Chances are, if your business, whether it’s a café, deli, caterer, or fine dining restaurant, serves any type of food or drink, you need food liability or restaurant insurance.
It is important to restaurants and food service businesses to have insurance protection. Coverage is available to protect against almost all of the risks restaurants face. In this article, we’ll explain everything you need to know to get the right coverage for your restaurants and how much it costs.
- How much is the average restaurant insurance cost?
- How much is the average restaurant insurance cost per month?
- What factors affect the restaurant insurance cost?
- How can I find cheap restaurant business insurance?
- What is restaurant insurance?
- Who needs restaurant insurance?
- Top 5 insurers for restaurants
How much is the average restaurant insurance cost?
On average, small and medium-sized restaurants pay $1,440 a year for their restaurant insurance. And this is for general liability coverage only.
Most restaurants pay between $900 to $10,800 a year for restaurant insurance coverages. It is a wide range because there are many types of restaurants, they have different sizes, and could have different insurance coverages. The more coverages you need, the more your restaurant insurance premiums will be.
How much is the average restaurant insurance cost per month?
The average cost of restaurant insurance is $120 a month if you only have general liability coverage. If you add more coverages, your premiums will increase accordingly. Below are the breakdown of the average restaurant insurance costs for different coverages:
|Restaurant insurance coverages||Average costs|
|General liability insurance||$120 a month|
|Commercial property insurance||$135 a month|
|Business Owners’ Policy (BOP)||$210 a month|
|Commercial auto insurance||$175 a month|
These are just the averages. Your quotes will be different. Be sure to shop around with a few companies or work with a broker like CoverWallet or commercialinsurance.net or ez.insure to get and compare several quotes to choose the cheapest one.
Business Owners Policy (BOP) insurance cost for restaurants
It can be a good idea to start with a business owners policy (BOP) if your restaurant or food service business generates less than $5M in annual revenue or employs less than 100 people. A BOP includes three coverages needed by most operations that serve food: general liability, commercial property, and business income interruption.
It is worth mentioning that if your restaurant is bigger, you are not eligible for BOP insurance. You need to get these 3 coverages in 3 separate policies.
The average Business Owners Policy (BOP) insurance cost for restaurants is $210 a month, or $2,520 per year.
General liability insurance cost for restaurants
General liability insurance protects your business if a customer or other non-employee is injured at your restaurant or other food service property. This could include things like broken arms from trips, slips and falls, cuts from broken glassware or a burn from a chafing dish. This is probably the most common insurance policy that restaurants get. If you can only afford one policy, let it be general liability policy.
The average cost of general liability insurance for restaurant is $120 per month, or $1,440 per year.
Commercial property insurance cost for restaurants
Commercial property insurance will cover your restaurant, catering hall, coffee shop or other food service location if it ever falls victim to theft, fire, vandalism or damage from certain weather events. It can also cover caterers and other similar businesses if they cause property damage while working at a client’s home or other location. A commercial property policy can help your business get back up and running quickly after an unexpected event.
If you rent a building for your restaurant, your landlord will require you to have commercial property insurance first before signing the lease.
The average cost of commercial property insurance for restaurants is $135 per month, or $1,620 per year.
Business income interruption insurance for restaurants
Business income insurance pays a portion of lost income if your food service business is unable to operate because of a reason covered by your insurance policy. That can be extreme weather conditions such as flood or hurricane, vandalism, or loss of water and/or electricity.
Unfortunately, a global pandemic is often not a reason covered by a standard business income interruption policy offered by most insurance companies. That’s the reason why when restaurants had to close due to the 2019 COVID, they couldn’t claim business interruption benefits from their policies.
The average cost of business interruption insurance for restaurants is $75 per month or $900 per year.
Product liability insurance cost for restaurants
Product liability insurance is a type of coverage that helps protect businesses from claims that a product made or sold by it caused bodily injury or damage to someone else’s property. An insurance company may offer this coverage as a stand alone policy, but it’s more commonly a component of a broader Business Owner’s Policy (BOP) or an inclusion in the general liability policy. Since you run a restaurant, you are exposed to the risk that the food you offer your customers might cause them to be really ill and they might sue you because of it. It is smart to have product liability coverage added to your BOP policy or your general liability insurance policy.
The average cost of product liability insurance for restaurants is $65 per month, or $780 per year.
