Restaurant Insurance

Restaurant Insurance

Protect your restaurant from property damage, equipment breakdown, client injuries and liquor liability claims with restaurant insurance.

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Zensurance - Restaurant Owner

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Insurance for restaurants

We know that providing good food and good service is more than just your job; it’s your passion. Given the events of COVID-19, we also know that you truly understand the impact of the unexpected. Restaurants of all varieties were forced to pivot their operations, catering their menus for takeout only or providing a safe dining experience that adhered to dining restrictions.

At Zensurance, we’re here to help. More than 100,000 entrepreneurs have trusted us to protect their restaurants with insurance policies designed to cover their needs.

Restaurant insurance is specially designed to protect restaurant owners against specific risks associated with serving food and drinks, including equipment- and treatment-related accidents and injuries.

Even if you take every precaution, an accident could happen beyond your control. For example, an allegation of a food poisoning incident or allergic reaction can result in a costly lawsuit. Beyond food, restaurants contain dangerous equipment such as commercial gas stoves and sharp utensils that could injure an employee or a wandering customer. Whether your customers are visiting your restaurant for a dine-in meal, picking up something to take home, or you’re delivering their order, it’s essential to make sure they have a safe meal and experience.

Restaurant insurance describes several insurance policies that are combined to provide comprehensive coverage for your business. Typically, restaurant insurance will include the following coverages:

  • Commercial General Liability Insurance (CGL): CGL or “slip-and-fall insurance” protects you against the day-to-day risks that can happen while running a restaurant. It protects your business against claims of third-party bodily injury or property damage that occur at your restaurant location. CGL will typically cover legal expenses and medical fees, regardless of the lawsuit’s outcome.
  • Commercial Property Insurance: There are many components within Commercial Property Insurance. One of our brokers will happily walk you through the policy to ensure you know what is covered. Commercial Property Insurance protects your restaurant location and the contents within it from insured risks that occur beyond your control, such as a fire, theft, or storm. Commercial Property Insurance often includes business interruption coverage (also called business income coverage). This coverage provides reimbursement for net income that’s lost following an insured event. Please note; business interruption coverage does not cover income lost due to a pandemic, infectious disease, or government-mandated closure. If you serve alcohol at your restaurant, you also need to purchase Liquor Liability Insurance which covers you for loss or damages due to alcohol-related injuries or accidents. For example, if a customer is overserved, your restaurant may be liable if they were to drive home drunk. Please note, alcohol-related incidents are excluded by General Liability Insurance.
  • Equipment Breakdown Insurance: Equipment Breakdown Insurance covers the costs to repair or replace professional equipment (e.g., a commercial kitchen appliance) that is broken or damaged due to an internal event, such as a mechanical or electrical issue. This coverage doesn’t protect your equipment from damage against external sources such as a fire (Commercial Property Insurance is required to cover damage from insured perils like these).
  • Product Liability Insurance: Product liability coverage protects against claims alleging third-party property damage or bodily injury caused by a product you manufacture, distribute, or sell – including the food you prepare and serve. Damages covered by product liability are usually the result of a design, manufacturing, or marketing defect, such as an incorrect label or a lack of safety warnings. A food poisoning incidence or an allergic reaction due to your food can be covered by Product Liability Insurance.
  • Cyber Liability Insurance: While the majority of the restaurant experience is in-person, you likely take reservations online or have the option to input a take-out order on your website. Both of these examples require your customers to provide their data online (e.g., their address and financial information). Cyber Insurance covers costs such as legal fees associated with electronic incidents, such as a cyber hack involving your technology systems and data.

Due to the variety of restaurants out there, many factors can influence the cost of your unique restaurant insurance policy. For a small- to medium-sized business that doesn’t serve alcohol, you can anticipate a starting cost of approximately $2000/year for a restaurant insurance policy package.

We know you want to make sure you get the best price for your business. We’ve partnered with over fifty insurance providers to offer you a variety of options that’ll suit your business needs.

During our online application for a free quote, we’ll ask questions about your business that will help us to determine what coverage you should have. Here are some of the main factors we take into consideration:

  • Years of experience
  • Business size and location
  • Annual and projected gross revenue
  • Number of employees
  • Previous insurance claims

A restaurant insurance policy package is helpful for any business owner providing food and drink services. Some specific types of food-service establishments we cover are:

Whether you own a dine-in restaurant or a take-out-only restaurant, here’s some specific advice to help you choose the insurance policies that are right for you.

Dine-In Restaurant Owner:

You’ll need comprehensive coverage to cover your property, employees (including chefs, servers, and other staff), and general business liability risks. Whether you rent or own your restaurant location, it’s usually required to have General Liability and Commercial Property Insurance as standard. Several other policies provide further protection for your restaurant from claims and lawsuits.

Your Commercial General Liability insurance may cover your restaurant’s full-time employees in the event of a claim due to third-party bodily injury or property damage. Please note, your policy limit is a cost limit and will apply to all employees rather than each individual. It’s important to make sure you’re sufficiently covered – and you have the option to increase your limit. Alternatively, you can ask employees to carry their own Liability Insurance.

