Whenever you budget the expenses of your business, Restaurant insurance must be near the top of the list because you can’t always know exactly what is going to happen in the future.
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With the protection provided by general insurance and all the other sorts of insurance we will tell you about, you can protect your business and yourself in case something unwanted happens.
Like any business owner, for your Restaurant enterprise, you must consider how much financial risk you are taking on.
If your Restaurant business runs without proper insurance, you are taking an enormous chance not just of losing some money but of a total wipe-out.
This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the upshots of their actions.
In this article, we are giving very general guidelines for growing businesses to explain what the main kinds of insurance that you need are, and where possible, a rough guide to how much you can expect to pay.
The question is, can you afford to NOT have insurance for your Restaurant business?
What this means, for any Restaurant business owner, is that if some customer claims that your business caused them some physical or economic damage, a court can award damages far beyond the total size of your business.
Your Restaurant business is not protected by laws in the same way as states are, where laws can place a “cap” on the maximum level of liability.
In some states, like Texas, there are specific monetary levels that limit the amount a court can award in any case against the state.
In a court case, it’s purely the duty of the jury to award whatever amount they deem appropriate, even sometimes giving a plaintiff more than they have claimed.
When you are running your Restaurant operations, you can’t avoid responsibility for the consequences of your actions.
Even more importantly, unless you have spent in advance the money necessary to have your business running as a limited liability company, all of that liability belongs to you as a person.
What does Restaurant insurance protect you from?
For your Restaurant business, the most important kinds of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.
Also there are some legal kinds of insurance that various states require.
In the next few paragraphs, we will explain the most important points any Restaurant business owner should remember when negotiating the insurance needed.
The main categories of insurance for your Restaurant businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.
General liability insurance
Any Restaurant business is dealing directly with other people, and that means you generally have the danger that some accident can happen to them bodily or else something of theirs can be spoiled.
In such a case, they can require compensation.
General liability insurance policy for your Restaurant business insures you against claims coming from injury to visitors or damage to their property.
It protects your Restaurant business from the claims themselves and in addition to any resulting court costs and legal fees of the lawsuits.
In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts demand proper liability insurance.
The usual level of general liability insurance for your Restaurant business would be with a cap of $1 million for a single submission and a total of $2 million for the whole year.
See the table in the costing section below for average prices of general liability insurance for your Restaurant insurance operations.
Professional liability insurance for your Restaurant business
In the event where a customer alleges some negligence, errors, or omissions in how you conducted your Restaurant business for them, you can quickly have to fight a law suit.
Even if the lawsuit against you is decided in your favor, the cost of defense can be substantial, and the impact on your reputation can be damaging.
Most small Restaurant business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.
See the table in the cost of Restaurant insurance section below for average prices of professional liability insurance for your Restaurant operations.
Product liability insurance
Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that what they received didn’t meet your description of function, or that your guidance was basically incorrect.
You need to know the particular laws of product liability in your own state.
For example, in California, all businesses in the supply chain can be held responsible for results caused by products claimed to be defective.
To cover yourself against any likely lawsuit, you need Product liability insurance for Restaurant
Only you can estimate exactly how much insurance you must have.
Best advice is to talk to experienced insurance agents, brokers or company representatives for support.
Commercial vehicle insurance for your Restaurant business
Beware! – practically all policies for private vehicle insurance do not cover any event like theft or accidental damage when the van is being used for business purposes.
The best way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.
Commercial van policies cover the value of any vehicle in case of accident, malicious damage, fire, or theft.
Also, in case of any accident, the car itself, the content and any legal bills, medical expenses, and property damage is covered if your truck is involved in a crash.
Most states, other than Virginia and New Hampshire, require this type of insurance.
The required value of the insurance depends on the depreciated value of the vehicle, and your intended level of cover of contents.
Tools and Equipment insurance
Since your Restaurant business needs unique and dedicated equipment, you know how much it can cost to replace it in case of any damage, loss, or theft.
The gear may be subject to malicious damage, deliberate fire, theft, other such unexpected acts.
Also, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can wipe-out your whole business in one stroke.
Unless you can afford to immediately replace such unique gear quickly out of your own pocket, you should have full-level equipment insurance so that you can immediately buy everything needed to keep your Restaurant business running.
It is difficult to advise how much equipment insurance you need – it’s really dependent on how much you have invested in your Restaurant business’ equipment.