Workers compensation insurance cost for restaurants
Workers’ compensation insurance covers you and your employees if anyone is injured or becomes ill because of business related reasons. It pays medical costs, disability and lost wages, along with funeral expenses and death benefits if an employee passes away while working.
It’s likely that your state requires workers comp coverage for your business. Despite this, it’s a smart coverage for food service businesses. As a restaurant owner, you probably already know that it is one of the riskier business operations. Even in the tightest run operations, workers are injured by cuts, burns, slips, and falls.
The average cost of workers comp insurance for restaurants is $140 per month per full-time employee, or $1,680 per year.
Commercial auto insurance cost for restaurants
Most food related companies do some driving for business reasons, whether it’s making deliveries, picking up supplies or getting food to party sites. That’s why it’s important for them to get commercial vehicle insurance. It helps pay for medical care related to injuries and vehicle repair and replacement costs if you or an employee is involved in an accident while driving for work purposes. A personal auto policy doesn’t cover accidents that happen if you’re driving while on the job. Learn more at the best commercial auto insurance companies
The average cost of commercial auto insurance for restaurants is $175 per month, or $2,100 per year.
Employee practices liability insurance cost for restaurants
Many food service businesses can be a bit rough around the edges. This coverage protects you if you’re ever sued for negative employment practices including things like discrimination and sexual harassment. The good news is that employee practices liability insurance (EPLI) isn’t too experience. The average cost of EPLI coverage for restaurants is just $55 per month or $660 per year.
Learn more at the best employee practices liability insurance companies.
Liquor liability insurance cost for restaurants
Food service businesses that serve liquor try to do so responsibly. Still, things can slip through the cracks. This coverage can help pay legal costs, court fees, and civil damages that could result from liquor sales. Learn more at Liquor Liability Insurance: Cost and the Best Providers
The average cost of liquor liability insurance for restaurants is $150 per month, or $1,800 per year.
What factors affect the restaurant insurance cost?
Restaurant insurance premium prices vary and depend on many factors including but not limited to the following:
Type of restaurant business
Different types of restaurants with different operations are exposed to different types of risks and different levels of risks. That results in different costs for restaurant insurance. This is probably the biggest factor affecting restaurant insurance cost. For example:
- A fine dining restaurant will have different premiums from a casual neighborhood restaurant, even if they are located in the same neighborhood and with similar sizes.
- A restaurant with significant outdoor seating area will have higher premiums than the one without.
- A restaurant serving a significant amount of alcohol and with a bar seating will have higher premiums than the one without serving alcohol or very little.
- A restaurant serving buffet will pay a lot more for their restaurant insurance compared to a similar one without serving buffet.
Number and size of properties
The bigger your restaurant is, and the more locations you have, the higher your restaurant insurance cost will be. Bigger restaurant can house more guests and require more workers, which increases the accident probability. That will increase the general liability insurance cost. Bigger restaurant will also increase the commercial property insurance cost.
These insurance coverages tend to be sold per location, so if you have multiple locations, while you may get some discounts, your insurance premiums will still increase.
Insurance companies always prefer experienced businesses. The more experience you have in running a restaurant, the more knowledge you have in organizing the operations to avoid accidents. If you open a new restaurant for the first time without relevant industry experience, you will pay significantly more than a restaurant who has been in business for 10 years or someone who open a new restaurant but he has had 10+ years experience in running other restaurants.
Coverages and level of coverage
As you see above, different coverages will cost you different amount. The more coverages you need, you more you will have to pay. In addition, the higher coverage limits are, the higher the premiums are. In some cases, you may be able to reduce the coverage limits to reduce the cost. But in other cases, you may not be able to since some minimum coverage limits are required by state and federal regulations such as commercial auto insurance.
Number and type of employees
One of the coverages you will need is workers comp insurance if you hire full-time employees for your restaurants or occupational accident insurance if you hire part-time employees. Workers comp insurance is actually required by all state laws, except Texas. So if you hire full-time employees, you must have workers comp insurance for your restaurant if it isn’t located in Texas. The more full-time employees you have, the more premiums you have to pay for workers comp insurance. Learn more at the best workers comp insurance for restaurants.
If you hire part-time employees, you are not required to provide them with workers comp insurance. However, to protect them from injuries they may suffer at work, you should provide them with occupational accident insurance. This coverage is similar to workers comp insurance, but less comprehensive, thus less expensive as well. Learn more at occupational accident insurance for independent contractors.
