If you run a restaurant, or are thinking of starting a restaurant business, liability is an issue you’re going to have to face, so you should look into restaurant insurance. A lot can go wrong while running a restaurant: an employee could burn themselves while using a deep fryer, a patron could slip on a wet floor or one of your foods could trigger an allergy attack in a customer. All of these situations could result in a lawsuit or needing to pay worker’s compensation benefits. So below we’ll look at restaurant insurance so you can remain protected when accidents and mistakes happen. We’ll cover what restaurant insurance is, how much it costs and where you can find it.
- The 6 Best Providers of Restaurant Insurance
- What Insurance a Restaurant Need?
- How Much does Restaurant Insurance Cost?
- How Much does Insurance Cost per Month for a Typical Restaurant?
- Compare Quotes of Restaurant Insurance
- Workers Compensation Insurance for Restaurants
The 6 Best Providers of Restaurant Insurance
Insurance for restaurants is quite popular, so many, if not all, insurance companies have products available for restaurant owners. Here are the top 6 insurance providers to restaurants:
- 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
CoverWallet: Best for Comparing Online Quotes
CoverWallet is a digital commercial insurance broker. They work with several business insurance companies and are able to provide quotes of these companies for consumers to compare and choose. They provide business insurance quotes for a wide range of industries. Restaurants or food catering is one of the industries they cover.
If you are new to buying restaurant insurance, you should give them a call and discuss your specific restaurant situation with their agents, who are very knowledgeable about business insurance in general.
CoverWallet also offers 4 different packages of restaurant insurance that you can choose from: Basic, Standard, Pro, and Custom. The basic restaurant insurance policy costs $39/month and includes general liability insurance only. The pro restaurant insurance policy costs $189/month and includes general liability, commercial property, and Employment Practices Liability Insurance (or EPLI).
Thimble – Fast Online Quotes and Smooth Digital Experience
This company specializes in offering digital insurance, so that online experience is a smooth one. In fact, Thimble offers one of the best digital experiences in the world of small business insurance. Within 5 minutes, you will get a quote and if you are happy with it, you can buy and bind the policy online immediately. After buying a policy from Thimble, you can manage the policy using their customer dashboard with so many features such as downloading the certificate of insurance, file a claim, add an additional insured, buy new coverages, or renew the policy.
Since they focus on offering a great digital experience, Thimble has been able to cut overhead costs and transfer these cost savings into discount for their customers. They claim that they help save small businesses at least 30% in general liability insurance premiums.
You should definitely give Thimble a try, getting a quote online with them takes less than 5 mins.
The Hartford – Combined Options
As a major player in the business insurance world, this company has a page detailing what type of insurance you’d want for a restaurant business. It recommends getting a business owners policy, which can include general liability, commercial property, and business income. However, the online quote system does not reflect this bundled option. When we selected property, general liability, and worker’s compensation together, we got the following quote screen:
Nationwide – Specialized Products
Nationwide offers a variety of products for restaurant insurance. Some are more common, like commercial auto insurance or worker’s compensation. Others are less common, like coverage for equipment breakdown, employee dishonesty coverage and property and sewer and drain coverage. The business owners policy combines business property, general liability, business income, and equipment breakdown. The quote process wants to you authorize that it’s ok for the company to call you for sales.
Farmers Insurance – Focus on restaurant issues like food contamination
Farmer’s offers a variety of insurance options for restaurants and food trucks. It can cover things like equipment breakdown, spoilage, food contamination shut down, and commercial auto insurance. You need to talk to an agent to start the quote process.
Liberty Mutual – Customized plans with an agent
This juggernaut in the business insurance world can tailor an insurance plan to meet the needs of restaurant businesses specifically. Plans target risks like slips, food borne illnesses and kitchen fires. This is another company that works through independent agents.
Working with an agent to obtain proper insurance policies to protect your restaurant might not be a bad idea. There are different types of restaurants and different restaurants might serve different food and drinks in different time windows. All of these factors actually determine what types of insurance you need to obtain and how much. A knowledgeable agent will be very helpful to help you figure it all out.
>>MORE: Best Business Insurance for Bars
What is restaurant insurance?
