Blog Post / February 12, 2020 / Industry Voices

What Every Owner Should Know About Restaurant Insurance

by Emily Lazration

Owning a restaurant is a lot of work. Fulfilling as it is to create lasting relationships with guests, restaurant ownership requires hard work, discipline, and a lot of sleepless nights.

It also comes with its share of risks. No matter how prepared you think you are, your restaurant will encounter accidents that are out of your control. A customer may have an allergic reaction to your food, someone may slip and get injured on your floor, or a fire could destroy all your equipment. If a customer files a lawsuit, it can lead to significant financial losses. Worse, it could shut down your business.

But you shouldn’t let those risks discourage you. The key to managing a restaurant’s operational risks is to minimize the chances of an accident happening in the first place, and to make sure you're protected. Knowing the potential risks involved means purchasing restaurant insurance that meets the unique needs of your business.

For those who are just starting a business, purchasing insurance may seem like an additional cost, considering the already long list of expenses that come with starting operations. However, the nature of running a restaurant should make you realize that insurance is a necessary investment that will help your business in the long run.

How much does a restaurant insurance policy cost?

Each type of coverage caters to a specific need, and businesses have different needs based on the products and services being offered, where they are based, how big your team is, and other crucial factors. In most cases, General Liability Insurance, designed to protect against claims of third parties or damages to property, can cost anywhere from $500 to $6,000 per year.

Different insurance providers offer a wide selection of policies, and choosing the right coverage for your restaurant may be time-consuming and overwhelming. You need to weigh the pros and cons of each offer, but there are ways to make the selection process much more manageable.

Know the different insurance policies and how they can protect your company.

Aside from General Liability Insurance, there’s coverage associated with employee welfare called Workers Compensation. To protect business property, consider getting Commercial Property Insurance. Operate a website? Don’t forget to carry Cyber Liability insurance. Also, your restaurant may lose assets due to theft, so it’s also essential to be protected with Crime insurance. Here’s what you need to know about each policy:

General Liability Insurance

What if someone sustained injuries on the restaurant’s property, or an incident led to property damage? A single claim can cost you thousands of dollars. With General Liability coverage, your business will be protected from the legal fees and other expenses associated with lawsuits against your company.

Workers' Compensation Insurance

Employees are the most important element aspect of your company. They're the ones interacting with customers, personalizing your restaurant's service, and driving customers to come back. It's imperative that your employees get the protection they deserve. That's where Workers Compensation Insurance comes in. This policy pays for the medical costs and rehabilitation expenses for employees in case they sustain injuries at work. Another great thing about this coverage is that it will take care of lost wages in case the employees cannot go back to work.

Commercial Property Insurance

As the name implies, Commercial Property Insurance provides coverage for the restaurant's assets such as the building, equipment, and tools used in day-to-day operations. It will pay for the expenses related to damage or loss of property due to accidents like a fire.

Cyber Liability Insurance

In this day and age, when more and more transactions are done online, it pays to carry Cyber Liability Insurance. Any website is a potential avenue of attack for determined cyber-criminals, and the costs for these breaches are only increasing.

Crime Insurance

Restaurants are prime targets for thieves. Make sure to carry a Crime insurance policy to protect your business against instances of theft such as petty robbery, extortion, forgery of documents, and burglary.

Identify the factors that have an impact on the cost of coverage.

Insurance can be expensive based on several factors. Do you sell alcoholic drinks? In which state do you operate? How long have you been running the business? What type of property do you have? These are all questions an insurance carrier will ask you.

Don’t focus on the price tag.

Who doesn't want to save some cash? Especially in the restaurant industry, where expenses can skyrocket, it might seem like a good idea to choose the coverage that will not leave a hole in your pocket. However, the price of insurance is just one of the many deciding factors to keep in mind. Avoid making decisions based on the cost alone. The most expensive coverage may not be as comprehensive as you might think, or it might have unnecessary features your restaurant does not need. In the same manner, the cheapest option may not be enough to meet your needs. It's all about finding the right mix of premiums that you can afford and coverage that meets your requirements.

Read and understand the terms and conditions.

Many entrepreneurs skip the fine print because it's a time-consuming process. But when it comes to insurance policies, it is crucial to read and understand the fine print as it provides detailed information of what is included and excluded in each type of policy.

Many things can make or break a restaurant venture. Buying insurance is one way to help ensure success. Not only does it provide vital protection for your business, but it also tells people that the company is reliable and responsible enough to take care of its employees and customers. Do some research and get a few quotes. Compare their offerings and choose what's best for your needs.

About the Author

Emily Lazration is the Content Marketing Specialist at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage commercial insurance online.

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