Whether or not your restaurant sells liquor and how much liquor revenue contributes to your total revenue play a big role in your restaurant insurance premiums. In some cases, if you liquor revenue accounts for less than a given threshold , usually 25%, you are not required to have a separate liquor liability insurance policy. If you do need a separate liquor liability insurance policy, that will increase your total costs of restaurant insurance a lot. Learn more at the best liquor liability insurance companies.
You have probably realized that location plays a big role in the cost of any insurance. It is the same for restaurant insurance. If your restaurant is located in a safe and good neighborhood, your restaurant insurance premiums will be a lot less than a similar restaurant located in a crime-prone neighborhood.
In addition, statistically speaking, insurance companies know that some states or cities just tend to have some insurance lawsuits than the others and they price insurance taking into consideration this insight as well.
Last but not least, your business insurance claim history affect the insurance cost as well. Insurance companies always charge restaurants with a lot of claims in the past more than those without claims.
How can I find cheap restaurant business insurance?
Here are some tips to help you get the coverage you need at a fair price:
Shop around for the best value
Get quotes from a few companies and compare them to find the right coverage for you at a reasonable cost. Working with a broker like CoverWallet, Simply Business, commercialinsurance.net, or ez.insure is a good way to get several quotes more easily and conveniently. These brokers work with several insurance companies and they can pull quotes from these companies to show you at once. That would make it easier for you to compare several quotes and select the cheapest one for your restaurants.
Partner with an experienced agent or broker
There are a lot of nuances in restaurant insurance as you can see. Any small details in your restaurant operations can have a big impact on the cost of insurance. However much you can learn on your own, it will not be comparable to an agent or broker who do this for a living and have worked with hundreds, if not thousands, of restaurants. Partner with an agent or a broker that you could trust so that they can advise you on the right coverages that you should have. They could also help you get several quotes to compare as well if you decide to work with a broker.
Insurance is always more expensive if you have claims and insurance companies give you bad assessment of safety practices and standards. Emphasizing on safety practices with both your employees and your customers, and requiring all of your employees to complete safety training and implement safe practices at the workplace will help reduce the number of accidents and claims in the future. Doing those may also decrease your current premiums since insurance companies’s underwriting engine may take these factors into consideration.
Take advantage of discounts
If they’re not offered to you when getting a quote, ask about them, whether you’re buying online or through an agent. Insurance companies often offer several discount programs that you can take advantages of. Even if you may not eligible for one or many of these programs today, you can still make changes in your operations so that you can be qualified to get these discounts in the future.
Taking these steps will help ensure you’re not paying too much for your restaurant insurance coverage.
What is restaurant insurance?
Restaurant insurance refers to the insurance coverages that a restaurant or a food service business should have to protect themselves from the liabilities of serving food and drinks to customers and running a restaurant business successfully.
Depending on the size of the restaurant, the operational details of the restaurant, and whether the restaurant serves alcohol or not, restaurant insurance may include more or less coverages. They may include general liability insurance, product/food liability insurance, commercial property insurance, workers comp insurance, commercial auto insurance, and liquor liability insurance. We discuss the details of these coverages and why they are required or necessary for any restaurant in the section below.
Who needs restaurant insurance?
Most businesses that serve food need restaurant insurance and other coverages. These include:
- Cafes and coffee shops
- Fast food restaurants
- Fine dining restaurants
- Full service restaurants
- Ice cream shops
- Sandwich shops
- Pizza shops.
Why is restaurant business insurance important?
Insurance helps protect the food service business you’ve worked so diligently to build.
You and everyone who works for you strives to make sure everything is perfect. Still, problems happen, even with the most by-the-book operation. Ask yourself, could you afford to pay out of pocket if:
- Your restaurant burns down because of a cooking fire
- Your catering business is sued because a bride is unhappy with the food you serve at her wedding
- A customer sues your coffee shop because she gets burned by a latte you serve her?
Most restaurant owners would be unable to cover these costs. It’s why they turn to insurance to protect their businesses.
Best restaurant insurance companies
Here are our recommendations of the best restaurant insurance companies for your consideration.
- CoverWallet: Best for Comparing Online Quotes
- Thimble: Fast Online Quotes and Smooth Digital Experience
- The Hartford: Combined options
- Nationwide: Specialized products
- Farmers Insurance: Focus on restaurant issues like food contamination
- Liberty Mutual: Customized plans with an agent