The restaurant industry has grown by more than 6% over past few decades and is expected to reach a record $860+ billion of sales revenues in 2019. The industry bears a positive outlook and demand from customers is on the rise. Restaurant owners, however, need to ensure that their business is properly protected by insurance and there are no unexpected setbacks to their growth plans. While commercial property insurance is fairly easy to decipher, there is a lack of understanding when it comes to liability insurance. Restaurant owners are often confused on which liability coverages are available and relevant to them.
Below are some of the most common types of liability insurance that you might want to consider for your restaurant business. Note that some of these coverages may be offered as a standalone product or as an endorsement to your General liability policy.
• General Liability Insurance: General liability insurance protects your restaurant against third-party claims such as property damage, bodily injury, or personal injury. For example, it will protect you against claims resulting from accidents, like a slip and fall. Since restaurants carry high risk of fire damage, this insurance will also provide protection if you accidentally start a fire that damages a rented property. This is provided through a coverage called ‘Damage To premises rented to you’ that automatically gets added to a General liability policy.
• Liquor Liability Insurance: Many restaurants serve alcohol, and in that case, Liquor liability insurance is insurance protection that you will need. It provides coverage for legal fees, settlements, and medical costs if alcohol is sold to an intoxicated person who then injures someone or causes property damage. Note that this insurance is also mandatory for conducting business involving alcohol in most states.
• Product Liability Insurance: Product liability insurance protects your restaurant from claims arising from food-borne illnesses. For example, if your food accidentally gets contaminated and a customer falls sick after having the food at your restaurant, you may face legal actions.
• Employee Benefits Liability Insurance: You should consider buying this insurance, if you are providing employee benefits such as health insurance or dental coverage to your workers. It provides protection against administrative error while handling employee benefits.
• Inventory Insurance or Food Spoilage Insurance: This coverage protects you against loss from food spoilage. For example, let's say you suffer spoilage of ice cream kept in a refrigerator in case there is a power breakdown. You can use inventory insurance for claiming losses from such incidents.
• Employment Practices Liability Insurance (EPLI): EPLI can protect you from lawsuits related to wrongful acts such as discrimination, harassment, wrongful termination and other workplace torts.
• Workers Compensation Insurance: Workers compensation covers an employee in case of injuries arising from a work-related accident or occupational disease.
If you are in the process of opening a new restaurant or simply would like to take stock of risks that you are facing with your existing restaurant, let’s talk. We, at Texas P&C Insurance, have a strong team specializing in the restaurant business and can help select the right coverages for you. Call us on 800-903-8690 or 972-293-2139 or contact us online here.