When it comes to running a restaurant, there are countless things to consider: menu development, staff management, inventory control, and more. But one thing that should be at the top of every restaurant owner’s mind is liability insurance. In this guide, we’ll explore what restaurant liability insurance is, what it covers, why restaurants need it, and other types of insurance that a restaurant business may need to consider. We’ll also discuss the cost of restaurant liability insurance and ways to reduce it, as well as answer the question of whether or not restaurant liability insurance covers liquor liability.
- What is restaurant liability insurance?
- What does restaurant liability insurance cover?
- Why do restaurants need liability insurance?
- Other insurance coverages restaurant businesses may need and what they cover
- How much does restaurant liability insurance cost?
- What can restaurant owners do to reduce the restaurant liability insurance cost?
- Best restaurant liability insurance companies
- Does restaurant liability insurance cover liquor liability?
What is restaurant liability insurance?
Restaurant liability insurance is a type of insurance that protects a restaurant business from financial loss in the event of a lawsuit. If a customer is injured on the property, for example, or if someone becomes ill from the food served at the restaurant, the business could be held liable for damages. Restaurant liability insurance can help cover the cost of legal fees and any settlements or judgments that may be awarded.
What does restaurant liability insurance cover?
The coverage that restaurant liability insurance provides can vary depending on the policy, but it typically covers:
- Bodily injury: If a customer is injured on the property, the policy can help cover the cost of medical expenses and any legal fees that may be incurred.
- Property damage: If someone damages property on the restaurant’s property, the policy can help cover the cost of repairs.
- Food contamination: If someone becomes ill from food served at the restaurant, the policy can help cover the cost of legal fees and any settlements or judgments.
- Liquor liability: If someone becomes injured or damages property as a result of alcohol consumption at the restaurant, the policy can help cover the cost.
Why do restaurants need liability insurance?
The restaurant industry is a high-risk one, and accidents and incidents can happen at any time. A customer could slip and fall on a wet floor, for example, or food could be contaminated during preparation. If a lawsuit is filed against the restaurant, the legal fees alone can be enough to put a business out of operation. Restaurant liability insurance can help protect the business from financial loss in the event of a lawsuit.
Other insurance coverages restaurant businesses may need and what they cover
There are several other types of insurance that restaurant businesses should consider in addition to liability insurance. These include:
Commercial property insurance:
Restaurants need commercial property insurance to protect their physical assets in case of damage or loss. Property insurance can help cover the cost of repairs or replacement of equipment, furniture, and other property in the event of damage or loss.
Here are some reasons why restaurants need property insurance:
- Protection against natural disasters: Restaurants are at risk of damage from natural disasters such as fires, floods, hurricanes, and earthquakes. Property insurance can help cover the cost of repairs or replacement of damaged property.
- Protection against theft: Restaurants are vulnerable to theft, whether it is from customers or employees. Property insurance can help cover the cost of replacing stolen property.
- Protection against equipment breakdown: Restaurants rely heavily on equipment to operate, such as ovens, refrigerators, and other appliances. Property insurance can help cover the cost of repairing or replacing equipment in case of breakdown or malfunction.
Business interruption insurance
Business interruption insurance is an important coverage for restaurants as it can help cover the cost of lost income if the restaurant is forced to close due to a covered event, such as a natural disaster or fire. Here are some reasons why restaurants need business interruption insurance:
- Protection against natural disasters: Restaurants are at risk of damage from natural disasters such as fires, floods, hurricanes, and earthquakes. Business interruption insurance can help cover the cost of lost income while the restaurant is closed for repairs.
- Protection against equipment breakdown: Restaurants rely heavily on equipment to operate, such as ovens, refrigerators, and other appliances. Business interruption insurance can help cover the cost of lost income if the restaurant is forced to close due to equipment breakdown or malfunction.
- Protection against supply chain disruption: Restaurants may be forced to close if there is a disruption in the supply chain, such as a food contamination or a shortage of ingredients. Business interruption insurance can help cover the cost of lost income during these disruptions.
- Protection against government-mandated closures: Restaurants may be forced to close by government order, such as during a pandemic, and business interruption insurance can help cover the cost of lost income during these closures.
- Protection against power outages: Restaurants may be forced to close if there is a power outage, and business interruption insurance can help cover the cost of lost income during these closures.
