| NYC Business Group
Insurance for Resturants
Restaurant owners should protect their businesses by investing in an insurance policy. There are numerous insurance policies and companies to choose from, especially if you don't want to be held liable for damages or injuries to a third party. Typically, restaurants obtain liability and commercial property coverages via business owners' policy (BOP) or a standard package policy. While this is a good investment, it is crucial to protect yourself against other liabilities.
General Liability
A restaurant needs to invest in general liability insurance to cover property damage or bodily injuries resulting from accidents. A general liability policy also helps protect your restaurant against product liability, for example, claims from food-borne illnesses. Ideally, the food that you sell at your restaurant may not be deemed as a 'product' under your policy. However, if you attach Product/Completed Operations Hazards Redefined, the food is considered a product. With this endorsement, the claims arising from the foods eaten on or off your premises will be covered under products/completed operations.
The building that houses your restaurant can be damaged by fire. Alternatively, if you lease the building and it catches fire, the landlord might sue you for property damage. With liability coverage, you will benefit from Damage to Premises Rented to You. The coverage usually has a sub-limit of up to $100,000, although some insurers can provide $300,000 or more. It is crucial to ensure that you have an adequate limit just in case you encounter damage.
If you offer valet parking and a customer's car is damaged while parking. The damage is not covered under the liability policy. You have to insure your business against such risks by investing in garage keepers' liability coverage.
It is prudent to buy employee benefits insurance if you provide health insurance, dental coverage, or other services to your employees. This coverage is vital because it protects you against lawsuits arising from administrative mistakes or clerical errors that may occur when handling employees' benefits.
Other Liability Coverage You Should Keep in Mind
Liquor liability – if your restaurant serves or sells alcoholic beverages, it is essential to invest in liquor liability insurance. Usually, general liability excludes property damage or bodily harm that arises from someone's intoxication through alcohol sale or service. Ensure you have liquor liability insurance to avoid possible lawsuits or financial losses.
Employment practices liability – certain workplace torts are not covered under general liability insurance, for example, harassment and discrimination. To protect yourself and your business against such workplace torts, invest in employment practices liability.
Umbrella insurance – if you have umbrella insurance, it supplements the limits of your general liability and commercial auto policies. If you have any claims that aren't covered in any of the two policies, the umbrella insurance policy covers them.
Commercial Property Insurance
All restaurant owners should have the following property coverages:
Sewer backup – under any typical property insurance, sewer backup is an exception. Ergo, to avoid any property damages, ensure you have sewer backup coverage at all times.
Utility interruption – for a restaurant to operate efficiently, it requires certain utilities like gas, water, and electricity. If an interruption occurs, you may be forced to close down for a while, thus losing a lot of money in the long run. To avoid such, invest in utility interruption insurance.
Electronic data processing – restaurants rely on computers to create, send, store and receive electronic documents. To avoid liabilities in case of a breach, electronic data processing insurance is a good option.
Extra expense – in case of property damage, you can continue your operation by hiring other equipment or moving to another property temporarily if you have extra expense insurance. It is prudent to have this policy to ensure the continuity of your business if anything happens.
Business income – it is possible to suffer income loss if a fire or other property damages. To avoid such losses, always purchase a business income policy.
Fine arts – always protect the fine art in your restaurant by purchasing fine art insurance, especially if you have valuable paintings, artwork, or sculptures.
Spoilage – if there is a power outage, the food stored in your refrigerators or freezers may spoil, thus incurring huge losses. Avoid such with a spoilage insurance policy.
Peak season – do your business generate high income at certain times of the year, for example, summer or Christmas? If that's the case, insure your business with a peak season insurance policy to avoid huge losses.
Equipment breakdown is typical for restaurants to depend on ovens, boilers, refrigerators, freezers, food warmers, and ice makers. Since the equipment can break down at any given time, equipment breakdown insurance is a good investment.
Employee theft – it is common for some employees to steal cash, food, or other restaurant property. Invest in employee theft insurance to avoid such losses, especially if you have many employees.
Commercial Auto Insurance
Restaurants own vehicles to pick and deliver supplies, among other uses. It is advisable to insure business-owned vehicles under a commercial auto insurance policy. The policy should cover hired, non-owned and restaurant-owned vehicles.
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