Restaurant Insurance Guidelines

Restaurants face hazards unlike those of other small businesses, and their insurance coverage should reflect these differences. Servers carry hot, heavy laden trays among tables of patrons. Open flames and searing steam emanate from stove tops. Food that is improperly stored and handled can cause food-borne illnesses. Follow guidelines for insurance to safeguard your restaurant operations.

Property Considerations

In addition to the property insurance any business would need, restaurant owners have additional considerations. If your restaurant serves wine, you may want a special endorsement to insure wines. You can buy coverage to cover losses from contamination or spoilage of food, and from damage to outdoor signage or art. You can be insured for noncollectable credit card charges. Restaurants can encounter mechanical, communications and data equipment breakdowns, and overflow and backup of water and sewage can have a devastating adverse affect on a restaurant business. Crime, acts of employee dishonesty and interruptions in business can result in loss. As a restaurant owner, you can purchase insurance against all of these perils.

Liability Concerns

As a restaurant owner, your liability exposure can exceed that of other types of businesses. Ensure that your liability insurance covers faulty equipment, fire, explosion, smoke and other system failures that can cause damage and injury. Slips, trips and falls are concerns in restaurants, where spills are not uncommon. Additionally, you may be eligible to purchase liquor liability insurance, if such coverage is available in your state. You may also extend liability coverage to valet parking.

Issues Underwriters Consider

Insurance companies may assign lower premiums to fine dining establishments and family-style restaurants. Other types of restaurants may be assigned higher premiums because of certain features. Restaurants that offer live entertainment and dancing, for example, usually pay a higher premium, as do nightclubs and restaurants that operate 24 hours a day. Insurers may offer an insurance cost break to owners who have three or more years of management experience and whose restaurants show a profit. Insurance companies also give preference to restaurants whose liquor sales amount to no more than 25 percent of their total sales. Insurance companies may offer more favorable rates to restaurants that have adequate kitchen ducts, grease filters and hoods; safe, up-to-date cooking equipment; and no violations of safety or fire codes.

Other Types of Insurance

As a restaurant owner, you may want to consider other kinds of insurance coverage. Workers Compensation can protect the owner if an employee is injured at work; in many states, employers are required carry this insurance. If the restaurant owns and operates a vehicle, the vehicle may or may not be covered under general liability insurance, so determine its status and make sure it is adequately covered. Buy insurance against damage from earthquakes, hurricanes, extended power outages or floods, if applicable. Life insurance could protect your family from financial loss in the event of your death.