5 Types of Insurance Every Restaurant Should Have

| August 04, 2022

As a business owner, it is always essential to make sure you minimize your risks. However, sometimes businesses can get adversely influenced by things out of their control. To ensure that your losses are covered in such unfortunate, unpreventable incidents, it is necessary to keep your business insured.

Insurance for your Restaurant

As a restaurant owner, there can be many things that may cause harm to your business. Let's look at the different kinds of problems that restaurant owners may face and what kind of insurance will be required to safeguard them.

1.  General Liability Insurance

One of the most important types of insurance that any restaurant should have is general liability insurance (a.k.a. Restaurant Liability Insurance). It protects the restaurant from various claims by patrons, staff members, and third parties for injuries or property damage. Typically, the insurance covers claims for product liability, premises liability, and advertising injuries.

Claims of copyright infringement are covered under advertising injury, whereas cases stemming from bodily harm to customers, such as food poisoning and burns, are covered under product liability. Premises liability also covers slip and fall injuries to customers and others. The insurance covers legal fees, settlement costs, and other lawsuit-related expenditures. 

Usually, a more comprehensive Business Owner's Policy includes this insurance coverage as a bundle. General liability insurance premiums are affected by several variables including the business's location and industry, size, history of prior claims, desired level of coverage, and payroll costs.

2.  Commercial Property Insurance 

One of the most crucial policies any restaurant owner should have is commercial property insurance, also called business property insurance or business hazard insurance. It protects against losses or damages to the restaurant's property brought on by unforeseeable occurrences like riots, vandalism, fire, theft, or bad weather.

In addition to renovating or repairing the restaurant's physical structure, this insurance covers the cost of repairing or replacing any interior furnishings, electrical devices, food and beverage inventory, utensils, and tableware used in food service. If the property is rented out, restaurant owners might opt to remove building coverage when acquiring a commercial property insurance policy. 

The location of the business, the business model and industry type, the kind of equipment used, the value of the building and inventory, the safety precautions put in place, the type of building construction, the typical number of footfalls, and the total number of employees are some of the factors that insurance companies take into account when determining the cost of commercial property insurance.

3.  Cyber Liability Insurance (CLI)

Cyber dangers are particularly harmful since it takes them a while to become a liability before anyone notices them. Customers who claim that their personally identifiable information (PII), such as credit card numbers, bank account numbers, and personal identification details were compromised have filed data breach lawsuits alleging financial losses as a result.

Cyber Liability Insurance provides coverage for these losses. The coverage also protects the restaurant from financial loss from illegal online transactions using bank accounts, debit or credit cards, hacking, harmful software, or virus assaults, and loss of business data brought on by these events. 

The total number of restaurant locations, the type and amount of sensitive data stored by the desired level of coverage, annual sales and total number of employees all affect how much a cyber liability policy will cost.

4.  Employment Practices Liability Insurance (EPLI) 

Restaurant enterprises risk lawsuits over employment issues from former, present, or potential staff members. total number of employees all affect how much a cyber liability policy will cost. Cases brought by employees who feel they have been the victims of discriminatory hiring practices, emotional anguish, wrongful termination, sexual harassment, retaliation, contract violations, and several other employment-related allegations.

Legal actions may endanger the company's finances, lower team morale, and damage the brand's reputation in the marketplace. Restaurant owners and operators should consider acquiring Employment Practices Liability Insurance in light of these concerns. The insurance policy pays for both claim and defense expenses.

The total number of employees, the rate of employee attrition, the availability of standard operating procedures and workplace policies, previous layoffs, the company's financial health, and previous employment-related lawsuits are some factors that affect the price of EPLI insurance. You may also opt to acquire EPLI alone or as a business owner's coverage component.

5.  Garage Keepers Liability Insurance

Restaurants that provide valet parking must have Garage Keepers Liability Insurance. When a customer's vehicle is in the restaurant's care, custody, or control, the policy protects it from damage brought on by fire, theft, vandalism, or collision. General liability insurance typically does not cover harm to a customer's vehicle. Restaurant owners have three options for garage keepers liability insurance:

  • Direct Primary
  • Direct Access
  • Legal Liability

Under Direct Primary, any cost brought on because of damage to the customer's vehicle while in the restaurant's care, custody, or control will be covered under the policy. Direct Access pays for damage to the customer's car brought on by calamities like a hurricane. Last but not least, Legal Liability pays for customer vehicle losses brought on by careless restaurant staff behavior, such as a vehicle damaged while being parked by a valet. 

Insurance at DiNicola Insurance Services

DiNicola Insurance Services is a leader in bringing comprehensive insurance solutions, risk management strategies, and employee benefits to businesses and property owners throughout the United States. We specialize in key industries including commercial property, construction, healthcare, hospitality, manufacturing, technology, and wholesale. We provide specialized coverages designed to address specific exposures in each niche.  DiNicola Insurance understands that every business is different and faces unique risks based on operations. Interested in getting your restaurant business covered? Then contact us today!