If you serve alcohol at your restaurant, you also need to purchase Liquor Liability Insurance. This policy covers loss or damages due to alcohol-related injuries or accidents, typically excluded by General Liability Insurance. Liquor Liability Insurance should cover you if a customer is accidentally overserved by your bartender and proceeds to fall over and injure themselves.

As a restaurant kitchen is full of expensive equipment, it’s important to ensure your appliances are protected in the instance of a mechanical or electrical fault. Equipment Breakdown Insurance covers the costs to repair or replace this equipment. For example, if your commercial oven breaks down and needs a costly part to fix it, Equipment Breakdown Insurance could cover the cost of the piece and the repair work required.

Product Liability Insurance covers injuries or property damage caused by defective products you manufacture, sell, or distribute. In the case of your restaurant, this also applies to the food you serve too. For example, if you serve in-date meat that’s been stored correctly, but a customer falls ill supposedly from the meat, Product Liability Insurance should cover you if they decide to sue.

Finally, if you use a booking system to store customer’s data (e.g., financial information or their address), it’s your legal obligation to protect their data. Cyber Insurance covers costs like legal fees associated with cyber hacks or other security compromises that involve your technology systems and data.

Suggested Coverage:

  • Commercial General Liability Insurance
  • Commercial Property Insurance
  • Business Interruption Insurance
  • Liquor Liability Insurance
  • Product Liability Insurance
  • Equipment Breakdown Insurance
  • Cyber Liability Insurance

Take-Out or Delivery Only Restaurant Owner:

Many food-service establishments are take out only, such as pizza joints or fast food locations. Other locations are currently serving take-out only due to COVID-19 restrictions. If you don’t have customers eating in your restaurant, there are still several similarities in coverage to a dine-in restaurant. To make sure you understand how your policy would cover your take-out restaurant, we’re providing examples applicable to you.

Whether you own or rent your take-out restaurant, it’s typically required to have Commercial Property Insurance from the start. However, several other policies can protect your business from claims and lawsuits.

Commercial General Liability insurance may cover employees and delivery drivers that work for your restaurant in the event of a claim due to third-party bodily injury or property damage. A policy limit will apply to all employees rather than a limit for each individual. You can request that your employees or your delivery drivers carry their own Liability Insurance, or you can increase your limit.

Product Liability Insurance covers injuries or property damage caused by defective products you manufacture, sell, or distribute. This coverage may also apply to the food you sell or deliver too. For example, you delivered a vegan pizza, and the customer discovers that it has cheese in the sauce even though the ingredients didn’t list it. In this case, your customer could sue, and Product Liability Insurance should cover you for legal costs.

Lastly, you have a legal obligation to protect the personal data you hold about your customers when they place an order on your website. Cyber Insurance will cover costs like legal fees associated with electronic incidents or hacks that involve your technology and data.

Suggested Coverage:

  • Commercial General Liability Insurance
  • Commercial Property Insurance
  • Commercial Auto Insurance
  • Business Interruption Insurance
  • Product Liability Insurance
  • Equipment Breakdown Insurance
  • Cyber Liability Insurance

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Common claims scenarios

bartender working at restaurant

Problem: A server accidentally overserves alcohol to a customer. When the customer gets up from the bar, they fall and injure their wrist.

Outcome: The customer successfully sues you for bodily injury due to an alcohol-related incident. Your Commercial General Liability and Liquor Liability Insurance offer coverage that may cover the legal fees and medical expenses, totalling $10,000.

restaurant closed sign

Problem: Your only commercial fridge freezer experiences a mechanical fault, and you lose all of your stock for food orders. You have no option but to close your business while the fridge freezer is replaced.

Outcome: Your Business Interruption Insurance may cover the income lost during the time you were closed, in addition to your staff’s wages, totalling $5,000. Your Equipment Breakdown Insurance may cover the cost to replace the broken fridge totalling $6,000.

Pizza Restaurant Delivery Driver

Problem: While delivering a pizza, one of your delivery drivers accidentally knocks over an ornate vase by your customer’s front door. The customer proceeds to successfully sue for property damage.

Outcome: Your General Liability Insurance may cover the cost to replace the ornate vase, totalling $2,000.

Frequently asked questions

Do I need equipment breakdown coverage?

Yes. This is an extremely important coverage for restaurant owners. It protects your business from cases of mechanical and electrical breakdown of major pieces of equipment (e.g., boilers, coolers, refrigerators, air conditioners). The policy covers the repair or replacement of the equipment, and there is also a limit associated with food/drink spoilage. Note that equipment breakdown is not included under property coverage.

Are employee theft and regular theft covered under Crime Insurance?

Crime Insurance protects your business from employee theft including stolen cash and credit card forgery as well as loss of money and securities inside and outside of the premises. Regular theft, however, is included under the property portion of a policy. Ensure that you have both added to your Restaurant Insurance policy.

Is liquor liability an important coverage for my restaurant?

If you serve alcohol at your restaurant, you may consider adding liquor liability to your insurance policy. You may be held liable if you serve alcohol to a customer who causes an accident, and alcohol is deemed to be a contributing factor in the incident. Restaurant employees are also required to ensure that they do not serve alcohol beyond the point of intoxication, which is a challenging requirement to manage.

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