Restaurant insurance is a catch-all phrase that includes the types of insurance that restaurants typically need in order to remain protected from claims and lawsuits. When running a restaurant, you typically need a full range of coverage, from protecting against lawsuits if someone slips on your floor to covering the wait staff in case of a workplace injury or if someone sues you for having over sold alcohol for customers who cause accidents after leaving your restaurants.
What Insurance Does a Restaurant Need?
As mentioned above, restaurants would need several insurance coverages to protect operations and business. The Insurance Information Institute lists several types of insurance that a restaurant should consider:
- Commercial property insurance
- General liability insurance
- Liquor liability insurance
- Commercial auto insurance
- Workers compensation insurance
- Employment practices liability insurance
- Business Owners Policy (or BOP)
Commercial property insurance
Commercial property insurance protects your tools and equipment from loss to fire, explosions, burst pipes, vandalism, storms, and theft. Earthquakes and floods aren’t usually covered, but if you live in an area prone to floods or earthquakes, you can add them to your policy.
For restaurant owners, whether you rent or own your restaurant space, you definitely need this insurance policy to protect your physical space and the equipment stored in it.
General liability insurance
General liability insurance will cover you if a client slips and falls and injures themselves in your shop. It covers third party bodily injury and property damage, plus advertising injury.
For example, if your client slips and falls in your restaurants, they are injured and have to be hospitalized for some time and decide to sue you, general liability insurance policy will pay for their medical bills and lost wages as a result of the injury. This is actually one of the most common law suits against small businesses, especially among the restaurants.
You can also add liquor liability endorsement to your general liability insurance policy to cover your liabilities if you serve alcohol to someone who already has had too much and that person ends up in an accident after leaving your restaurant.
However, if your restaurant is a fine dining one, with a lot of liquor consumption, you may want to consider a separate liquor liability insurance policy. (see more below)
Liquor liability insurance
Liquor liability insurance: If your restaurant serves alcohol, you will need to obtain liquor insurance as well. Liquor liability insurance is defined as coverage for bodily injury or property damage that an intoxicated person causes after being served alcohol by a policy holder. The coverage on a liquor liability policy varies quite a bit from state to state because each state interprets who is legally liable for damages or injuries differently.
In many states, liquor liability insurance is required when you apply for a liquor license, so make sure to obtain it before applying for a liquor license.
Commercial auto insurance
If you use a vehicle for work, including delivering food to your customers or getting groceries from supermarkets to your restaurant, you will need a commercial auto insurance policy. It is legally required in all 50 states
Your personal auto insurance policy doesn’t cover you if you drive your vehicle for work. The personal auto insurance company will refuse your claims. Even worse, they might drop you off altogether when they find out. Commercial auto insurance is usually a bit more expensive than personal auto policy. However, it is not worth it skipping it.
Workers compensation insurance
If you have employees, workers’ compensation insurance is a must since it is legally required. This will cover the costs of employees work-related injuries or illnesses, including medical cost and lost wages. If you are running your restaurants by yourself and/or your family members, you are a self-employed independent contractor, you still need workers comp insurance coverage to protect yourself (and your family members) when you get injured at work.
Working in a restaurants is actually one of the most risky jobs, especially for those who work in the kitchen. The likelihood of getting injured in a commercial kitchen is relatively high. Make sure you have workers comp insurance coverage to protect yourself and your employees.
Even more importantly, with COVID, your waiters and waitresses are now at risk to contracting COVID from your customers. Although more and more restaurants require vaccination proof from customers for entry, the risk is still there.
Having workers comp insurance will also make it easier for you to hire employees. Your employees will feel safe and protected. Most restaurants are short of staff due to COVID. Potential employees wouldn’t even consider you if you don’t provide workers comp insurance coverage for them.
Employment Practices Liability Insurance (EPLI)
This is to protect restaurant owners from claims and law suits of claims of harassment, discrimination, wrongful termination, and wage discrimination.
You will be surprised to learn that harassment and wage discrimination is the second most popular lawsuits among restaurants. Protect yourself and your restaurant business to obtain EPLI coverage. Learn more at the best employment practices liability insurance (EPLI) companies.