Commercial Property insurance
Any Restaurant business that owns or rents space in a building should have a commercial property insurance policy.
If you own the property, you probably have a substantial capital investment, along with a big liability if there’s a mortgage.
Any physical building location needs to carry insurance coverage for the value of the premises and contents against accidental occurrences like fire and storms, and against deliberate damages like theft and vandalism.
In other states like Washington, where extreme cold snaps can cause damage to outer coverings of Restaurant business premises, there is a need for more extra cover than in warmer climes.
Because the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of Restaurant insurance section below to give some estimate of the average prices per million dollars of property insurance for your Restaurant business.
Temporary insurance by month, week or day for your Restaurant business
Is your Restaurant business working part-time or casually, or is the level of business seasonal?
Using short-term insurance makes excellent sense. Business insurance by the month, day, or week – temporary insurance for Restaurant – are special policies where you can cover a specific period when you want to be covered.
By only paying for that period of cover, you will save by having reduced premiums but still having adequate risk cover.
The key feature of short-term insurance is that you pay for the cover for a defined period – a designated date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.
When you are expecting periods of larger business activity, get the existing cover increased.
Talk to your insurance agent, broker or the company’s representatives to see what options you have.
Business Owners Policy BOP for your Restaurant business
You have the option to combine most of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.
A BOP combines commercial property and public liability insurance by amalgamating these coverages into one insurance policy, which can save you money.
BOP insurance will cover you if any claims of injury or property damage are made.
It is mostly the right choice for small and medium-sized Restaurant businesses, such as yours.
There are a few limits that will rule whether BOP is suitable for your own business.
BOPs will not cover your professional liability or commercial vehicle risks.
Also, the size of your business will determine whether you are allowed to take out BOP cover.
The normal business that can take out a BOP policy must have fewer than one hundred employees, and maximum five million dollars in annual turnover.
As well, you must separately take out the required worker’s compensation, health and disability insurance as determined for your state.
Workers Compensation insurance for your Restaurant business employees
In many states, it is mandatory to have workers compensation insurance when your Restaurant business has one or more employees.
Workers compensation insurance covers the enterprise against any costs that arise if an employee experiences an injury or becomes sick as a result of work.
The benefits provide for medical expenses, death benefits, lost wages, and vocational rehabilitation.
Failure to meet a state’s laws in this regard can leave you as the employer having to pay penalties levied by the states.
In these states, you may not get your workers compensation obligations from private insurance providers.
Workers compensation premiums are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.
However, you must see the relevant authorities in your state.
Average costs of these types of insurance
Although every Restaurant insurance level is unique, there are enough examples of standard quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.
Of course, you should always check with a broker what’s relevant for your business.
The list below is of annual premiums we have collected for the main types of insurance your Restaurant businesses needs.
|Types of insurance||Price range|
|Equipment insurance||$385 – $1255|
|Commercial vehicle insurance||$1878 – $2924|
|General liability insurance||$574 – $1091|
|Public liability insurance||$390 – $679|
|Commercial insurance||$1120 – $2241|
|Product liability insurance||$209 – $721|
Cost of insurance for your Restaurant operations depends on many different factors.
We have reckoned these figures for small freelance Restaurant businesses.
The location and size and type of your Restaurant business can have a big effect on the cost of different policies.
You should discuss with professional insurance agents and brokers, or insurance company representatives.
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In addition you can let the internet do the work for you by enquiring about insurance companies near where your business is located.
Another useful source of information is the local Better Business Bureau in your town.
What is small business insurance for Restaurant operations?
This is a wide term used to describe basic insurance policies designed to protect Restaurant business owners from risks like bodily injury, property damage, claims of negligence.
Does my Restaurant business have to have insurance?
Some of the forms of insurance are not mandatory for you to operate your business, but they can protect you from risks in your business operations.
Certain other forms are required by state law, such as workers compensation and vehicle insurance.
What does a small Restaurant business insurance policy cover?
Liability insurance provides insurance against lawsuits or claims filed by a client for bodily injury, property damage, or negligence.
The exact cover will vary based on your own operations.
See the table in the costing section above for average prices of the recommended policies for Restaurant insurance.
How much will Restaurant business insurance cost?
In addition to the size of the business, several other factors, such as location and claims history, are used to determine your policy’s cost.
You should discuss with professional insurance agents and brokers, or insurance company representatives.