Restaurant food and beverage sales in the U.S. exceeded $7.82 billion in 2015, according to Statista. Whether it’s a fast food chain, fine dining establishment or “mom and pop” eatery, however, all restaurants need insurance. It’s a smart investment that can keep a restaurant afloat when unforeseen problems arise. To learn more about the different types of insurance for restaurant businesses, keep reading.
Also known as Commercial Business Liability, liability insurance protects a restaurant’s financial assets if they are sued. It doesn’t prevent someone from suing the restaurant. Rather, it pays for any legal obligations stemming from the lawsuit, such as medical cost, pain and suffering, etc.
General liability insurance is particularly important for restaurants considering the high rate of slip-and-fall accidents. According to the National Safety Council (NSC), the average U.S.-based restaurant has 3 to 9 slip-and-fall accidents per year. If a patron slips and injures him or herself while dining at a restaurant, the patron could sue, which is why it’s a good idea to have general liability insurance.
While liability insurance covers most legal obligations associated with lawsuits, it doesn’t cover them all. If a worker sues for discrimination or wrongful termination, for instance, the restaurant could be liable — even if it has liability insurance. Employment practices liability insurance, however, specifically covers these and many other claims made by employees.
Workers’ compensation is a type of insurance that covers the financial cost of injured workers. Any business operating in the U.S. with employees (not freelance workers) are required by law to have workers’ compensation.
It’s important to note that only workers who are injured while on the job can take workers’ compensation. If a food prep worker cuts him or herself while preparing vegetables at a restaurant, this type of insurance can cover the costs of medical bills and lost wages. On the other hand, a worker who is injured at his or her home is not eligible to take workers’ compensation.
The cost of workers’ compensation varies depending on the risk of injury for the respective business. Construction companies, for instance, typically pay more because of the high risk of injury associated with this work. Restaurants fall somewhere in the low-to-middle range.
As the name suggests, property insurance covers the financial cost of property. For a restaurant, this may include the building itself, as well as commercial-grade dishwashers, ovens, stoves, tables, TVs, etc.
Property insurance typically pays when the business’s property is damaged from fire, flood, theft, storms and other events.
Before seeking a property insurance policy, you should take inventory of all property in your business. This will help you determine what items you need to insure and its respective replacement value.
Assuming you want to sell alcoholic beverages at your restaurant, you’ll need a liquor liability insurance policy. This type of insurance protects a restaurant for liability claims made as a result of a customer becoming intoxicating and causing injury and/or property damage. It’s a common assumption that the intoxicated customer is responsible for these damages. However, the restaurant who served the customer alcohol could be liable.
It’s not just restaurants that are required to have liquor liability insurance; any business that services alcoholic beverages must have it, including sports bars, wine bars, taverns and clubs.
Hopefully, this gives you a better understanding of the different insurance types for restaurant businesses.
To learn more about insurance requirements for restaurants and other businesses, contact us today. Axelrod Insurance Services is the premier provider of business insurance, serving clients in San Diego and the surrounding area. We’ll help you choose the best possible coverage based on your business’s specific needs.