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Restaurant Insurance: What It Is, What It Covers, & Cost

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. 

Ask yourself: Could you afford to pay out of pocket if:

  • A customer sues you because you serve them contaminated food and they become extremely ill because of it
  • A restaurant patron slips, falls, and breaks a leg, then takes you to court to recover medical costs
  • An awning over your outdoor patio is torn down during a wind storm and you have to replace it?

The answer for most owners of food service businesses is NO.

That’s why it’s important for them to get restaurant insurance. Coverage is available to protect against almost all of the risks food service businesses face.

In this article, we’ll explain everything you need to know to get the right coverage for your food related company at a price you can afford and reveal the 5 best insurers for restaurants and other food service operations.

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
  • Cafeterias
  • Caterers
  • Delis
  • 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.

The insurance coverages restaurants and other food service businesses should get

Because restaurants and other food service businesses are so complex with a lot of risks involved. Below are the two essential policies that all restaurants must have:

Business Owners Policy (BOP) insurance 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.

1. General liability insurance 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.

>>MORE: Best General Liability Insurance Companies

2. Commercial property insurance 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.

>>MORE: Best Commercial Property Insurance

3. 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.

Product liability insurance 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.

>>MORE: Best Product Liability Insurance Companies

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 second essential insurance policy that all restaurant must have is workers compensation insurance.

Workers compensation insurance 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. 

Other coverages food service businesses should consider

Here are some other types of insurance food related operations typically purchase:

  • Product liability insurance:
  • Commercial auto: 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
  • Employee practices liability insurance: 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.
  • Liquor liability insurance. 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

How much does food liability insurance coverage cost?

On average, small and medium-sized restaurants pay $200 a month for their restaurant insurance (or $2,400 a year). Most restaurants pay between $1,500 to $6,800 a year for restaurant insurance coverages.

Premium prices vary and depend on many factors including:

  • Type of food service business
  • Number and size of properties
  • Experience level
  • Coverages and level of coverage
  • Number and type of employees
  • Liquor service
  • Location
  • Scope of operation 
  • Claims history
  • And more. 

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.
  • Review before you renew. Make sure you get new quotes before you renew your policy.
  • 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.

Taking these steps will help ensure you’re not paying too much for your restaurant insurance coverage.

Top 5 insurers for restaurants and food service businesses

 Here are our top 5 restaurant insurance providers, along with what makes each one stand out:

  • biBerk: Best for low-cost restaurant business coverage
  • THREE: A one stop shop for all your restaurant business insurance needs
  • The Hartford: Best for food service operations looking for insurance from a respected company
  • Progressive: Top insurer for discounted restaurant business insurance
  • Next: Ideal for restauranteurs who prefer to buy insurance online 

biBerk: Best for low-cost restaurant business coverage

After the last few years, few restaurants are sitting on extra cash to spend on insurance. If that’s the case with your food service operation, biBerk could be the ideal insurer for you. 

biBerk is a low-cost business insurance provider. Despite saving money on your restaurant business coverage, you can rest assured knowing you’re still getting quality protection for the business you’ve worked so hard to build. biBERK is able to lower insurance costs by almost 20 percent because it insures small businesses directly, without the added expense of having to work through a middleman or insurance broker.

You can feel confident knowing biBerk is a part of Berkshire Hathaway, a company headed by well-known investor Warren Buffett. It’s a firm that has millions of satisfied customers that’s been insuring businesses for more than 75 years.

Here is a basic business owners policy quote for a restaurant from biBerk.

THREE: A one stop shop for all your restaurant business insurance needs

If you’re a busy food service business owner who doesn’t have much time to shop for restaurant insurance, THREE could be the ideal solution for you.

THREE is also a part of the Berkshire Hathaway family of companies. It offers a single policy that covers most of the risks faced by food service businesses. The firm prides itself on the fact that it has a simple three page policy with no fine print or surprises. 

The single policy covers:

  • Liability: General liability, errors and omissions, and employment practices
  • Cyber: Cyber liability, data compromise, and incident response
  • Property and business interruption: Fire, theft, flood and water damage, wind, and hail and earthquake
  • Business auto: Collision, comprehensive, auto liability and hired and non-owned
  • Workers compensation

If simplicity and comprehensive coverage are important to you, THREE could be a good provider for your food business insurance.

Here is a sample restaurant quote from THREE:

The Hartford: Best for food service operations looking for insurance from a respected company

The Hartford is one of the oldest companies of any kind in the United States. It’s offered insurance solutions for more than 200 years and has helped one million plus businesses with their insurance needs. 

The Hartford takes pride in the fact that the Ethisphere Institute named it a World’s Most Ethical Company twelve times. The Hartford’s longevity and focus on ethical business practices makes it a firm you can feel good about doing business with.

The Hartford’s dedicated and highly experienced small business team is available to help businesses in the food service industry explore their insurance options. If you decide to purchase insurance from The Hartford, you can rest assured knowing you’re entrusting your operation to a strong, stable, knowledgeable and ethical provider.

Progressive: Top insurer for discounted restaurant business insurance

Despite the image it projects in its television commercials, Progressive is a reputable company that’s been in business since 1937. The insurer is known for its flexibility, great rates and highly responsive service.

Progressive is famous for its discounts, which could help you save on your restaurant business insurance. You can earn discounts for things like:

  • Purchasing multiple coverages
  • Implementing safe work practices 
  • Paying annually rather than in smaller increments 
  • Agreeing to autopay.

It’s easy to get a restaurant quote online from Progressive. It should take you less than five minutes.  Here is a sample of one for a small deli.

Next: Ideal for restauranteurs who prefer to buy insurance online 

Next is changing how businesses purchase food liability insurance and other coverage.

Their operation is focused on delivering the ultimate online insurance experience. Because of this, you’re able to purchase a policy, file a claim or get a certificate of insurance any place, any time, 365 days a year. This is a big plus for people who own food service businesses because they often need to do these kinds of things on off hours. Even though Next is an online insurer, you can get expert help over the phone when you need it. The firm is also known for being able to make most claims decisions within 48 hours.

Even though Next is a relatively new and innovative company, you can rest assured knowing it has an excellent rating from A.M. Best, an insurance company rating agency. All the company’s policies are backed by MunichRe, an established insurance company and reinsurer. More than 10,000 business owners have turned to Next for their insurance needs. The firm has earned a solid 4.7 customer rating. 

>>MORE: Best Restaurant Insurance Companies

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