Securing proper insurance is an essential step for any small business owner, but particularly for the restaurant industry. Owning a restaurant runs the added risk of fire hazards, employee injuries, and liability for customer safety. In the case of a claim, it’s important that your business has enough coverage to offset losses from incidents and that you understand what your homeowner’s insurance covers. Without proper insurance, you may be forced to liquidate your assets to cover repair costs, lawsuits, and other damages.

Choosing an insurance plan that accounts for the high-risk nature of your business helps financially protect you from accidents so that your business can stay afloat even in the midst of disaster.

All insurance plans are not created equally so it’s important to understand the unique needs of your business. To help you evaluate your restaurant insurance needs, here are four things to consider before opening a restaurant:

1.   Risks of Opening a Restaurant

Owning a restaurant comes with some inherent risks due to flammable machinery, food contamination concerns, and general liability issues. Identifying the vulnerabilities your restaurant may face helps you choose a policy with enough coverage to protect you from losses. Restaurants typically face insurance exposure that requires an extra coverage plan for areas of concern. The most common risks faced by restaurants are:

• Property damage
• Theft
• Customer injury
• Food poisoning & allergic reaction claims
• Liquor liability
• Business vehicle accidents
• Workers compensation

With so many variables at play, restaurants are notorious for accidents. It’s important to have a quality insurance plan that protects you from every risk the industry throws your way.

2.   Different Types of Insurance

Several types of coverage exist that are available to restaurant owners. Depending on your needs you may need additional coverage, but the following are the most recommended restaurant insurance policies:

• Commercial property insurance covers the structure that your business owns or rents and sometimes the equipment, computers, tools, and furniture in the building. This is designed to protect you from natural disasters, fires, hail & wind damage, and other incidents that jeopardize the integrity of the building’s structure.
• General liability insurance protects your business if you’re sued for personal injury or property damage. A typical policy covers those accidents or damages that occur on-site or as a result of using goods or services sold by the company. For example, if you’re sued for serving undercooked meat that results in severe medical issues for a customer, a small business general liability plan helps protect you from lawsuits. In addition, coverages can be designed to cover additional costs like attorney fees or court costs.
• Worker’s compensation insurance protects employees working in the restaurant. As an employer, you’re legally obligated to maintain a safe workplace for your employees, but sometimes accidents happen. If an employee sustains an injury while working, worker’s comp helps to cover the medical expenses and lost salaries of the employee.
• Crime insurance: protects your business from internal theft, vandalism, robbery, and other crime. As a cash-dominant business, restaurants are extremely susceptible to crime. Regardless of the type of restaurant crime, a quality insurance policy covers any monetary or tangible losses you incur.

In addition to these basic policies, you may want to consider purchasing umbrella insurance for your small business. Umbrella insurance acts as a second line of defense for your company and extends upon the policies you already have in place as an added layer of protection.

3.   Price Factors

Different contributing factors determine the rates you’ll be required to pay for your insurance policies. The type of property, geographic location, number of employees, operating hours, goods and services being offered, and your personal claims history all affect your business insurance rates. For example, restaurants located in areas prone to severe water damage from flooding, hurricanes, or hail all have higher property insurance rates.

Restaurants in areas with high-crime activity have higher premiums on crime insurance rates. When opening a restaurant, factoring in these price determinants helps you come up with a good estimate of what you’ll need to pay to properly cover your business.

4.   High-Coverage vs. Affordability

While you may be looking to save a few bucks where you can when opening a restaurant, when it comes to insurance you shouldn’t skimp out. Think of your insurance plan as an investment. While it may not pay off immediately, one day it can literally save your business. Cheaper plans may be more attractive, but they likely won’t provide the extent of coverage you need, especially considering the risky nature of the restaurant industry. Work with your insurance agent to find a plan that adequately covers you from potential losses, but also fits within your budget.

Protect Your Business Today

A high-coverage insurance policy is imperative for the success of your restaurant. Choosing the right plan helps to protect your business, employees, customers and yourself from unexpected circumstances. American Tri-Star Insurance Services Inc. caters to the insurance needs of today’s restaurant owners in San Diego and throughout the state of California, offering quality coverage unique to the industry. Contact us today at 619-363-0257 or request a quote to learn more about insurance options for your restaurant venture.