Restaurants, Bars & Taverns
Restaurant Risk Is Different
Why Restaurants & Bars Need Specialized Business Insurance
Restaurants combine property, employees, customers, food preparation, heat, electricity, gas, refrigeration, inventory, cash flow, technology, and potentially alcohol under one roof. A serious loss can affect several parts of the business at the same time.
Cooking & Fire Exposure
Open flames, fryers, grills, ovens, electrical equipment, grease accumulation, gas lines, ventilation systems, and high-temperature cooking can create significant property-loss exposures.
Constant Customer Traffic
Wet floors, crowded dining areas, stairs, parking lots, food service, furniture, and other premises conditions can result in bodily-injury or property-damage claims.
Perishable Inventory
A refrigeration or electrical problem can potentially destroy thousands of dollars in refrigerated or frozen food before the restaurant can reopen.
One Loss Can Affect the Entire Operation
A fire may damage the building and equipment, destroy inventory, stop operations, interrupt revenue, and require extensive repairs. Restaurant insurance should be reviewed as a coordinated insurance program rather than as a single coverage.
Different Concepts. Different Exposures.
Insurance for Many Types of Food & Beverage Businesses
The appropriate insurance depends on the operation. A neighborhood café has a different risk profile from a nightclub, full-service restaurant, brewery, or restaurant with delivery drivers.
Build the Insurance Around the Operation
Important Insurance Coverages for Restaurants & Bars
Not every restaurant needs the exact same insurance program. These are some of the major coverages that should be evaluated when protecting a food-service business.
General Liability
May help protect the restaurant from qualifying third-party bodily injury, property damage, and other liability claims, including certain slip-and-fall and premises-related incidents.
Commercial Property
May protect qualifying buildings, restaurant equipment, furniture, improvements, inventory, and other insured business property against covered causes of loss.
Business Income
May help replace qualifying lost business income and certain continuing expenses when operations are suspended because of covered direct physical damage.
Workers’ Compensation
May provide benefits for qualifying work-related employee injuries or illnesses, subject to applicable state requirements and policy terms.
Liquor Liability
Important for businesses that sell or serve alcohol. Coverage may respond to qualifying claims arising from the sale or service of alcoholic beverages, subject to applicable law and policy terms.
Equipment Breakdown
May cover qualifying mechanical, electrical, or pressure-system breakdown to covered restaurant equipment and potentially related losses, depending on the policy.
Spoilage Coverage
May help cover qualifying loss of perishable food or other stock following certain covered refrigeration, equipment, contamination, or power-related events, depending on the policy.
Commercial Auto
Restaurants that own vehicles for deliveries, catering, supply runs, or other business operations should evaluate commercial auto insurance.
Cyber Liability
Restaurants frequently process payment-card transactions and maintain customer or employee information. Cyber coverage may help address qualifying data breaches, cyber incidents, and related expenses.
Protect More Than the Four Walls
Restaurant Property Insurance
The cost of rebuilding a restaurant can extend far beyond tables and chairs. Commercial kitchens contain specialized equipment and improvements that can represent a substantial investment.
Cooking Equipment
Ranges, ovens, fryers, grills, broilers, steamers, warming equipment, and other insured cooking equipment.
Refrigeration
Walk-in coolers, freezers, refrigerators, ice machines, and other qualifying insured equipment.
Furniture & Fixtures
Tables, chairs, booths, bars, shelving, décor, POS equipment, and other business personal property.
Tenant Improvements
Depending on ownership and the lease, improvements such as flooring, walls, counters, lighting, plumbing, electrical work, and built-in fixtures may need to be insured.
One of the Most Important Restaurant Exposures
Commercial Kitchen Fire Risk
Restaurant kitchens combine high temperatures, cooking oils, combustible materials, electrical equipment, gas, and continuous operations. Fire protection and kitchen maintenance can therefore play an important role in underwriting and loss prevention.
Hood & Duct Cleaning
Grease can accumulate in commercial exhaust systems. Appropriate inspection and professional cleaning schedules can be an important part of restaurant fire prevention.
Fire Suppression Systems
Commercial cooking operations may require appropriate automatic fire-suppression equipment that is properly inspected, serviced, and maintained.
Portable Extinguishers
Appropriate fire extinguishers should be accessible and maintained. Commercial kitchens involving combustible cooking media may require specialized extinguishing equipment.
Electrical & Gas Systems
Damaged wiring, overloaded circuits, improperly maintained appliances, gas leaks, and equipment failures can create serious fire and property exposures.
Cooking Practices
Fryers, grills, ranges, ovens, solid-fuel cooking, and other cooking methods can affect both insurance eligibility and pricing.
Tell Us How You Cook
The type of cooking equipment and fuel used should be accurately disclosed. A restaurant with deep fryers can present a different exposure from a café serving primarily prepared foods.
