What Kind of Insurance Does a Restaurant Need?

Insurance protects your restaurant from a wide range of issues, including broken equipment and liability lawsuits.

Restaurant insurance requirements will vary depending on the state. Therefore, the breadth of coverage is based on both your needs and local laws.

Types of Restaurant Insurance Coverage

There are several different types of insurance that every restaurant should have, including:

• Commercial General Liability protecting your business from third-party claims, including personal injury, bodily injury and property damage. Without it, you leave your business vulnerable to lawsuits that could potentially bankrupt your restaurant.
• Commercial Property will provide coverage for water damage, break-ins, fires, etc. Depending on the policy, property insurance may not cover natural disasters, such as earthquakes and floods. You may need additional coverage for these issues. Also, if you have a mortgage on the property, your lender will likely require you to have this coverage.
• Commercial Auto Insurance is needed in case you offer catering or delivery service and you have employees drive company vehicles. You may also need commercial auto insurance if you allow your employees to use their own vehicles to make deliveries.
• Workers’ Compensation Insurance is obligatory for every business with employees. Although it’s an added expense, workers’ compensation is beneficial for both you and your employees. If one of your workers is injured on the job, workers’ compensation will cover the cost of medical expenses and a portion of the employee’s wages.

General liability, property insurance, commercial auto and workers’ compensation are the four main types of insurance restaurants need. But you can also purchase specialized insurance for a restaurant.

• If you have a mortgage for your restaurant, your lender may require you to have a life insurance policy. The policy would ensure that the loan is satisfied in the event of your death.
• Inventory insurance will protect your restaurant against any inventory-related losses, such as food spoilage. For example, if you lose power during a storm and your refrigerated products spoil overnight, your inventory insurance policy may cover you against this loss.
• If your restaurant serves, sells, distributes or manufactures alcoholic beverages, you may be held liable for injuries or damages caused by patrons who were served alcohol at your establishment. Most states will require you to carry liquor liability if you have a liquor license.

Keep in mind that specialized policies may sometimes cost more than whatever you’re insuring. Weigh the pros and cons of having each type of coverage before making a commitment.

How Much is Restaurant Insurance?

Insurance is a necessity — not a luxury. Still, you want to prepare for these costs when creating your budget.

How much does restaurant insurance cost? The average restaurant insurance cost will depend on the insurer, the location and the policies purchased.

General Liability

How much does restaurant liability insurance cost?

A standalone general liability insurance policy has a median cost of $80 per month, or $950 per year. Most policies have a $1 million limit and no policy deductible. General liability coverage is often included in a BOP.

Liquor Liability

Liquor liability may be required as part of your bar and restaurant insurance coverage. Depending on the jurisdiction, this coverage may be required in order to get a liquor license.

The median cost of liquor liability is $50 per month, or $620 per year. Most policies have a $2 million limit.

Workers’ Compensation

Most restaurants pay a median cost of $125 per month, or $1,500 annually, for workers’ compensation coverage. Policy limits are typically $500,000. Keep in mind that policies can vary greatly, depending on the state and business operations.

How to Compare Restaurant Insurance Companies

While you shouldn’t skimp on coverage, there’s nothing wrong with wanting to lower your restaurant’s insurance costs. Comparing insurance companies and their policies will allow you to get the coverage you need at the right price. The simplest and most effective way to compare insurance companies is to gather restaurant insurance quotes from at least three providers.

You may have to get separate quotes for BOP, commercial auto and workers’ compensation policies.

Comparing quotes and doing your research on insurance providers can be a grueling task, but it’s one that will pay off. An affordable policy with a reputable insurance company will ensure that you have reliable coverage when you need it most.

Source: https://mcdonaldpaper.com/blog/how-to-choose-right-insurance-coverage-for-restaurant