You need restaurant insurance to protect your restaurant business from the potential risks and accidents that may occur. However, you are stuck trying to figure out how to get the best restaurant insurance offer, one that gives you total coverage with costs that stay within your budget. Learn how to analyse restaurant insurance costs and how to choose the best insurance for you.
If you own a restaurant, one of your biggest concerns will be how to protect your business from any risks that may threaten its survival. Just like any other business, running a restaurant comes with various risks, but knowing how to protect your business effectively can be the difference between success and failure.
Suppose a fire breaks out in your kitchen and damages your property, or a customer sustains an injury or an allergic reaction to your food and decides to sue your restaurant; what will you do?
What if a power surge damages your refrigerators and ruins your inventory of perishable goods, or someone breaks into your restaurant at night and steals valuable equipment or cash from the register? Nobody can deny the importance of restaurant insurance, but as a business person, you need to understand how to factor in restaurant business insurance costs to ensure they don’t cut deep into your revenue.
This article exposes you to all you need to know about restaurant insurance costs and how to choose an insurance package that suits your business size.
What Is Restaurant Insurance?
Restaurant insurance is a specialised kind of business insurance available for restaurant owners to protect their business from risks like property damage, liability claims, employee injuries, etc. It includes a combination of policies tailored to provide coverage and meet the unique needs of food service businesses.
When you have restaurant insurance, your business enjoys protection from unexpected events that may threaten its survival or lead to lawsuits.
What Does Restaurant Insurance Cover?
The first way to understand how insurance providers decide the average restaurant insurance cost per month is to understand the basic coverage that restaurant insurance covers.
There are different coverages that restaurant insurance covers, all of which depend on the size and type of your restaurant. These coverages are tailored to protect your business from various risks. Below is a breakdown of the types of coverage you can get from restaurant insurance.
General Liability Insurance
General liability insurance tops the list of insurance policies necessary for restaurants. It protects you against third-party claims for bodily injury, property damage, or advertising injury.
For instance, if a customer or employee sustains an injury (from slipping and falling or other reasons) in your restaurant and sues you, general liability insurance covers you.
Commercial Property Insurance
This covers damages to your restaurant’s building, equipment, furniture, and inventory due to events such as fire, natural disasters, theft, or vandalism. It protects the assets of your business property from losses in the face of an unexpected situation event.
Business Interruption Insurance
There may be times when your restaurant must close temporarily due to a covered event. In such instances, business interruption insurance compensates for lost income and operating expenses. Let’s say a flood forces your restaurant to shut down for repairs; this insurance policy compensates you so you won’t be in total loss throughout the period you were not in operation.
Workers’ Compensation Insurance
If your employees become injured or ill while working, workers’ compensation insurance takes care of their medical expenses, lost wages, and rehabilitation costs. A typical example will be when a chef suffers a burn while cooking at your restaurant and needs medical treatment.
Liquor Liability Insurance
This insurance policy applies to restaurants with a liquor license or beer and wine license. Liquor liability insurance covers claims or lawsuits arising from a patron’s alcohol-related injury. So if a customer drives drunk after taking liquor at your restaurant and, as a result, causes an accident, you get protection from liquor liability insurance.
Food Contamination and Spoilage Insurance
This insurance policy covers losses due to food spoilage caused by equipment breakdowns or power outages. For example, a refrigeration failure ruins your inventory of perishables, and you need support to continue running your business.
Equipment Breakdown Insurance
When your ovens, refrigerators, and other equipment break down unexpectedly, equipment breakdown insurance covers the repair or replacement costs.
Cyber Liability Insurance
Cyberattacks are becoming a big threat as technology penetrates deeper into the core of business operations. Cyber liability protects your business from losses due to data breaches or cyberattacks, enabling you to operate with peace of mind.
These coverages ensure that your restaurant is financially protected from a wide range of risks, allowing you to focus on serving customers without constant worry.
Factors Affecting Restaurant Liability Insurance Costs
Factors that determine restaurant liability insurance costs includes:
Size of your restaurant: If you own a large establishment with high foot traffic, there are greater risks, hence higher premiums.
Type of cuisine and services: Fast food joints may have lower premiums compared to fine dining restaurants that serve high-end dishes.
Location: Urban areas with higher crime rates or expensive real estate tend to have higher insurance costs.
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Number of Employees: More employees mean higher worker’s compensation premiums.
Equipment Value: Expensive equipment increases the cost of property insurance.
Average Restaurant Insurance Cost for Small and Big Restaurants
| Type of Insurance | Coverage Description | Average Cost Range (annual) |
| General Liability Insurance | Protects you against third-party claims for bodily injury, property damage, or advertising injury. | $500 – $2500 |
| Commercial Property Liability Insurance | covers damages to your restaurant’s building, equipment, furniture, and inventory due events such as fire, natural disasters, theft or vandalism. | $500 – $2500 |
| Workers’ Compensation Insurance | Takes care of medical expenses, lost wages, and rehabilitation costs when employees become injured or ill while working. | $600 – $10,000 |
| Liquor Liability Insurance | Covers claims or lawsuits arising from a patron’s alcohol-related injury. | $300 – $3000 |
FAQs Restaurant Insurance Costs
What insurance does a restaurant need?
Restaurants usually need several types of insurance coverage, such as general liability insurance, property damage insurance, food contamination and spoilage insurance, etc. You should work with a reliable insurance provider to determine the insurance required by your restaurant so that you can enjoy full protection.
How much is insurance for a small restaurant?
Although small restaurants tend to spend less on insurance than larger ones, it’s essential to know the specific protection needs of your business before making a statement. The average insurance cost for a small restaurant runs between $1,000 and $5,000 per year.
Final Thoughts
Every business is unique, and that’s why getting the perfect coverage for your business requires working with a professional and experienced insurance company. The right insurance provider will help you analyse your business needs and provide the best coverage for your business type and size.
As a result, you can protect your business, equipment, and even the customers patronising your brand without breaking a sweat.
Trust Barter Insurance for your reliable insurance quote options and enjoy peace while running your restaurant business.
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