What Kind of Insurance Does a Restaurant Need?

As a business owner, it’s almost inevitable that, one day, something will happen that will make you thankful for having insurance. While not the most exciting topic, insurance is undoubtedly a necessary consideration - and one that makes sure your business is protected against lawsuits, claims, and damage.  

Here are just a handful of things that may prove to be a worry as a restaurant owner:

• What if my deep fryer catches on fire and burns the place to the ground?
• What if the food that is served makes people sick?
• What if a customer injures themselves or another guest in my restaurant? 
• What if someone breaks in and steals all my equipment?
• What if a fridge breaks down and I lose all of my stock?
• What if a staff member hurts themself?

Although these concerns could keep any restaurateur awake at night, you can ease your fears simply by having the right insurance policy in place. 

But what kind of insurance does a restaurant need? Since hospitality is a hive of activity, there are a variety of insurance policies that will be required. While there will always be compulsory insurance like public liability, there are also additional ‘good-to-have’ policies to protect your growing business.  

Types of restaurant insurance coverage

Before organising restaurant insurance, it’s crucial to know the basics of what you can cover, and what your business will need.

When gathering insurance quotes, you will need to know:

• Size of your venue 
• The type and age of the building 
• Any security or fire system installed 
• Projected sales and customer numbers 
• The value of all inventory, and equipment 
• Number of employees 
• Type of equipment that will be in your restaurant 

These factors will also heavily influence the costs of each insurance policy you take out.  

General Liability

General liability insurance is an important umbrella policy that covers your business if a customer is injured or harmed in your business place. Depending on the provider, this insurance may also cover damaged reputations, copyright infringement lawsuits, property damage and any costs relevant to foodborne illnesses. 

Theft Insurance 

When it comes to covering theft in your business there are three main types of theft insurance. 

Theft: This level of insurance covers the loss of contents, equipment and stock from theft, attempted theft, an armed hold up and an actual assault.  

Money: This insurance covers the loss of or any damage to your business’ money from a variety of sources. Money insurance can cover theft, armed robbery or fire for both on your property and during transit.  

Employee Dishonesty: Even though we like to think the best of our employees, sometimes they can betray our trust. This level of insurance covers those times. You will be covered for the theft of property or money by any of your employees.    

Product Liability 

Having a thorough product liability insurance policy is extremely important if you are planning on opening a restaurant. This type of insurance will protect you against claims from customers who ate or drank your products.  

Property and Contents insurance 

There are a range of potential disasters that can severely damage your business in just minutes. Having this policy in place can cover the financial costs of property loss from events like fire, storms and any other unthinkable disaster.  

Workers’ Compensation 

Having this kind of insurance policy in Australia is mandatory, and it is there to protect you if a member of staff suffers an injury while at work. Most workers’ compensation policies will also include employers liability insurance. This relates to any legal costs that may be incurred with a workers’ comp lawsuit.  

Equipment breakdown

Without functioning equipment, your restaurant won’t be able to trade effectively, and will in turn suffer financially. Having this type of insurance will ensure that the financial costs of repairing or even replacing covered equipment is covered.  

Deterioration of stock 

This type of insurance compliments having coverage on equipment breakdown. It will cover your business for any damages or spoiled food that occurs as a result of equipment breakdown or failure.  

Business interruption 

If 2020 taught us anything, it’s that incidents beyond your control can happen at any time, and ultimately shut your business down almost overnight. Having a business interruption policy in place can help cover operating expenses, which can include leasing and franchise fees; and in some cases, it can extend to covering food spoilage costs.  

In addition to the above policies, your business may need coverage for the below policies depending on requirements. 

• Liquor liability 
• Transit coverage 
• Glass breakage 
• Vehicle insurance (if one is operated for work)
• Building cover (if you own the premise) 
• Life insurance

While most of these insurance policies can seem quite straightforward, they can become fairly complex depending on your requirements. Although some business owners will opt to take the DIY approach and search for their own policies, it can be beneficial to seek professional help to make sure your coverage is both priced fairly, and exactly what you need. 

An insurance broker that specialises in insurance for restaurant and hospitality venues can be the best way to analyse the exact risks your business will encounter and develop an insurance package to suit.