Published On: August 26, 2022

Whether you are just starting a new restaurant or looking at current coverage for an established eatery, you may wonder what is included under restaurant insurance. You want to have adequate coverage to protect you, your business, your employees, and your customers. At Tabak Insurance, we provide a variety of policies that can cover food and beverage venues.

What Is Restaurant Insurance?

Also known as food service insurance, coverage for restaurants is unique from other businesses. Restaurant insurance is only one aspect of the food service, but it is different from a food manufacturing facility, warehouse, or other businesses with food as their primary good or service.

When developing your customized insurance policy, you need to think about the specific needs of your business. It may differ from one type of eatery to another. For instance, a coffee shop will need different coverage than a nightclub, while a food truck will be distinct from them both. The agents with Tabak Insurance can help each business evaluate its needs for comprehensive coverage.

Property Insurance

Every bar or restaurant, unless it’s a food truck, has a building to maintain and protect. Commercial property insurance is necessary to provide for various losses that can occur. Consider natural disasters, such as flooding and wind, that are prevalent in your area. Some of these situations may be covered in your main policy while others will need to be added in a rider if they are applicable.

This type of coverage also includes the breakdown of equipment and loss of business income due to not being able to provide service. It can also cover the cost of food spoilage or contamination and crimes committed against the property.

Commercial General Liability

Commercial general liability (CGL) is another type of coverage necessary for restaurants. This policy covers the business with workers’ compensation, employee benefits liability, assault cases, and situations involving battery or physical altercations.

CGL includes liquor liability if the establishment serves alcohol on the premises. If the restaurant has a valet, it will include auto/valet liability. This coverage also protects the restaurant from damage to the vehicle when the valet is driving. You can purchase an umbrella policy for excess liability in these areas over what is normally included in a policy.

Errors and Omissions Insurance

Errors and Omissions insurance protects the restaurant from any claims made over financial losses. Though E&O isn’t specific to the restaurant industry, it may be a necessary part of insurance coverage. It is often referred to as professional liability insurance.

An example of E&O insurance is when a restaurant uses a slogan in marketing that is similar enough to another restaurant that they sue over copyright infringement.

Directors and Officers Liability Insurance

Known as D&O, this type of insurance provides protection for the restaurant itself. It covers the business for errors committed during regular business activities. D&O covers the cost of legal counsel for any alleged violations. It doesn’t cover intentional illegal activity. The coverages may be part of the CGL policy, but they can include the following categories.

Premises/Operations Coverage

This is an overarching type of coverage that includes damages that happen if the premises aren’t maintained or from operations that are performed on the property.

Products/Completed Operations Coverage

This portion of the policy provides coverage for damages that happen from products that are manufactured, sold, handled, or distributed. In a restaurant, this would include food made at the restaurant, including anything that is sold outside of the meal. For example, a barbeque restaurant may develop and sell its own bottled sauce in addition to serving it with meals.

Medical Payments Coverage

This coverage pays out for damages incurred when someone is injured on the property or from the operations of the restaurant. An example is if someone gets food poisoning from spoiled food that was served.

Fire Legal Liability Coverage

This portion of the policy provides coverage from damages caused by fire due to negligence. For instance, a cook may forget to turn off the stove, which causes the fire to start and damages the building and other buildings in the vicinity.

Personal Injury Coverage

This coverage is for injuries outside of physical harm. It may include wrongful eviction or wrongful entry, as well as libel and slander.

Advertising Injury Coverage

This policy covers damages that occur from written or oral advertising. Coverage may be combined with personal injury as protection against libel and slander.

Limits With Coverage

Not all coverages will be necessary for every restaurant and amounts will be different. Many policies establish limits based on occurrence. An occurrence can be something that happens suddenly or over a long period. It may be a one-time exposure or a continuous one.

Restaurant insurance policies will have a deductible. If you have add-ons or a rider, each policy may have a separate deductible amount.

Replacement vs Actual Cash Value

When you suffer a loss for your restaurant and need to file a claim, you will be covered based on the value of the property damaged. There are two ways of determining value. Replacement value refers to how much it would cost to replace the item at today’s price even if the item is much older.

Actual cash value refers to the amount an item is worth. It would take into consideration the age of the item and the condition it is in. When considering these two methods of determining value, you want to think about how much it would cost you to replace those items and how valuable they are to your business.

Getting Adequate Restaurant Insurance

With so many types of policies and areas of coverage, getting the right kind of restaurant insurance can be challenging. You want to protect your business and everyone involved from liability and incidents that can happen in the normal course of business.

Tabak Insurance agents can help you find the right policy that is customized for your restaurant. We can evaluate your business to help you save money on premiums while getting the coverage you need to protect your business. Contact us to find out more about our policies or to get a quote on insurance for your business.

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