There’s no question about it, running any business takes a lot of hard work, and running a restaurant, in particular, carries a lot of risks. Someone could slip and fall on the property from food or water on the floor, a customer could have an allergic reaction or become sick from spoiled food, or a kitchen fire could damage expensive equipment. The list goes on and on. All of these potential hazards could lead to a costly and damaging lawsuit. But there’s no need for this to scare-off entrepreneurs from starting their own restaurant venture.

The key is planning, and part of that means making sure the company has adequate insurance coverage to shield it from significant financial losses in case of a claim. Some may think it’s an additional expense, but a change in mindset is crucial. Think of insurance as a wise investment. It’s much better to have it and not need it than to need it and not have it.

There are several factors to take into account when buying insurance for a restaurant business. With so many options available, the selection process can be daunting and time-consuming. To help break it down, here are five things restaurant owners need to consider when buying insurance:

Identify the potential risks associated with the nature of the restaurant business. Restaurant owners will not be able to protect their business if they don’t know what they’re up against. Assess the products and services being offered and the vulnerabilities that can affect the business.

Understand the different types of insurance. There are several types of coverage: Commercial Property, General Liability, Worker’s Compensation insurance, in addition to other policies that you should consider.

  • Commercial Property insurance: This is designed to protect tools, equipment, and the building where the restaurant is located. In case of a natural disaster, fire, or robbery that can lead to loss of or damage to property, this insurance will take care of the expenses.
  • General Liability insurance: In case of bodily injury to a customer or an employee, damage to property, or if someone files a complaint associated with libel or copyright infringement, General Liability insurance will take care of it. It also handles the legal expenses when someone files a lawsuit against the restaurant.
  • Worker’s Compensation insurance: As the name suggests, this insurance protects the staff working in the restaurant. If an employee slips or falls, gets hurt while preparing food or using kitchen equipment, the insurance will cover the medical expenses, including the treatment for rehabilitation. It also pays for the lost salaries of the employee. As for the restaurant owner, it protects them against lawsuits associated with negligence.
  • Crime insurance: Crime is a serious threat to any business, especially restaurants which are prone to theft and robbery. Without this type of insurance, the business owner would be responsible for the money, data, or properties that were stolen. This insurance will protect a restaurant from petty theft, forgery, burglary, extortion, computer fraud, and robbery.

Determine the different factors that can affect the price of insurance for the restaurant. The location, type of property, operating hours, activities or services being offered, the sale of alcoholic beverages, and years in the industry are some of the main factors that insurers look into when it comes to the cost of the insurance.

Don’t let price be the deciding factor. When it comes to insurance, many people tend to go for the cheapest option. Saving a bit more cash may sound like a good idea, but a cheap policy could wind up costing the business more if an uncovered/undercovered claim is filed. With insurance, it’s crucial to look into the coverage and make sure that it can adequately protect the business against substantial financial losses. On the other hand, purchasing the most expensive option doesn’t necessarily mean it’s the right one either. The key is to strike a balance between meeting the business requirements and making sure that the premiums are within budget.

Read the fine print. Reading over an insurance policy can be daunting, but it’s important to read the fine print carefully and understand the inclusions and exclusions of the coverage. This will help the owner understand what to do if a complaint is filed against the business.

Many things can make or break a restaurant venture. Buying insurance is one way to help ensure success. Not only does it provide vital protection for the business, but it also tells people that the company is reliable and responsible enough to take care of the employees and customers. Do some research and get a few quotes. Compare their offerings and choose what’s best for the needs of the restaurant.  And finally, try seeking feedback or insights from fellow restaurant owners on their experience when buying insurance.

Jim Loughlin is a well-respected insurance industry veteran with more than 20 years of experience. He is currently the Senior Sales Director at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage insurance online, in minutes.
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