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Restaurant Insurance: A Menu of Options

Jason Metz

Restaurant insurance typically combines several coverage types to meet all of the business's needs. For example, coverage for broken equipment, customer injuries and car accidents while you're picking up kitchen inventory.

A common way to combine coverage into one policy is a business owners policy (BOP). BOP insurance for restaurants usually includes property insurance, general liability insurance, business income insurance and customized coverage.

Restaurant insurance can vary by the specific needs of the business. For example, a restaurant might cater special events or sell alcohol. It might be a fine-dining restaurant or have a pizza delivery service.

Basic restaurant insurance coverage types

Here's a list of coverage types that restaurants commonly buy.

Business general liability insurance

General liability covers injuries and property damage lawsuits against the restaurant. For example, if a customer slips and falls in the restaurant, general liability insurance covers legal costs, including settlements and judgments.

Business interruption (also known as business income) insurance

If a problem covered by the policy (such as a fire) forces you to temporarily close or relocate the restaurant, business interruption insurance helps cover expenses.

Business property insurance

Covers your building and its contents for problems such as thefts, vandalism, storms and fires. "Contents" might include kitchen equipment, inventory, tables and chairs.

Commercial auto insurance

Do you use a vehicle to help run the restaurant, such as picking up kitchen supplies or delivering food? If so, a personal auto policy generally won't cover business-related accidents. Commercial auto insurance covers the vehicles used for business purposes.

Workers compensation insurance

Unless you're doing all the cooking, cleaning and serving, it's likely you have employees. If they get injured or ill from work-related tasks, workers compensation covers medical bills and some lost wages.

Additional restaurant insurance coverage types

There's no one-size-fits-all approach to restaurant insurance. Here are some additional options. A business insurance agent can help you identify the right options.

Business income from dependent properties – If your restaurant depends on another business, such as seafood or produce delivery, and they're unable to deliver, this could affect sales. This coverage can help replace lost income.

Business off-premises – Business property insurance typically covers only the primary place of business. If you take inventory, equipment or other business-owned items off-premises, such as to cater an event, consider this coverage.

Employment practices liability – This covers you if an employee claims their legal rights were violated. This typically includes discrimination, harassment, wrongful termination and other issues.

Equipment breakdown coverage -- Kitchen equipment such as freezers and ovens are essential to a restaurant. If your equipment breaks, this pays to repair and replace equipment and covers lost income if business was interrupted.

Food contamination coverage – If a government authority such as the board of health orders you to close the restaurant, this helps cover lost income and other damages. For example, you may need to clean contaminated equipment, replace spoiled food and advertise to get customers back.

Liquor liability – If your restaurant sells beer, wine or spirits, you're most likely going to want liquor liability insurance. If a customer has a few too many and starts a fight or causes a car accident after they leave, you could be held responsible. A general liability policy typically does not cover liquor liability.