Workers’ compensation insurance:
Workers’ compensation insurance, also known as workers’ comp insurance, is an important coverage for restaurants as it can help cover the cost of medical expenses and lost wages for employees who are injured or become ill as a result of their job duties. Here are some reasons why restaurants need workers’ comp insurance:
- Protection for employees: Restaurants have a high risk of employee injuries, such as cuts, burns, and slip and fall accidents. Workers’ comp insurance can help cover the cost of medical expenses and lost wages for employees who are injured on the job.
- Compliance with state laws: Many states require employers to provide workers’ compensation coverage for their employees. Failure to comply with these laws can result in fines and penalties.
- Protection against lawsuits: Without workers’ comp insurance, an employee who is injured on the job may be able to sue the employer for damages. Workers’ comp insurance can help protect the restaurant from financial loss in the event of a lawsuit.
- Covering costs related to illnesses: Some illnesses, such as repetitive motion injuries, can develop over time and can be linked to the job. Workers’ comp insurance can help cover the cost of medical expenses and lost wages for employees who become ill as a result of their job duties.
- Protection for employees who are injured outside of the restaurant: Some policies will cover employees who are injured while traveling on business, or during off-duty activities that are related to their job.
Cyber liability insurance
Cyber liability insurance is an important coverage for restaurants as it can help cover the cost of damages and expenses resulting from a data breach or cyber attack. Here are some reasons why restaurants need cyber liability insurance:
- Protection against data breaches: Restaurants handle sensitive customer information, such as credit card numbers and personal information. Cyber liability insurance can help cover the cost of damages and expenses resulting from a data breach.
- Compliance with regulations: Many states and industries have regulations in place that require businesses to protect customer data and to report data breaches. Cyber liability insurance can help cover the cost of compliance and fines for non-compliance.
- Protection against cyber attacks: Restaurants may be vulnerable to cyber attacks, such as malware or ransomware. Cyber liability insurance can help cover the cost of damages and expenses resulting from a cyber attack.
- Protection against theft of intellectual property: Restaurants may have confidential business information, such as recipes, that they need to protect. Cyber liability insurance can help cover the cost of damages and expenses resulting from the theft of intellectual property.
- Protection against business interruption: If a cyber attack or data breach causes the restaurant to close, cyber liability insurance can help cover the cost of lost income during the closure.
How much does restaurant liability insurance cost?
The cost of restaurant liability insurance will vary depending on a number of factors, including the size of the restaurant and the level of coverage needed. Some insurers may also take into account the restaurant’s location and the type of cuisine it serves. Typically, the cost of liability insurance for a restaurant ranges from $500 to $2,000 per year. On average, a restaurant pays $110 per month, or $1,440 per year, for a liability insurance policy
Keep in mind that this is just the average, your rate will be different. Be sure to shop around with a few insurance companies to compare several quotes to find the cheapest one for your restaurants. We recommend to the following providers:
- Simply Business: Best brokerage to find cheap restaurant liability insurance
- CoverWallet: Best brokerage firm to compare several quotes online
- NEXT: Best digital carrier that offers fast quotes online and affordable rates
What factors affect the restaurant liability insurance cost?
There are several factors that can affect the cost of restaurant liability insurance:
The size and type of the restaurant
Larger and more complex restaurants may require more coverage and therefore may have higher insurance costs. The type of cuisine and the risk associated with it can also affect the cost. For example, a restaurant that serves raw or undercooked meat may be considered higher risk and therefore have a higher insurance cost.
The location of the restaurant
Insurance costs may be higher for restaurants located in areas with higher crime rates or those that are more susceptible to natural disasters.
The restaurant’s safety and risk management practices
Insurers may offer discounts to restaurants that have implemented safety and risk management practices to help reduce the likelihood of accidents and incidents.
The restaurant’s claims history
Restaurants with a history of claims may be considered higher risk and may therefore have higher insurance costs.
The amount of coverage and the size of deductibles
The more coverage a restaurant needs, the higher the insurance cost will be. Increasing the deductibles on a liability insurance policy can also help to reduce the overall cost of the policy.
What can restaurant owners do to reduce the restaurant liability insurance cost?
There are several things that restaurant owners can do to reduce the cost of their liability insurance:
Implement safety and risk management practices:
Insurers may offer discounts to businesses that have implemented safety and risk management practices to help reduce the likelihood of accidents and incidents. This can include things like regular safety inspections, employee training, and risk assessments.
Increase deductibles
Increasing the deductibles on a liability insurance policy can also help to reduce the overall cost of the policy.
Bundle policies
Many insurers offer discounts for businesses that bundle multiple types of insurance, such as property and liability insurance, together.
