You came up with a fabulous menu and created the perfect décor and ambiance for customers to enjoy your special recipes and drinks. Your new restaurant is all set up, except for one key issue—insurance.
Read on to learn why you should find insurance coverage for your restaurant business.
What Type of Restaurant Insurance Policy Do You Need?
A restaurant requires various insurance protections to cushion the owner against financial loss. Important coverage considerations include:
- Commercial property insurance-This policy can pay to repair or rebuild your restaurant if it is damaged in a covered peril like fire or water. It can also pay to replace stolen restaurant properties, such as inventory and equipment. Be sure to insure all your restaurant contents for full loss protection.
- Restaurant liability insurance-This component covers your business against any third-party damage caused. Coverage includes slip and fall injuries that lead to lawsuits against your establishment. It can pay for any liability settlements, including your defense attorney fees.
- Restaurant business interruption insurance-Get this coverage to replace any lost restaurant income if you have to shut down operations for a few months, such as while repairing fire damage. Your monthly bills, payroll, and other expenses fall under this component of your commercial insurance policy. Without this protection, any business interruption could leave you overwhelmed by debt and fixed costs.
Reasons to Have Insurance for Your Restaurant Business
Your restaurant, just like any other enterprise, constantly faces unpredictable perils and liabilities. Commercial insurance cushions you against unfortunate events that may impact your organization. According to the National Fire Protection Association (NFPA), thousands of fires start in eating and drinking establishments in the U.S. each year.
These fire incidences result in civilian deaths and injuries besides causing direct property damage. Fire is one of the most common causes of restaurant claims that insurers payout annually.
This reality isn’t difficult to comprehend, considering that the possibility of accidental fires starting in any establishment with a kitchen is usually high. The chefs are constantly handling or dealing with flammable substances like gas and ingredients like oil and butter.
To stay prepared ahead of the risk of restaurant fire, always ensure your properties and any physical assets for their full replacement value. Insurance will enable you to reopen quickly after losing your business properties in any covered event, including damages caused by fire or water.
Another reason to obtain insurance for a restaurant business is to gain protection against liability claims. These too are common in eating and drinking establishments. For instance, if a guest slips and falls inside or outside your establishment and sustains a severe injury, the customer might sue your restaurant for medical costs.
If the dispute goes to court, you’ll have to hire a defense attorney, adding to your costs. Commercial liability insurance for your restaurant can pay to settle the guest’s slip and fall injury claims. It’ll also cover your attorney fees, whether or not you’re liable for the specific injury claim.
Besides slip and fall injuries, guests breaking their teeth while eating can also result in liability claims covered by restaurant insurance. This policy can also cover falling/tripping due to broken furniture.
Is Commercial Insurance Mandatory for Restaurants?
The law doesn’t usually require restaurants to have commercial insurance, including liability coverage. However, if you’re a contractor, you may face third-party claims, in which case you’ll need to have liability insurance, depending on your state’s laws.
As your restaurant is a bona fide business like any other, it needs the protection of an insurance program. Contact the experts at Humble & Davenport Insurance today for help finding comprehensive coverage for your new business. We are happy to assess your insurance requirements and provide reliable solutions.