Contributor, Benzinga
July 26, 2023

Like all businesses, restaurants and other food service businesses need to manage risk by purchasing commercial insurance. Restaurant insurance will protect you against common types of food service business risks and help prevent unexpected financial situations that are difficult to overcome. Many incidents unique to the restaurant business pose a risk to you as a business owner. Food can go bad, kitchens can be dangerous and the customers who frequent your restaurant can become angry. 

Additionally, food businesses experience other risks common to any business. Negative or damaging situations with customers or your own employees pose insurable risks that your restaurant can manage with the right insurance. 

Start with our restaurant insurance guide to understand the coverage options available for your business.

Best Restaurant Insurance

Insurance is a crucial aspect of your restaurant business. Restaurant business insurance makes sure you’re covered in the event of the many situations that can occur in food preparation and service.  

Insurable risks to your restaurant business include losses to real property and personal property of the business, employees, and customers; fire coverage; workers compensation; and general liability. Risks unique to the restaurant industry include delivery, valet parking, alcohol service, customer aggression, sexual harassment, vandalism, substance abuse, memorabilia, food poisoning, signage and glass, food spoilage and business interruption, among others. 

Best For Higher-Risk Restaurants: The Hartford

If you own a thriving restaurant or bar business, a call to The Hartford for commercial insurance is worth your time. This centuries-old insurer has loyally protected cafes/coffee shops, fast food restaurants, ice cream shops, fine dining facilities, family restaurants, full-service restaurants, caterers, cafeterias, pizza shops, food trucks, farmer’s market food establishments and others from the many risks that food businesses face. 

No situation that your restaurant could experience will be a surprise to the caring, competent agents at The Hartford. If you own an establishment with many employees and a continual stream of hungry patrons, you will sleep well at night knowing The Hartford is managing your risk.

Best for Tailored Coverage: Simply Business

Simply Business offers a comprehensive suite of business insurance that specializes in making it easy to insure your business. 

Whether you’re looking for construction workers' insurance or insurance for your startup, Simply Business helps you find the right coverage at the right price. This includes your restaurant, deli, cafe, pizza joint and more.

Tell Simply Business a little bit about your business and you'll get almost-instantaneous affordable quotes from top insurance providers. You can look into workers’ comp insurance, business owner’s plans, liability insurance, commercial auto and more that will cover everyone on your team, and you can get covered in accordance with state law without overspending. 

Building your business is hard enough. Let Simply Business make it easier. Get a quote from Simply Business today.

Best for Restaurant Owners With No Time To Waste: Coverwallet

Coverwallet is one of the best choices for easy-to-begin restaurant insurance because of its simple one-price bundling plans and lightning-fast efficiency. You can start a quote for restaurant insurance by filling out a simple online form or by calling a knowledgeable human agent. 

Coverwallet answers your questions, educates you on what you need and what you don’t and gets you a Certificate of Insurance immediately. They value your time as a busy restaurant owner, and it shows in the whole process of getting insurance, paying the premiums and initiating a claim if necessary.

Best for Small Businesses: Progressive

Progressive is a well-rounded insurer that specializes in the needs of small businesses like your restaurant. Obtaining a quote is fast and easy, and you can do it online or over the phone with a friendly agent. The Progressive website on insurance for those in the food service business breaks down the most likely combination of coverages for your protection. 

Progressive’s familiarity with the most likely risks your food business can face means you can rely on them for expert protective guidance. Your Progressive agent will customize a combination of policies to cover your restaurant based on your business location, owner information and experience, business operations, gross annual sales, details of your daily operations and where you conduct business.

Best for Quick Coverage: NEXT Insurance

NEXT insurance is a simple platform that allows you to get covered quickly—in about 10 minutes—and cover your business properly. Discounts are available for bundled policies, and you can cover your restaurant with:

  • General liability
  • Commercial property
  • Workers’ compensation
  • Business owner’s policy
  • Professional liability
  • Liquor liability
  • Commercial auto
  • Errors and omissions

You can reach out to the customer service at any time for more information, and you can tailor your policy to your restaurant. NEXT policies are not cookie-cutter plans. You can build something that works best for your restaurant because your joint is different from the one next door and coverages will change over time.

Try Tivly

Tivly offers 1-stop shopping for a range of business insurance policies using its convenient online website. Fill in the criteria online and get a quote for your business. Tivly is partnered with over 200 providers and will match you with the one that fits your needs, especially when you are looking to protect your bottom line. 

Tivly works with providers on our list like Progressive, The Hartford, Liberty Mutual and Gallagher. Therefore, you can purchase business income insurance, liability coverage and more to protect your life’s work. 

How Restaurant Insurance Works

Restaurant insurance isn’t a specific policy you can purchase but instead a combination of policies that restaurant owners can acquire to protect their food businesses. Each policy insures against a unique risk, and most restaurant businesses will need more than a single policy to be fully protected.

Most insurance providers will offer general liability and commercial property insurance in a single business owner’s policy (BOP). Bundling gives 2 types of coverage in 1 package  for a lower rate. Most restaurants also need workers compensation insurance to protect against claims by employees who are injured in the line of duty.

