Cost of Restaurant Insurance - How Much is it?

When it really comes down to it, running a successful restaurant comes to down to strict planning. As a restaurateur, you must plan your menu, the restaurant food costs, labor cost for restaurants, and a hundred other little outgoing fees. With so many plates to keep spinning, it's almost surprising that restaurant owners remember to serve the food.

Unfortunately, no matter how well you plan, the unexpected often strikes at the worst possible moment. This is where restaurant insurance comes in. Insurance is easy to overlook when you are focused on perfecting your latest culinary masterpiece but it should always be included in your restaurant prime costs. Good insurance has saved more than a few businesses when something unpleasant happened.

In this blog, we'll be exploring insurance in detail. This will include average restaurant insurance costs, what insurance you'll need to operate your business, and answer the question: how much does it cost to open a restaurant with insurance?

What is restaurant insurance?

In simple terms, restaurant insurance is a policy or collection of policies that provide essential coverage to hospitality businesses in the event of something unfortunate or unexpected. There are many different types of insurance and just as many different insurance companies and brokers.

Nearly every eventuality can be insured against depending on a variety of factors. Insurance can cover everything from legal fees to workers comp to even funeral expenses should the very worst come to worse.

It's almost unheard of for a business in the restaurant industry not to have some sort of insurance. In most countries, restaurants are required to have insurance of some kind by law. As the restaurant owner, it is part of your job to ensure that your restaurant has all the correct insurance policies in place. Failure to do this can lead to fines and even prison sentences in some places.

What kind of insurance does a restaurant need?

Think of different types of insurance as any other restaurant licenses and permits. It's simply another thing that helps you run your business in the best and safest way possible. Depending on the risks involved in your restaurant, you'll need several different types of insurance to operate your business.

While each restaurant will have its own specific insurance needs, most hospitality businesses will generally be covered by the same policies. The two most popular restaurant business insurance policies for restaurants are general liability insurance and commercial property insurance.

There is a lot that can go wrong in a restaurant and general liability insurance covers most of it. A restaurant general liability insurance policy covers legal fees incurred from lawsuits brought against your business by disgruntled customers. This includes customer slip and fall cases, food poisoning, any medical expenses incurred by customers as a result of dining at your restaurant, and even slander and libel cases.

While general liability insurance can protect you against a variety of damages, its coverage limits can be quite severe (depending on the insurance company you use). Always take care to have an insurance agent go over the extent and limits of your general liability insurance.

A commercial property insurance policy is solely concerned with your building. This includes property damage caused by vandalism, equipment replacement costs as a result of theft, and damages caused by natural phenomena such as storms, fires, and floods. In some locations, damages caused by natural disasters will be covered by a separate, specific insurance policy instead of commercial property insurance.

Some insurance providers will allow you to bundle general liability insurance and commercial property insurance into a single policy. This is called a business owner's policy. The cost of a business owner's policy is determined by your overall property value, your location, your restaurant equipment value, and other factors.

It's worth talking with your insurance provider about obtaining a business owner's policy as it can be cheaper than taking out separate general liability insurance and commercial property insurance policies.

What other types of insurance are available?

Depending on the needs of your business, you may need to take out a expanded suite of policies to ensure you're fully protected. While general liability insurance and commercial property insurance are the two most popular policies, it's not unusual for restaurants to take out multiple different types of insurance. We've included examples of different policies below to help you decide what your business may need.

• Workers compensation insurance - Sometimes known colloquially as workers comp insurance, this policy provides your restaurant employees with coverage should they suffer a workplace injury. Workers compensation insurance helps pay for employee injuries. medical bills, and can cover lost wages in certain circumstances. Workers compensation insurance costs depend on the size of your staff and the frequency of occupational injuries.
• Liquor liability insurance - For restaurants with a liquor license, liquor liability insurance is vital and often legally required. This policy protects your restaurant if you serve intoxicated patrons who go on to harm themselves and any property damage they cause. Liquor liability insurance should be one of the main expenses for a restaurant looking to serve alcohol.
• Business interruption insurance - Should your restaurant be forced to stop service, Business interruption insurance will help you cover your bottom line during the stoppage. While this type of insurance won't be pertinent for every restaurant, if you're based in a location that suffers from heavy snow storms or wildfires, this policy can give you a lot of breathing room.
• Commercial auto insurance - Restaurant franchise costs often include running supplies between your locations. Commercial auto insurance covers all your vehicles in cases of breakdowns and car accidents. This insurance can help support injured employees should they suffer a bodily injury while driving one of your vehicles.

How much does the average restaurant insurance cost?

At this point, you may be wondering how much does restaurant insurance cost? As mentioned above, each restaurant has its own set of unique risks and so it can be difficult to give a one size fits all answer. However, we can use average price ranges for different types of insurance to give a general answer.

The size of your restaurant, its clientele, its location, the size of your staff, and even the food you serve all inform your insurance costs. Restaurant pricing for insurance can wildly vary from business to business so you'll need to do some research to work out what types of insurance you'll need.

Just so we can get a general idea of some of the variable costs for a restaurant insurance cost, lets use two of the policies we've mentioned above. Commercial property insurance costs around $740 per year while general liability insurance costs around $900 per year. This means that for the average restaurant insurance cost comes in at $1640 per year.

This is basic set of policies so you should generally expect to pay more. If we includes costs like workers compensation insurance, liquor liability insurance, commercial auto insurance, and other smaller restaurant insurance costs, the price rises. When we factor in these extra policies, we can see that restaurant owners should expect to pay around $4000 per year for insurance.

While this may seem like a big expense in an industry where profit margins are paper-thin, restaurant insurance policies are designed to help you run your business safe in the knowledge that you're covered for all eventualities. Workers comp, liquor liability insurance, and a business owners policy will all pay for themselves if you ever need to cash in your policy.

What insurance policies do I need to open a restaurant

If you're new to the restaurant business, it can be confusing working out what insurance you need to start. As we've mentioned above, you should start with general liability insurance and commercial property insurance as these two will cover your day-to-day needs. Once you have these, you should be able to open up a small business.

If you're opening a larger operation, you'll need some extra policies. If you have more than a couple full-time employees, you must have workers compensation insurance in case the worst happens and you need to cover a bodily injury or a work related injury. If you're serving alcohol, you'll often be required by law to have liquor liability insurance. This will ensure you're covered if your diners enjoy themselves a little too much.

Perfect restaurant POS

Now that you have the perfect insurance policies in place at your restaurant, you need a powerful point of sale (POS). The Epos Now Complete Solution is a restaurant POS system designed with business owners in mind. Take payment, manage staff, and get orders out faster with one innovative system.

If you'd like to hear more about Epos Now, get in touch with our expert team below.