Property Insurance Repairs the Property. What About the Revenue?
Business Income Insurance Can Be Critical for Restaurants
After serious covered property damage, the restaurant may be unable to serve customers for days, weeks, or longer. Repairing the physical damage is only part of the financial problem.
Consider the Financial Impact of Being Closed
Revenue can stop while rent, loan payments, certain payroll obligations, utilities, insurance, and other continuing expenses may remain. Business income coverage may help with qualifying lost income and continuing expenses when a covered cause of loss suspends operations, subject to policy terms and applicable waiting periods or limits.
Lost Business Income
Coverage may help replace qualifying income the business would have earned during a covered suspension.
Continuing Expenses
Certain necessary expenses may continue even while the restaurant cannot operate normally.
Extra Expense
Depending on the policy, coverage may help with certain additional expenses incurred to reduce the interruption or continue operations.
Protect the Systems That Keep the Restaurant Running
Equipment Breakdown & Food Spoilage
A restaurant depends on refrigeration, electrical systems, cooking equipment, HVAC, and other machinery every day. A breakdown can create both an equipment loss and an inventory problem.
Equipment Breakdown
Depending on the policy, equipment breakdown coverage may help with qualifying sudden and accidental mechanical or electrical breakdown to covered equipment.
Examples may include: refrigeration equipment, electrical systems, HVAC equipment, boilers, pressure equipment, and other covered machinery.
Spoilage
A refrigeration failure, qualifying equipment breakdown, or other covered event could result in loss of meat, seafood, produce, dairy products, frozen inventory, beverages, and other perishable stock.
Spoilage coverage varies significantly by policy, including the covered causes of loss, limits, deductibles, exclusions, and whether off-premises utility interruption is covered.
Selling Alcohol Changes the Risk
Liquor Liability Insurance
Restaurants, bars, nightclubs, breweries, and other businesses that sell or serve alcoholic beverages should specifically review liquor liability rather than assuming their general liability policy provides all of the protection they need.
Alcohol-Related Liability
Liquor liability may respond to qualifying claims alleging injury or property damage arising from the sale or service of alcohol, subject to applicable law and policy provisions.
Alcohol Sales Matter
The percentage of revenue generated from alcohol, hours of operation, type of establishment, entertainment, security, prior incidents, and alcohol-service procedures can affect underwriting.
Bars Can Require a More Specialized Review
Late-night operations, high alcohol-to-food sales, dancing, live entertainment, security personnel, cover charges, special events, and other characteristics can materially change the insurance exposure.
Especially Important for Bars & Nightlife
Assault & Battery Coverage Should Be Reviewed Carefully
Restaurants and bars should not assume that every altercation is automatically covered under general liability or liquor liability. Assault-and-battery exclusions and limitations can significantly affect coverage.
Customer Altercations
Claims can arise from fights or physical confrontations involving customers or other individuals on the premises.
Security Personnel
Using employees or contracted security can create additional liability considerations that should be disclosed and reviewed.
Read the Exclusion
Coverage may be excluded, limited, or separately endorsed. Bars, lounges, nightclubs, and late-night restaurants should pay particular attention to this issue.
The Product You Serve Creates Liability Too
Foodborne Illness & Product Liability
A restaurant’s liability exposure does not end when food leaves the kitchen. Allegations involving contaminated food, foodborne illness, or other problems with products sold or served can result in claims.
Foodborne Illness
A customer may allege that food purchased from the restaurant caused illness or injury.
Products-Completed Operations
General liability policies may provide coverage for certain qualifying claims arising from products sold or distributed, subject to policy terms and exclusions.
Contamination & Recall
Standard liability or property coverage should not automatically be assumed to cover every contamination event, recall expense, reputation loss, or business shutdown. Specialized coverage may be needed for certain exposures.
Protect the People Who Keep the Restaurant Running
Workers’ Compensation for Restaurant Employees
Restaurant employees work around knives, hot surfaces, fryers, wet floors, heavy supplies, repetitive movements, cleaning chemicals, and other hazards. Workers’ compensation should be an important part of the restaurant’s insurance review.
Burns
Hot oil, grills, ovens, steam, hot liquids, cookware, and kitchen equipment can cause serious employee injuries.
Cuts
Knives, slicers, broken glass, food-processing equipment, and other sharp objects can create frequent injury exposures.
Slips & Falls
Water, grease, food, ice, cleaning activity, and fast-paced working conditions can contribute to employee falls.
Lifting Injuries
Employees may lift food deliveries, beverage cases, kitchen supplies, garbage, furniture, and other heavy items.
Accurate Payroll Matters
Workers’ compensation premiums can be affected by payroll and employee classifications. Accurate records are important for underwriting and premium audits.