Your restaurant may also require commercial auto insurance to protect its delivery vans and business interruption insurance to help it resume its operations fast after a disruption due to flood or fire damage.

Types of Restaurant Insurance

You need a combination of several types of commercial insurance to  fully protect your restaurant  or food truck business against unexpected losses. Here are some of the most common coverage options:

Business Liability Insurance

General liability insurance protects your business against claims made against your business by third parties. It will protect you if a member of the public claims they’ve been injured within your premises or their property was damaged by your products or actions undertaken by your business.

Liability insurance will also cover compensation costs and the legal expenses incurred in the claims process up to your policy limits.

Workers Compensation Insurance

Workers compensation insurance covers medical costs and a portion of lost wages for an employee who becomes ill or is injured on the job. Coverage may also include employee rehabilitation and death benefits. 

Each state has its unique set of workers compensation laws that businesses must follow. These laws help ensure that businesses provide coverage for the cost of occupational diseases or work-related injuries.

Employees will only receive benefits if the illness or injury is related to their workplace duties. The business  could be required to cover  injuries to an employee caused by a slip on a wet floor, lifting heavy kitchen equipment or burns from  a cooking fire. 

Commercial Auto Insurance

Commercial auto insurance provides liability and physical damage protection for your business vehicles. It will keep you and your workers covered whether you’re making deliveries or picking up supplies. You don’t want to rely on your personal auto policy for vehicles driven in your business; the risks that business vehicles face differ from those of a personal vehicle.

You can tailor your auto insurance policy to match your business needs. For instance, an ice cream van with an extensive delivery route may need more coverage than a food truck that’s often parked in 1 place. Your business auto insurance policy may cover:

  • Collision. Collision coverage pays for any damage to your food truck, delivery van or work vehicle, irrespective of who’s at fault.
  • Uninsured motorists. This part of a policy provides coverage for damage caused by motorists who don’t carry insurance.
  • Comprehensive. Comprehensive insurance pays for all non-collision damages, including theft, vandalism and fire.

Business auto insurance only covers your company-owned vehicles, so employees who use personal cars for work errands need extra coverage. A hired and non-owned auto insurance policy may cover employees who use their personal cars for business purposes.

Business Interruption Insurance

Business interruption insurance will help you if you’re unable to continue with your business operations due to an unexpected interruption like damage to restaurant equipment. 

Staying out of action means you’re losing earnings and risking your  reputation. Business interruption insurance will help get your business back up and running fast and with minimal disruptions.

Commercial Property Insurance

Commercial property insurance is an important coverage if your business has a physical location. It protects your business and its assets and can pay repair or replacement costs if your property is damaged or destroyed. Common risks covered by this policy include fires, vandalism, burglaries and storms.  

You may also need additional coverage to  your commercial property insurance (called a “rider”) or a separate policy to cover additional risks like:

  • Natural disasters like earthquakes, floods or hurricanes
  • Forced closure arising from property damage
  • Damage to mobile property

Employment Practices Liability Insurance

Managing employees is tough, and you can’t be everywhere at one time. Your business is at risk from employee behavior; for example, you may not notice your cashier harassing a customer that could escalate into a claim against your business. Employment practices liability insurance (EPLI) protects you from claims on incidents of workplace harassment to your customers. In addition to covering employees harassing customers, EPLI insurance also protects your business against sexual harassment of another employee, discrimination, wrongful termination, breach of employment contract, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress or mismanagement of employee benefit plans.

Cost of Restaurant Insurance

Each restaurant’s unique qualities expose it to various risks. This differentiation causes the cost of insurance to vary from business to business. Common factors that impact your rates for the insurance coverages important to your restaurant include:

  • Where your business is located. There’s obviously a higher risk of property damage if your business is located in a flood-prone or wildfire zone than in an area where weather-related occurrences are less likely to hit. Insurance premiums will often reflect the various risk levels. Higher risk levels will translate to a higher premium.
  • Prior claims history. Insurance providers will assess your past claim history when calculating your premium. You will pay a higher premium if you were previously sued for incidents of bodily injury or property damage.
  • Number of employees. The number of people working in your restaurant will impact the cost of your workers compensation policy. Employing more personnel increases your risk of an employee-related claim, so you’ll pay a higher premium.
  • Your deductible. The deductible amount for your insurance policy will impact your insurance rates. You will pay a lower premium if you choose a higher deductible amount.
  • Your insurance limits. A restaurant business insurance policy with a higher limit means you have more coverage against incidents, hence a higher premium. Speak to your carrier about the right limits for your business to make sure you aren’t overpaying for coverage you don’t require.
  • Business income. You’ll have more to protect if your business records a high annual income,  so the rate of your premiums will be higher. A higher premium will also affect  the cost of replacing lost income due to business interruption.

Insure Your Restaurant Business Today

There are different types of restaurant businesses, and each faces unique exposures. Whether you own a fast food eatery or food truck, you need quality business insurance. You may be liable for third-party injuries and property damage even if your restaurant is small and has limited assets. Comprehensive insurance will protect your business should the worst happen.