Business Owners Policy (BOP)
Some of these policies can be combined into a convenient business owners policy (BOP), which often bundles property, general liability coverage, and business (income) interruption insurance. If your restaurant generates less than $10M in annual revenue and/or employ less than 100 people, which most restaurants do, you might want to consider a BOP policy, instead of three separate policies: general liability, commercial property, and business income interruption.
However, if your restaurant generates more than $10M in annual revenue or employs more than 100 people, you are not eligible for BOP policy. You need to get three separate policies.
BOP makes it simple and more cost efficient for you to get coverage to protect your restaurant business.
Who needs restaurant insurance?
Many types of food-serving businesses need some types of restaurant insurance. Below are a few of them:
- Casual restaurants
- Fast food restaurants
- Fine dining
- Food delivery services
- Catering services
- Coffee shops
- Juice bars
- Ice cream shops
How Much Does Restaurant Insurance Cost?
Tabak Insurance Agency, with specializes in the food industry, averages a business owners policy, worker’s compensation, and liquor liability insurance at $4,300 annually. Though the agency states that restaurant insurance costs for a business owners policy (BOP) can range widely from $1,100 to $10,500 annually.
Many factors can affect how expensive restaurant insurance is, like the size of your business, how many employees you have, whether you sell liquor and the location of your business, to name a few conditions.
Learn more at how much restaurant insurance costs
How Much Does Restaurant Insurance Cost Per Month?
On average, a typical small restaurant with about $1 million in annual revenue would pay about $600 in restaurant insurance a month, or $7,200 a year, all necessary policies included.
- General liability insurance costs $69 a month
- Food contamination insurance costs $49 a month
- Commercial property insurance costs $139 a month
- Liquor liability insurance costs $89 a month
- Commercial auto insurance costs $215 a month
- Workers compensation insurance costs $75 a month (with 4 full-time employees)
Each restaurant is unique with its own features. Each restaurant will also has different quotes from different insuance companies. The only way to get the best quote is to shop around with 3-5 companies and compare their quotes. Working with a digital broker like CoverWallet or Simply Business is a good way to compare quotes from several leading companies in one place.
Compare Quotes of Restaurant Insurance
In order to try to compare quotes online, we put in a business owners policy through CoverWallet, since many insurers recommend this as an option for restaurants. We entered a full-service restaurant with three part-time employees that’s three years old. We got the following screen with one quote:
Restaurant Insurance in New Jersey
Restaurant owners in New Jersey need to obtain sufficient business insurance coverage to protect their restaurant business operations. In addition to the standard restaurant coverage such as workers comp, general liability insurance, and commercial auto insurance, restaurant owners in New Jersey will need to have liquor liability insurance. New Jersey is popular with its dram shop laws, which holds restaurant owners liable for serving alcohol to minors and for harm caused by the individuals that have been over-served by the restaurants even after they have left the restaurants.
Restaurant owners in New Jersey may also need to consider hurricane and flood insurance. They can obtain these coverages separately or add the coverage as endorsements to their commercial property policy.
Restaurant Insurance in New York
A restaurant in New York state should have the same set of business insurance policies as in other states. However, it is likely to be a lot more expensive in New York than in other states, especially for commercial property, liquor liability, and commercial auto insurance. New York state is in the top 3 most expensive states for these insurance policies.
Don’t skip restaurant insurance because it is expensive. It is a lot costlier without restaurant insurance in New York when bad luck happens. Make sure you shop around, compare quotes with digital brokers like CoverWallet and Simply Business to get the best quote for your restaurant.
- Restaurant insurance is an umbrella term that covers the different types of insurance a restaurant business should carry. These typically include general liability insurance, property insurance, professional liability insurance, worker’s compensation and commercial auto insurance.
- The cost can vary depending on how much coverage you want, benefits like limits and the size of your business, as a few examples. It typically ranges all around the thousands of dollars annually.
- Some of the top five companies to look into include Next Insurance, The Hartford, Nationwide, Farmer’s and Liberty Mutual.
- CoverWallet is a good source for restaurant insurance quotes, since it allows you to pick insurance types by industry recommendations.