Delivery Creates an Automobile Exposure
Restaurant Delivery & Vehicle Insurance
Restaurants should disclose delivery operations when arranging insurance. The appropriate auto coverage can depend on who owns the vehicles and who performs the deliveries.
Restaurant-Owned Vehicles
Vehicles titled to the business and used for deliveries, catering, supply runs, or other operations should be evaluated for commercial auto insurance.
Employee-Owned Vehicles
When employees use personal vehicles for restaurant business, hired and non-owned auto liability may be an important coverage consideration. It does not replace the employee’s own required automobile insurance.
Third-Party Delivery Platforms
Using an outside delivery platform does not mean every restaurant-related exposure automatically transfers to that company. Contracts and insurance responsibilities should be reviewed carefully.
Modern Restaurants Are Technology Businesses Too
POS Systems, Online Orders & Cyber Risk
Restaurants increasingly depend on point-of-sale systems, online ordering, payment processors, reservation systems, payroll platforms, Wi-Fi, delivery integrations, email, and cloud-based business systems.
Payment Information
Payment-card transactions and related systems can create data-security and cyber exposures.
Employee Information
Payroll, tax, hiring, scheduling, and HR systems may contain sensitive employee information.
Cyber Insurance
Depending on the policy, cyber coverage may help with qualifying breach-response costs, notification, forensic services, cyber liability, restoration expenses, business interruption, and other covered cyber events.
Go Beyond the Basic Policy
Additional Coverages Worth Reviewing
Depending on the restaurant’s size, ownership structure, employees, contracts, alcohol sales, vehicles, and operations, additional coverage may be appropriate.
Commercial Umbrella
May provide additional liability limits over certain underlying policies, subject to the umbrella policy’s terms, exclusions, and required underlying insurance.
Employment Practices Liability
May help with qualifying employment-related claims involving allegations such as discrimination, harassment, wrongful termination, or certain other employment practices.
Crime Coverage
Coverage may be available for certain qualifying losses involving employee dishonesty, theft, forgery, money, securities, or other covered crime exposures.
Utility Services
Certain endorsements may provide coverage for qualifying losses caused by interruption of specified off-premises utility services, subject to policy terms.
Ordinance or Law
May help with certain additional costs resulting from enforcement of applicable building codes or ordinances following qualifying covered damage.
Flood & Earthquake
Standard commercial property coverage should not automatically be assumed to include flood or earthquake. Separate policies or endorsements may be necessary.
Before Signing the Lease
Restaurant Owners Should Understand Their Lease Insurance Requirements
Commercial leases can place significant insurance responsibilities on the restaurant tenant. Review the insurance provisions before opening whenever possible.
Required Liability Limits
The lease may specify minimum general liability, liquor liability, auto, workers’ compensation, umbrella, or other insurance requirements.
Additional Insured
The landlord or other parties may need to be added as additional insureds when required by written contract and permitted by the applicable policy.
Tenant Improvements
Determine whether the tenant or landlord is responsible for insuring buildouts, improvements, fixtures, and other property installed inside the restaurant.
Certificate Requirements
Landlords commonly request evidence of insurance. A certificate documents insurance information but does not independently change or expand the policy’s coverage.
Prepare for the Quote
Information That May Be Needed to Quote Restaurant Insurance
Accurate information helps the insurance company understand the operation and can reduce delays during underwriting.
Estimated or historical gross restaurant revenue.
Percentage and amount of revenue generated from alcohol.
Estimated annual payroll and employee job classifications.
Fryers, grills, ranges, ovens, solid-fuel cooking, and other equipment.
Hood systems, suppression systems, extinguishers, alarms, and sprinklers.
Opening and closing times, including late-night operations.
Live music, DJs, dancing, karaoke, special events, or other entertainment.
Whether deliveries are performed and who owns the vehicles.
Equipment, furniture, inventory, improvements, and building value when applicable.
Customer capacity, square footage, and operational characteristics.
Current or previous coverage and insurance history.
Prior property, liability, liquor, auto, workers’ compensation, and other relevant losses.
Restaurant & Bar Learning Center
Understand the Risks Behind Your Restaurant Insurance
Use these resources to better understand restaurant property, liquor liability, business interruption, kitchen fire exposures, equipment breakdown, spoilage, and other important insurance considerations.
Restaurant Insurance Questions
Restaurant & Bar Insurance FAQs
Important answers about liability, property, alcohol, employees, food spoilage, equipment, delivery, leases, business interruption, and other restaurant insurance considerations.
Restaurants. Bars. Cafés. Food Service.
Build an Insurance Program Around the Way Your Restaurant Actually Operates
Best Formula Insurance can help review your restaurant’s liability, property, equipment, employees, alcohol sales, food inventory, delivery operations, business income, and other exposures to identify insurance options appropriate for the business.