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Does my restaurant need business insurance?

Does my restaurant need business insurance?There is a lot of setup involved in opening a restaurant and many details need to be addressed before, during, and after the grand opening. Most details are crucial to success, from the name of the restaurant and its location all the way to the choice of tableware and ambiance. Out of all the elements, one of the most important things that you need for your restaurant is business insurance.

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Business insurance is critical for all business, but it is especially important for a restaurant. In addition to general liability you need property and casualty insurance and possibly other insurance coverage such as liquor liability and assault and battery.

Whether you are a bar, pub, nightclub, adult entertainment facility, caterer, dine in restaurant, or fast food joint, you need to have business insurance. The type of insurance and how much you need may depend on the type of establishment you have.

Bar and Restaurant Insurance

The restaurant industry is such a unique business in the service that it provides that it has an entire separate branch of insurance dedicated just for the industry. That is because multiple incidents can occur at a bar or restaurant that could lead to injuries, medical expenses, and lawsuits. The cost of these incident can fast exceed the cost of business insurance.

Typical accidents such as slipping and falling can happen in any brick and mortar store, so restaurants should always carry general liability. However, a restaurant is also responsible for serving food, which can lead to a host of problems, anywhere from spilling a hot plate on a patron’s lap to a customer getting sick with food poisoning.

Other types of incidents that could occur are related to employee complaints for harassment or worker’s compensation needs. Customers are also able to complain about harassment, such as by citing that you refused to serve him because of discrimination.

More simple types of insurance needs cover things such as power outages that lead you to close your store, lose income potential as a result, and possible food spoilage loss depending upon your backup generator system. A power outage is usually unavoidable and unpredictable, so the only way to really have financial protection from one is through business insurance.

Property Business Insurance for Restaurants

Property business insurance for restaurants may cover some of the above mentioned items such as food spoilage or business interruption. It may also cover contamination, business income, mechanical breakdown, water backup and overflow, electronic equipment, fine art, and signs.

Depending on your restaurant property business insurance, you may also be covered for credit card charges due to business loss or crime resulting from an employee’s dishonesty. If your restaurant serves only wine but no other liquor, you may be able to get a wine stock endorsement on your business insurance policy.

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General Liability Insurance for Restaurants

As the name implies, general liability typically covers general incidents that relate to bodily injury. It can also cover fire damage beyond your fire insurance policy, including damage from sprinkler systems. Unlike typical general business liability, restaurant general liability usually includes insurance for valet parking as well.

If you rent or lease your building, your general liability insurance may extend to your landlord’s property. This is important, especially if there is a fire or other incident that is the fault of the restaurant. If you do not have fire insurance that covers the actual property because you are not the owner, then your restaurant is at risk of financial responsibility and possibly a lawsuit.

Optional Insurance for Restaurants

One of the biggest needs for restaurant insurance is liquor liability if your restaurant is serving alcohol. Liquor liability insurance can be purchased by itself or added on to your other business insurance policy. If you do not purchase liquor liability then your restaurant is responsible for any ill doing that follows liquor consumption in your establishment.

When people drink there are a couple of different scenarios that can cause to injury and lawsuits. One is in the case of what is known as a bar brawl. If someone gets intoxicated and causes a fight at your restaurant, you could be held responsible since you served the alcohol. Another scenario, and usually a worse one, is the patron who drinks at your restaurant and then drives away, getting into a car accident after leaving your place of business.

Other optional insurance includes insurance for:

  • Restaurant vehicles or boiler and machinery insurance
  • Employee insurance such as worker’s compensation and benefit liability
  • Benefit liability protects your business from employee administrative errors that lead to financial loss

Your restaurant needs business insurance regardless of how big or small your restaurant is. The type of place you have will dictate what type of business insurance you need and how much it will cost.

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