From the kitchen to the front of the house, restaurants, delis, cafes, bakeries, and other eateries have numerous exposures based on the nature of their business. As a result, it’s important that they have the necessary types of insurance coverage in place to ensure that they would be covered correctly should an incident occur, and a claim or lawsuit resulted.
Necessary Coverages for Restaurants
For starters, a restaurant or eatery must have a Business Owner’s Policy, commonly referred to as a BOP, in place. A BOP combines General Liability insurance and Property insurance, as well as a variety of optional endorsements that offer additional coverage if a restaurant or eatery experiences a loss.
General Liability protects the business against claims made by others such as bodily injury, damage to property, or personal injury. While Property Insurance covers your building, belongings in the building, and loss of income (which we will talk more about below) if you're out of business due to a claim.
A BOP can also include various endorsements, which are supplemental coverages added to the policy, such as:
- Spoilage covers the loss of perishable items if a restaurant or eatery experiences a power outage, breakdown of equipment or contamination and the food inventory goes bad.
- Business Income Coverage reimburses you for the loss of income your restaurant would incur should it be closed for a period due to a covered cause of loss. Thus, preventing the business from going insolvent during the time of repairs.
- Business Income/Time Element Coverage provides normal business income coverage due to power outage if a business cannot open. This coverage can be immediate, but most carriers have a 24-72 hour waiting period before coverage kicks in.
- Employee Dishonesty Coverage (also referred to as Employee Theft insurance) protects small businesses, such as restaurants and eateries, from employee theft of money.
- Equipment Breakdown is an endorsement that provides reimbursement to repair or replace damaged machinery or equipment that has suffered a mechanical or electrical failure. Please note that this does not cover wear and tear from normal operation.
- Water Backup coverage addresses damage done by water which backs up through the sewers, drains or even a sump pump basin and does damage to business property.
- Workers Compensation is a necessity as soon as you hire an employee, subcontract employees, or use any workers who are under your control. Should an employee become ill or injured on the job or because of their work, Workers Compensation provides medical benefits and can provide lost wages for that employee.
- Statutory Disability Insurance is also a necessity once you hire employees, as it covers them for lost wages due to injuries or illnesses while off the job. In New York, it also provides lost wages due to Paid Family Leave circumstances.
- EPLI Employment Practices Liability Insurance (EPLI) covers claims made by current, former, and prospective employees, as well as customers and vendors that work with your restaurant or eatery. EPLI protects against claims made by employees or third parties accusing them of a variety of work-related issues.
Other Coverages That May Be Necessary
In addition to the coverage and endorsements listed above, there are others that might be necessary for your restaurant or eatery, based on your establishment’s offerings.
- Liquor Liability Insurance helps cover claims of bodily injury or property damage that an intoxicated person causes after a business has sold, served, or distributed to them.
- Commercial Auto coverage is a must if your restaurant or eatery owns a vehicle that is used to conduct business. This coverage protects your business against bodily injury lawsuits and property damage if you or your employee gets into an accident in a company vehicle. This coverage also provides no fault medical coverage for you or your passengers who may get injured in an auto accident. It can also provide comprehensive coverage to protect your commercial auto against damage from things like animals, theft, and fire; collision coverage for damage to your company vehicle that you or your employee have caused, towing and labor, and rental reimbursement coverage.
- Non-Owned Auto Liability covers your liability when the personal vehicle of an employee or temporary staff, whether owned or rented by them, is driven for business. The vehicle must be in-use for business purposes at the time of the accident. So, if you hire drivers to handle delivery for your restaurant, this policy would cover their damages, or the damages they cause, in case of an accident. This coverage usually goes in excess over the employees’ personal auto limits.
The costs associated with running a restaurant can be hefty – but the cost of the insurance coverage doesn’t have to be.
J. Hoffman Insurance represents one of the most competitively priced Restaurant & Eatery programs in NY, and we would love to see how we can put it to work for you. Please reach out to our team at 845-239-4787 or firstname.lastname@example.org with any questions, or to see how we can save your restaurant or eatery a significant amount on thorough and complete insurance coverage.