liability insurance includes professional liability insurance, which can save you from costly bills if a server mistakenly brought food to a customer with an allergy and they ended up missing work because of the severity of their reaction. 

This is where you’ll want to check with the owner of the property where your restaurant is located, as well as local and state laws to discover if you’re required to carry general liability insurance before you open. 

Commercial auto insurance 

While you may have thought commercial auto insurance was only for food trucks, it’s a critical piece of restaurant insurance if you or your employees are using a vehicle to run errands or deliveries for your restaurant. 

Even if you’re using a personal vehicle, to shuttle ingredients from a restaurant supply shop or an ice cream machine that’s being repaired, personal auto insurance won’t always cover business-related activities if you get into an accident. 

Commercial auto insurance can help you cover medical expenses and property damage in the event of an accident involving a business-owned vehicle. You may also be reimbursed for the cost of a rental while that vehicle is in the shop. 

Workers’ compensation insurance 

Since you may be hiring employees that are new to the service industry, it’s important that you’re covered in the case of injury. The U.S. Bureau of Labor Statistics reported 93,800 injuries and illnesses among restaurant workers in 2019 with more than a third of those cases requiring people to take at least a day off from work. 

While commercial cleaning protocols and safety training can mitigate risk, accidents do happen. Let’s say a new trainee burns their arm on the side of an oven or cuts their hand on a broken glass in the dishwasher. Workers’ compensation can cover lost wages and medical expenses for your employee while also protecting you from liability. 

Note: Workers’ compensation is typically required by law in most states if you have people working for you. 

Commercial property insurance 

Owning a restaurant is full of unpredictable moments. You don’t know that a special will become your signature dish or a burst pipe will turn your walk-in into a swimming pool. Commercial property insurance aids restaurant owners who rent or own a physical space by protecting the building and what’s inside the building. 

In the case of a covered event — a potential example might be a faulty dishwasher that floods your kitchen  — restaurant insurance could take care of your repairs or replacement costs for equipment, inventory and spoiled food. If you’re the property owner, you may also get help for the cost of making repairs to the building in the potential case of a fire or vandalism. 

Liquor liability insurance 

Serving alcohol can boost your profit margins, but it also comes with a lot of potential liability. That’s why your restaurant can benefit greatly from liquor liability insurance

This type of restaurant liability insurance protects your business in the case of an intoxicated customer who engages in destructive behavior, even after they’ve left your restaurant. Liquor liability insurance can help with legal defense fees or medical bills if your restaurant is held responsible. 

How NEXT can help you get the restaurant insurance you need 

Your restaurant is unique. That’s why NEXT Insurance offers customized, reliable restaurant insurance at an affordable price. 

Our goal is to let you focus on your business. That’s why we built a quick and easy way to get restaurant insurance online and receive your certificate of insurance in about 10 minutes. 

Get your instant quote now.  

Here’s what you need to know about restaurant insurance

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About the author
Jonathan Bender is a food writer who lives in Kansas City, Missouri. He's also an Emmy Award winning documentarian and the author of a pair of cookbooks: Stock, Broth & Bowl and Cookies & Beer. He's written about restaurants for two decades, which thankfully for diners and his self-esteem, is much longer than his career as a waiter. He is always happy to share barbecue recommendations and is open to your sandwich suggestions.
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