The Importance of Restaurant Insurance and What It All Covers

Aspiring restauranteurs focus on the menu and the overall concept of their establishment. While these are the building blocks for starting a business, the owner needs proper insurance coverage to prevent disastrous outcomes. Restaurant insurance could offer adequate protection for these new business owners, but what is restaurant insurance, and what does it cover?


What Is Restaurant Insurance?


Insurers define restaurant insurance under the umbrella of a business owner’s policy. A standard BOP offers protection for bodily injuries, legal defense coverage for liabilities, and coverage for items inside the establishment.


Premises Liabilities Inside and Outside Your Restaurant


Restaurateurs cannot always monitor every patron, so they need coverage to protect against unexpected accidents. Parking lots are the first point of entry for all patrons, and even if they are well-maintained, accidents are possible. Someone could slip and fall in the parking and sustain an injury.


Patrons could become injured inside the restaurant due to slippery flooring, other patrons, or faulty equipment in the dining area or restrooms. A walk-through assessment could reveal unknown risks and help owners implement safety policies to reduce accidents. However, even the most well-thought-out plan won’t include every possibility of an injury.


Payment for Lawsuit-Related and Similar Losses


Premises liability-related accidents aren’t the only risk to a new restaurant. Serving too much alcohol presents dire risks to the patron, establishment, and owner. Under Dram Shop Laws, a patron or their family could file a lawsuit if the restaurant overserved the customer and they died or became seriously injured in a related drunk driving accident.


Restaurant insurance offers financial loss protection due to lawsuits. The policy can also protect against losses related to additional liabilities such as food poisoning or contaminated ingredients.


Health code violations, for example, aren’t the same as a lawsuit, but they can significantly reduce business income. The owner could incur severe financial losses if a health inspector shuts down the business. The insurance policy could lessen the impact of a temporary business shutdown.


Protecting On-Site Assets


Establishing a restaurant requires the acquisition of equipment, furniture, and other permanent fixtures. Adequate restaurant insurance coverage may pay the replacement cost of a faulty oven, refrigeration system, or furniture inside the business.

At the start of the policy, the new owner determines which items require coverage and how much coverage applies to each asset. Discussing coverage limits with an insurer helps determine whether supplementary policies, such as a rider, are necessary.


For example, if the owner purchases equipment that isn’t readily available locally, they may need more substantial coverage to replace it. Under the circumstances, the owner may also need coverage for financial losses related to equipment loss or the inability to create specialty menu items.


Owning a restaurant is fun for anyone who loves food and the culinary arts. However, becoming a business owner requires you to make sound decisions about protecting your establishment. Restaurant insurance covers unexpected events, including premises liabilities, legal costs related to a lawsuit, and on-site asset protection. New owners can evaluate coverage with an insurer to get the best coverage for their establishment.