As a restaurant owner, it’s essential to make certain that your company is adequately secured by insurance. The majority of restaurants receive commercial property and liability coverage by acquiring a business owners policy (BOP) or a conventional package policy, which includes both property and liability coverage.
Liability in General
General liability insurance is required by a restaurant in order to cover claims for physical injury or property damage that may arise as a result of accidents such as slips and falls. Your restaurant will be protected from claims stemming from food-borne illnesses under the terms of the insurance, which also includes product liability coverage.
Product/Completed Operations Hazard Redefined endorsement must be attached to your policy if the food that consumers consume on your premises is to be considered a ‘product’ under the terms of your policy. With this endorsement, you can rest assured that any claims stemming from the food you sell will be covered under the products/completed operations coverage, regardless of whether the food is consumed on or off your property.
Buildings that contain restaurants are particularly vulnerable to fire damage. Furthermore, many restaurant owners rent the space in which they operate their businesses. The owner of the building you rent may sue you for damages caused by a fire that you started by mistake and caused damage to the premises.
A coverage known as Damage to Premises Rented to You is automatically included in a liability policy, which is a welcome relief. This type of coverage is typically subject to a sublimit, such as $100,000 in most cases. Make certain that your limit is sufficient. Some insurance companies will provide up to $300,000 in coverage. Some insurance companies will provide this coverage without imposing a sublimit.
Perhaps valet parking is available at your establishment. Is the damage to a customer’s vehicle, which occurs accidentally while you are parking it, covered by your liability insurance? Because of the exclusion for care, custody, or control, the answer is no. Consider protecting your business against such losses by acquiring garage keepers’ liability insurance.
If your company provides health insurance, dental coverage, or other benefits to its employees, you should think about purchasing employee benefits liability insurance. This coverage will protect you from lawsuits that arise as a result of any clerical or administrative errors you make while administering employee benefits.
Other Liability Insurance Protection
Here are some examples of different liability insurance policies that a restaurant may require.
- Liquor Liability: General liability policies do not cover claims for bodily injury or property damage that may arise as a result of the sale or service of alcoholic beverages. If you cause or contribute to someone’s intoxication as a result of the sale or service of alcoholic beverages, your general liability policy will not cover you. It is necessary to buy liquor liability insurance if your restaurant sells or serves alcoholic beverages.
- Employees can sue restaurants for discrimination, harassment, and other workplace torts if they believe they have been subjected to such practices. General liability insurance does not provide coverage for such torts. You’ll need to obtain employment practises liability insurance in order to protect your company’s assets.
- Umbrella: A commercial umbrella policy provides additional coverage above and beyond the limits given by your general liability and commercial car policies. It also provides coverage for claims that are not covered by other insurance policies.
Insurance for Commercial Real Estate
The following are some types of property insurance that a restaurant owner should consider:
- Backup of sewer water into your restaurant: If sewer water backs up into your restaurant, you’re going to have a big mess on your hands. It doesn’t help matters that sewer backup is an excluded danger under a standard property insurance policy. If you want to be safe, make sure you purchase sewer backup insurance.
- Your business’s income could be significantly reduced in the event of a fire or other disaster causing property damage at your restaurant, forcing you to close your doors permanently. You can protect yourself against such occurrences by getting company income insurance.
- Utility Service Disruption: In order to operate, most restaurants require power, natural gas, water, and communication services. Any of these services can be disrupted, resulting in harm to your property. It may also compel you to close down your eatery completely. By acquiring utility interruption coverage, you can safeguard your company’s operations.
- In the event that your restaurant’s property is damaged by fire or another risk, you may be able to continue operations while repairs are being made by renting additional equipment or transferring to a temporary location. You will need to obtain additional expense coverage in order to ensure that those additional charges will be covered.
- A power outage can cause food to spoil if the cooling equipment in refrigerators and freezers fails or shuts down, causing the refrigeration or freezing equipment to stop working. By acquiring spoilage insurance, you can protect your restaurant from incurring costly losses due to deterioration.
- Breakdown of Equipment: Many restaurants rely on machinery such as steamers, boilers, ovens, refrigerators, freezers, ice makers, and food warmers to function properly. A steam explosion, as well as an electrical or mechanical breakdown, can cause significant damage to this equipment. Equipment breakdown insurance is required to protect against such losses. This latter coverage can be expanded to include coverage for loss of income, additional expenses, and spoilage.
- Most restaurants utilise computers to produce, store, send, and receive electronic documents, which is known as electronic data processing (EDP). Table ordering systems are used by some establishments. Electronic data and equipment are typically only covered to a limited extent by standard property insurance plans. Therefore, you should consider purchasing electronic data processing coverage.
- Fine Arts: Does your restaurant have paintings, statues, or other pieces of artwork on display? If this is the case, you should consider purchasing fine arts insurance to preserve your investment.
- Employee Theft: Restaurant staff have been known to steal food, cash, and other items from their places of business. Employee theft is an excluded danger under the terms of a conventional property insurance policy. Employee theft insurance will be required if you want to keep your company safe.
- Peak Season: If your restaurant generates a high volume of business during specific seasons of the year, such as Easter or during summer, you should consider purchasing this coverage. During a set time period, it gives a higher limit for personal property insurance coverage. Many business owners’ policies (BOPs) automatically contain this coverage, which provides a 25% seasonal boost.
Insurance for Commercial Automobiles
Many restaurants have their own fleet of vehicles that they utilise for a variety of tasks such as picking up supplies, delivering food, and other company needs. Vehicles used for business purposes should be covered by a commercial auto policy. The policy should include coverage for non-owned and hired vehicles, as well as coverage for vehicles owned by the restaurant.
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