Insurance is a necessary part of doing business today – especially for those in the food services industry. Whether you run a deli or a 5-star fine dining restaurant, there are several major factors to consider when it comes to ensuring your business. Knowing what your risks or exposures are can help you purchase the right restaurant insurance protection to guard your business, not to mention your personal property, against them.
1) Spoilage Insurance/Food Contamination Insurance
Despite your best efforts to establish a policy in your restaurant that promotes food safety, proper food handling, and the avoidance of potential cross contamination, employees may not be as vigilant in following the rules as you’d like. Protection for food poisoning in the form of spoilage and food contamination insurance is wise and necessary. In addition, if the power goes out for an extended period of time and food stock and ingredients are deemed unsafe and unusable, spoilage insurance will kick in to cover the loss.
Does your restaurant offer gluten-free menu items or are considering doing so? The growing “gluten-free” trend is bringing a new kind of insurance need to the surface. Restaurant industry businesses need to invest in product liability and completed operations insurance coverage when offering gluten free menus because there are no specific standards for food to qualify as gluten free. This leaves a great deal of wiggle room and the potential for many food sensitivity reactions depending on how stringent your standards (and those of your food vendors) are.
2) Liquor Liability Insurance
If you serve alcohol in your restaurant, then you absolutely can’t afford to go without liquor liability insurance. It’s a type of insurance that provides coverage to your business in the event that liquor-related claims are made against your business. The most classic example is when damage or injury is incurred as a result of the actions of an intoxicated (i.e. drunk) person and the harmed party files a lawsuit. Damages in this type of suit can be substantial, so it behooves establishments that serve alcohol to be armed with liquor liability insurance.
Keep in mind, though, that liquor liability coverage does not extend to protect you if your restaurant serves underage drinkers or if the sales are contrary to state laws regarding alcohol service.
3) Equipment Breakdown Coverage
Equipment breaks down. It’s the bane of all businesses. Whether it’s the result of mechanical failure, power surges, improper maintenance, or other internal issues, the breakdown isn’t any less painful for your business to experience. Unfortunately, it never breaks down at an opportune time. More importantly, your existing property/casualty insurance coverage may not adequately cover the cost of replacing that equipment when it’s the result of this kind of internal damage. Therefore, don’t forget to look for equipment breakdown coverage that also protects your business from income losses due to the loss of the equipment, spoilage costs in replacing materials, costs associated with repairing or replacing the equipment, and labor expenses in the event you repair the equipment rather than replacing it.
4) Employee Theft and Fraud
In small businesses today, employee theft is one of the biggest problems retailers and service entities face. One of the most common methods employees use to steal from employers is to take cash from customer transactions. Restaurants have not escaped this epidemic of fraud and theft, unfortunately. Employees are able to steal cash, give away or steal food, and even fudge their time cards. That’s why restaurant owners, specifically, need to invest in crime insurance that protects the business for losses due to crimes being committed against them.
5) Property Insurance (Fire Safety)
Restaurants alone face a heightened risk of fires. Restaurants do more than a fair share of cooking at higher than average temperatures and the dining rooms are often filled with patrons. In addition to having the proper safety equipment on hand, the equipment needs to be tested frequently in order to ensure it’s in proper working order. Your restaurant staff members also need to adhere to strict safety and cleaning protocols and training designed to minimize the risk and/or severity of fires. But regardless of employee training and safety precautions, you still need to have adequate property and liability coverage to handle the damage caused to the physical property and your patrons by a fire.
Finding the right liability insurance policy for your restaurant is a delicate process. Don’t overlook the importance of insurance policies that cover these vital factors of operating a restaurant in your efforts to find the right fit.
