Did you know that small businesses represent almost 98% of United States employer firms?
In most states, small businesses are required to carry liability insurance at the very least. It helps protect those businesses from claims having to do with bodily injury, property damage, and much more.
When it comes to restaurants, there is a multitude of things that can go wrong on any given day. Without restaurant insurance, your business, your product, your employees, and the people that you serve are all at risk.
Nothing is worse than having to shut down after a natural disaster because you don’t have insurance to cover the damage.
Or what if the power goes out and all your food spoils? What if one of your servers trips and breaks a bone while carrying a tray of drinks?
The key to running a successful restaurant is being prepared for the worst. Here are 10 of the top risk factors to consider when you’re looking for restaurant insurance.
1. Food Spoilage or Contamination
Food safety is one of the most significant insurance risk factors for a restaurant. Food poisoning is the most commonly reported restaurant injury.
Power outages, mechanical failures, and other occurrences can easily result in food spoilage. When that happens, the food needs to be thrown out right away to eliminate any chance of food poisoning.
This results in the restaurant losing money unless they have insurance. Most policies include coverage for food spoilage, but make sure that you confirm the limit in your policy to make sure that it’s enough to meet your needs.
2. Employee Lawsuits and Injuries
In the restaurant business, the culture isn’t always politically correct. Any joke can be taken the wrong way and cause an employee to want to sue their employer.
You want to make sure that your policy protects you against wrongful termination, discrimination, sexual harassment, and other allegations.
Plus, restaurant workers can easily injure themselves on the job, and you want to make sure you’re protected should that happen as well. Worker’s compensation insurance will do just that in the event of an injury or illness,
3. Business Interruption
In the restaurant business, the unexpected happens. An explosion, fire, flood, or any other damaging and unexpected event can result in your business losing money.
Most policies include coverage for those losses, which is where business interruption insurance comes in.
4. Equipment Breakdown
There is a lot of equipment in a restaurant that’s crucial for keeping business going.
Stoves, dishwashers, freezers, computers, and air conditioning are essential when running a restaurant. If you aren’t able to get your equipment back up and running right away, your business can incur lost income and pricey repairs.
Equipment breakdown insurance will get you back up and running without facing financial setbacks. Make sure your policy covers costs for labor to replace or repair that expensive equipment. Make sure it also covers costs for replacing any perishable food that was ruined as a result.
Depending on where your restaurant is situated, flooding could be a strong possibility.
Flood insurance isn’t typically included in a property policy, which is why it’s so important you choose to add it on or purchase it separately.
Check to see if your contents would be replaced at “replacement cost value” rather than “actual cost value,” which is the depreciated amount.
6. Sign Coverage
Any exterior signs associated with your restaurant are vulnerable, just like the rest of your property.
Vandalism, fire, and damage due to weather are all things that commonly affect restaurant signage.
A lot of property policies offer limited coverage for signs, but that amount isn’t always enough to cover a replacement.
If your sign was expensive, look into what your policy covers and add on if you feel it’s necessary.
7. Liquor Liability
Any business that sells liquor is liable for claims associated with someone getting inebriated to the point of serious injuries or property damage. If this happens, your restaurant isn’t exempt, even if the event occurred after that customer left.
If any civil or criminal acts occurred as a result of consuming liquor obtained from your establishment, you’re at risk of having to pay court fees, lawyer costs, and a number of other damages associated with the incident.
If you sell any type of alcohol at your restaurant, make sure you’re covered.
8. Auto Liability
Does your place of business offer delivery? Do any of your employees ever have to drive as part of the job?
Even if an employee uses their own car, if anyone is injured as a result of their driving while they’re making a delivery for your restaurant, you can be named and deemed liable in a lawsuit.
If your restaurant offers food delivery service, whether the drivers are using company-owned vehicles or their own, you can be named in a lawsuit as a result of an injury or damage caused by the driver while making a delivery for your restaurant.
9. Employee Theft
While it’s nice to think that you trust all of your employees, this isn’t always possible. Food and money are 2 things that you’ll always find in a restaurant. They’re also 2 things that are commonly stolen.
Even if someone is only taking a loaf of bread and some bacon to share with their friends and family, those costs add up. Once you realize it’s happening, it’s nice to have a policy that has you covered.
10. Data Breach
We hear about data breaches all the time, but no business owner thinks it will happen to them.
The unfortunate truth is that it does happen, so it’s best to be prepared for it.
A cyber liability insurance policy will offer you coverage for a data breach.
Restaurant Insurance Is Essential
If you’re running or opening a restaurant and you’re wondering if you need restaurant insurance, stop wondering.
With so many restaurant insurance risk factors, it’s vital that you protect yourself and your business.
Don’t think about how much it’ll cost you monthly. Rather, think about the thousands of dollars it could save you in the future. And whether it’s a data breach, equipment malfunction, or employee theft, the chances are that you will need insurance at some point.
So why not be prepared for the future? Do you want to get an idea of how much insurance will cost for your business? Start your quote and find out!