What Type of Insurance Does a Restaurant Need?

When you own a business, you’re probably just as worried about maintaining your future income streams as you are concerned about protecting your existing investments. 

Businesses don’t spring up overnight, and business owners sometimes spend years building up the resources they need to procure the right space, the right equipment, and the right level of inventory. Perhaps nowhere is this more true than the restaurant industry. 

When it comes to restaurant insurance, there’s much more to think about than a grease fire or a break-in. Commercial restaurant insurance means making decisions about food liability insurance and a policy for restaurant employees — all while keeping the restaurant insurance cost at the top of mind. 

When it comes to business insurance, you may not want to hear “it depends,” but there’s no blanket policy that’s going to work for every business, even in the same industry, especially if your restaurant is on wheels in the form of a food truck.

The same is true for restaurant insurance, although there are six categories of coverage that you’ll want to consider. At a glance, here are the types of restaurant insurance your establishment may need: 

For most restaurants, a Business Owners Policy (BOP) is a good place to start for coverage, as it includes general liability coverage and commercial property insurance. But it may not be enough.

Not sure how these apply to your restaurant specifically? Let’s break them down even further to help ensure every element of your restaurant is protected from the unexpected.

A must for all restaurant owners that includes coverage for injuries or accidents that might occur on your property when a customer is hurt and requires medical attention.

Not only will your general liability insurance help cover the cost of their medical care, but it can also protect you from legal retribution related to the accident. 

It provides coverage for expenses you can incur if a patron falls ill from consuming food cooked or provided by your restaurant. Food liability insurance steps in to protect against these losses — whether or not the customer consumed food or consumable items on the property or at home.

This specifically provides coverage for the cost of replacing food that spoils unexpectedly. In a large restaurant, a broken refrigerator or a damaged storage room can lead to devastating costs in damages, so it’s imperative to have the proper insurance coverage in place to protect your business.

It provides protection against someone who injures themselves or someone else (or inflicts property damage) after buying or consuming alcohol sold by your restaurant.

While you aren’t explicitly responsible for the actions of every person who drinks in your restaurant, you can be held liable if one of your employees continues to serve someone who’s already intoxicated.

This is mandatory for every restaurant that employs staff. As a restaurant owner, you’re responsible for providing workers’ compensation if someone who works for you is injured on the job in your restaurant. Workers’ compensation works to help protect both restaurant owners and their teams equally. 

This is legally required if you own or utilize a vehicle primarily for business purposes. The most common example is restaurants that own a vehicle that’s used for delivery purposes or catering.

On the other hand, if you own a vehicle that transports inventory or is used exclusively or primarily for restaurant businesses, you’re still required to enroll that vehicle with a commercial auto coverage policy. 

On average, restaurant insurance typically ranges between $1,000 and $12,000 a year, which breaks down to roughly anywhere from $80 to $1,000 every month. Restaurant insurance cost for you will depend on the specifics of your restaurant and your insurance provider.

On average, restaurant insurance costs are dependent on how big your restaurant is, how many employees you have, and the different levels of coverage you elect to enroll in. 

In most cases, a Business Owners Policy (BOP) can cost anywhere from $80 to $100 a year, but those are just the basic elements of coverage you’ll need. For many restaurants, each of the coverage plans listed above is a necessity, which will raise the overall cost of your coverage. 

Remember, it’s never a good idea to set it and forget it. Insurance of any kind can become an out-of-sight, out-of-mind expense, which can lead to overpaying or not fully understanding your coverage limitations.

Instead, make it a point to review your restaurant insurance policy every year and shop around for cheaper coverage or discount opportunities.