Shop around
It’s important to shop around and compare quotes from different insurers to find the best deal on restaurant liability insurance.
Restaurant liability insurance quotes
A restaurant liability insurance quote is an estimate of the cost of restaurant liability insurance for a specific restaurant.
There are pros and cons to getting a restaurant liability insurance quote from a carrier versus a brokerage firm.
Pros of getting a quote from a carrier:
- A carrier is an insurance company that provides coverage directly to the customer.
- They may have more experience and expertise in the specific type of insurance needed by the restaurant.
- They may have more experience and expertise in insuring a specific type of restaurant
Cons of getting a quote from a carrier:
- They may only offer coverage from their own company, so the options for coverage may be limited.
- They may not be able to offer as much flexibility in coverage and pricing as a brokerage firm.
Pros of getting a quote from a brokerage firm:
- A brokerage firm is an intermediary that represents multiple insurance companies and can offer a wider range of options.
- They may be able to customize coverage to fit the specific needs of the restaurant.
- They may have more experience and expertise in a wide range of insurance types needed by the restaurant
- They may have more experience working with a wide range of restaurant types
- Comparing several quotes to find the best and the cheapest one may be a lot easier when working with a brokerage firm
Cons of getting a quote from a brokerage firm:
- If you prefer a specific carrier that the brokerage firm doesn’t work with, you may not be able to get it
- In some cases, it may take longer to get several quotes and compare with a broker, especially if your restaurant’s operation is complicated with many high-risk activities
It’s recommended to get multiple quotes from different carriers and brokerage firms to compare prices, coverage options and services to make an informed decision. It’s also important to read and understand the policy terms and conditions before purchasing.
Best restaurant liability insurance companies
There are many companies that provide restaurant liability insurance, and the best company for a restaurant owner will depend on their specific needs and circumstances. Here are the best restaurant companies that we recommend
- Simply Business: Best brokerage firm to find the cheapest restaurant insurance coverage
- CoverWallet: Best brokerage firm to compare several quotes from top-tier carriers
- NEXT: Best digital carrier with affordable rates
Does restaurant liability insurance cover liquor liability?
Liquor liability insurance, also known as dram shop liability, is often included in a standard restaurant liability insurance policy. This coverage can help protect the restaurant from financial loss if someone becomes injured or causes damage as a result of alcohol consumption at the restaurant.
It’s important for restaurant owners to understand the importance of liquor liability insurance and the laws and regulations that govern it. Many states have dram shop laws that hold businesses liable for injuries or damages caused by patrons who were over-served alcohol. It’s crucial for restaurant owners to understand these laws and to take steps to comply with them, such as providing employee training on responsible alcohol service and implementing policies to prevent over-serving.
Do restaurants need to have garage keepers insurance and why?
Restaurants may need garage keepers insurance if they offer valet parking services or if they have a parking lot where customers can park their vehicles. Garage keepers insurance is a type of commercial insurance that provides coverage for damage to customers’ vehicles while they are parked at the restaurant. This type of insurance is typically needed by businesses that are responsible for the care, custody, and control of customers’ vehicles.
There are several reasons why restaurants might need garage keepers insurance:
- Protection against liability: If a customer’s vehicle is damaged while parked at the restaurant, the restaurant may be held liable for the damages. Garage keepers insurance can help cover the cost of repairs to the vehicle and any legal fees that may be incurred.
- Coverage for fire and theft: Garage keepers insurance can provide coverage for damage to customers’ vehicles that is caused by fire or theft while the vehicle is parked at the restaurant.
- Protection for valet services: If a restaurant offers valet parking services, it is important to have garage keepers insurance in place to protect against damage to customers’ vehicles while they are being driven by the valet.
- Compliance with local laws: Some municipalities may require businesses that offer valet parking services or operate a parking lot to have garage keepers insurance.
- Protection for parking lots: If a restaurant has a parking lot where customers can park their vehicles, it is important to have garage keepers insurance in place to protect against damage to customers’ vehicles while they are parked on the restaurant’s property.
Final thoughts
In conclusion, restaurant liability insurance is an essential coverage that every restaurant owner should have. It can help protect the business from financial loss in the event of a lawsuit and provides peace of mind knowing that the business is protected against potential liabilities. Additionally, restaurant owners should consider other insurance coverages such as property insurance, business interruption insurance, workers’ compensation insurance, and cyber liability insurance. Finally, the cost of restaurant liability insurance can be reduced by implementing safety and risk management practices, increasing deductibles, bundling policies, and shopping around for the best rates.
