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Running out of money is one of the biggest challenges restaurant owners face today. Not calculating the budget to include unexpected emergencies might bring a restaurant close to needing to file for bankruptcy.
As a restaurant owner, it's important to have the right restaurant insurance. This article will guide you through the different insurance policies you'll need and explain why they are important for protecting your business.
Commercial General Liability
Commercial general liability insurance or restaurant liability insurance is one of the most important coverages that every restaurant owner should purchase. This insurance protects against property damage or bodily injury that customers may experience while at your restaurant.
Following, are a few examples of the coverages included in a commercial general liability policy.
Restaurants can be prone to fire damage. Many restaurant owners lease the building in which they operate. If a fire accidentally starts and it damages a building you rent, your landlord come after you for the property damage.
A commercial general liability policy automatically includes a coverage called Damage To Premises Rented To You. This coverage is normally subject to a sublimit, such as $100,000. It's important to confirm that your limit provides enough coverage. Some insurers will provide $300,000 or more, and some will cover include this coverage, without a sublimit.
Food Poisoning: When you own a restaurant, food poisoning can sometime occur. Sometimes, the claims of food poisoning can be groundless, but others may not be. A restaurant insurance policy can cover these types of claims if consuming your food causes bodily injury to someone .
Customer Burns: If hot liquid is spilled on someone, or a customer touches a scalding hot plate, the commercial general liability policy will cover bodily injury that is caused to a customer.
Slip and Falls: These are the most common claims we see filed on restaurant insurance policies. Slips and falls commonly happen when water, food, or anything else on the floor, causes a customer to slip and injure themselves.
Most often, this is a "medical payments" claim. The policy that pays for small medical bills of up to about $5,000, regardless of fault. Unfortunately, these claims may sometimes cost more or can escalate into a lawsuit. If this happens, it is almost always covered under the commercial general liability insurance policy.
Liquor Liability - Only If You Serve Alcohol
If you serve alcohol of any kind, your state will most likely require you to hold liquor liability coverage to maintain your liquor license. This coverage protects your business from the legal liability arising out of overserving a customer. It will also provide coverage if an accident occurs as a result of you serving an customer.
The majority of these types of claims arise from an overserved customer that has been in a drunk driving accident. As the restaurant business owner, you could be held liable for that, in some states. In other states, you might be listed on the lawsuit and will have to fight your way out of it.
Liquor liability is a policy that can sometimes be included in your general liability policy, and will pay for these types of accidents and your legal bills. It's extremely important to confirm that you have this type of insurance, if you serve any alcohol in your restaurant.
Garage Keepers Liability - Only If You Have A Valet Service
When you have a valet service and a customer's vehicle is damaged while in your care, commercial general liability insurance does not cover auto accidents. The garage keepers policy covers customer vehicles in your care, custody, and control.
If your restaurant offers valet service, most likely, some of the vehicles parked by your staff are very expensive. Garage keepers liability insurance is a necessary coverage for restaurants with valet services.
Commercial Property
The commercial general liability policy most often sees the highest frequency of claims, but the restaurant commercial property insurance policy will commonly see the highest dollar amount of claims. This insurance policy can cover the building, the kitchen equipment, freezers, ovens, dining tables, and any other property you'll have in your restaurant.
The most common types of claims on restaurant commercial property insurance policies range from theft, to building fires. Because restaurants are so highly visible to the public, and their operations include ovens and open flames, commercial property is also a must-have insurance coverage.
Workers Compensation
Workers compensation insurance is usually required by your state government. This type of insurance pays for medical bills caused from an injury to an employee while they were working.
This is very important for restaurants, because your employees are always carrying heavy dishes, reaching overhead, touching hot surfaces, and sometimes climbing on chairs.
Workers compensation insurance will also cover a portion of an employee's income if they are not able to work, due to a severe injury at work.
Commercial Auto Insurance
Many restaurants have vehicles that are used for delivering food, picking up supplies, or other business purposes. Business-owned vehicles should be insured under a business auto policy, called commercial auto insurance. The policy should cover non-owned autos and hired autos, as well as vehicles the restaurant owns.
As you can see, you'll need the right combination of insurance coverage for your unique restaurant. You don't want to be under insured and you definitely don't want to overpay for your coverage.
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