Restaurant Insurance Questions and Answers

Restaurants face a distinctive combination of risks, including kitchen fires, customer injuries, food contamination, employee accidents, equipment breakdowns, and business interruptions. Restaurant insurance can combine several policies to protect the business, employees, property, and income. Below are answers to common restaurant insurance questions.

What insurance does a restaurant need?

The right coverage depends on the restaurant’s size, location, menu, employees, equipment, delivery services, and whether alcohol is served. Common policies include:

General liability insurance
Commercial property insurance
Business income insurance
Workers’ compensation
Liquor liability insurance
Equipment breakdown coverage
Food spoilage coverage
Commercial auto insurance
Cyber liability insurance
Employment practices liability insurance
Commercial umbrella insurance

What does restaurant general liability insurance cover?

General liability insurance can cover claims involving customer injuries, property damage, and certain personal or advertising injuries.

For example, it may help if a customer slips on a wet floor, is injured by damaged furniture, or claims the restaurant damaged personal property. It may also help pay legal defense costs for a covered lawsuit.

Does restaurant insurance cover food poisoning?

General liability insurance may cover claims alleging that contaminated food caused a customer to become ill. Coverage may include medical expenses, legal defense costs, settlements, or judgments.

Restaurants should follow food-safety procedures, monitor temperatures, train employees, and document their handling and cleaning practices.

What does commercial property insurance cover?

Commercial property insurance can protect the restaurant’s physical assets against covered losses such as fire, theft, vandalism, or certain weather events. Covered property may include:

Cooking equipment
Refrigerators and freezers
Furniture and fixtures
Food inventory
Computers and point-of-sale systems
Signs and improvements

The building may also be covered if the restaurant owner owns it.

What is equipment breakdown coverage?

Equipment breakdown coverage can help pay for certain sudden mechanical or electrical failures involving refrigerators, freezers, ovens, air-conditioning systems, boilers, and electrical equipment.

Commercial property insurance may not cover every type of mechanical failure. Equipment breakdown coverage may also help with related property damage, lost income, and spoilage, depending on the policy.

Does restaurant insurance cover spoiled food?

Food spoilage coverage can help replace inventory lost because of a covered power outage, refrigeration failure, or equipment breakdown.

Coverage limits, deductibles, and qualifying causes vary. Restaurants should calculate how much refrigerated and frozen inventory they could lose during a prolonged outage.

What is business income insurance?

Business income insurance can help replace lost income and pay certain continuing expenses when a restaurant temporarily closes because of covered property damage.

It may help with payroll, rent, loan payments, taxes, and other operating expenses. A standard policy generally does not cover every closure, including interruptions caused solely by poor sales or an uncovered event.

Does a restaurant need liquor liability insurance?

A restaurant that serves or sells alcohol should carry liquor liability insurance. This coverage can protect the business against claims alleging that an intoxicated customer caused injury or property damage.

General liability insurance often excludes liquor-related liability when the business earns money from selling alcohol. Requirements and liability laws vary by state.

Does a restaurant need worker’s compensation?

Most states require businesses with employees to carry worker’s compensation insurance, although specific rules vary.

Restaurant employees face risks such as burns, cuts, falls, lifting injuries, and repetitive-motion injuries. Workers’ compensation can help pay medical expenses and replace a portion of lost wages following a covered work-related injury or illness.

Are restaurant delivery drivers covered?

Commercial auto insurance may be needed when the restaurant owns vehicles used for deliveries or catering.

If employees use personal vehicles, hired and non-owned auto liability coverage can help protect the restaurant against certain liability claims. It generally does not pay for damage to an employee’s vehicle. The employee should also tell their personal insurer about delivery use.

Does a restaurant need cyber insurance?

Restaurants collect payment-card information, maintain employee records, use online ordering platforms, and depend on point-of-sale systems. These activities create cyber risks.

Cyber insurance may help with data breaches, ransomware, payment fraud, notification expenses, data recovery, and network interruptions. Restaurants should also use secure payment systems, strong passwords, multi factor authentication, and employee training.

What is employment practices liability insurance?

Employment practices liability insurance can address certain employee claims involving discrimination, harassment, retaliation, or wrongful termination.

Restaurants often have large, changing workforce. Written policies, supervisor training, consistent discipline, and proper documentation can help reduce employment-related claims.

How much does restaurant insurance cost?

Premiums may depend on:

Annual sales and payroll
Type of food served
Cooking methods
Alcohol sales
Building age and condition
Fire-protection systems
Delivery and catering services
Claims history
Coverage limits and deductibles

A coffee shop will generally have different risks and insurance costs than a full-service restaurant with deep fryers, alcohol, and delivery drivers.

How can restaurants reduce insurance claims?

Restaurants can reduce risk by:

Cleaning spills promptly
Maintaining kitchen equipment
Inspecting fire-suppression systems
Training employees in food safety
Monitoring food temperatures
Using nonslip flooring and mats
Maintaining proper lighting
Establishing alcohol-service procedures
Keeping accurate incident reports
Training drivers and checking driving records

Strong safety procedures can help protect customers, employees, and the restaurant’s reputation.

Protect Your Restaurant

One serious fire, injury, equipment failure, or food-related claim can disrupt everything you have built. [Agency Name] can help evaluate your restaurant’s operations and create an insurance program suited to your risks.

Coverage descriptions are general. Actual coverage is determined by the policy’s terms, conditions, limits, endorsements, and exclusions.