What Insurance is Needed When Running A Restaurant?
When running a restaurant, multiple types of insurance cover can be essential to protect the business and prevent any huge financial losses from a disaster or being sued. The best way to make sure the policy will be adequate is to research and compare restaurant insurance options available.
Of all the insurance types, there is only one that is legally required. All businesses which employ staff must have employers’ liability insurance. This type of cover gives the employer protection if a member of staff suffers a personal injury at work or becomes ill. The employee can sue the business if they consider the workplace or job to be at fault. The policy can provide the money for legal fees and compensation if a court awards it.
Another important type of insurance is public liability insurance for restaurants. This offers businesses the necessary cover for claims coming from members of the public if they are injured or fall ill. In addition, public liability cover will provide the funding for the legal fees and any payments awarded by the court. This can be vital to preventing the business from catastrophic costs in fighting against a claim.
If the business owns the premise, then commercial building insurance is important to protect the property. Substantial costs can be incurred in the event of a flood, fire, lightning strike, theft or earthquake. Building insurance designed for commercial properties can fund the repair or rebuilding costs if the worst should happen.
Complimenting building insurance is business interruption cover, which helps with the financial burden if the restaurant is unable to trade due to a disaster. In addition, it can help with the ongoing costs still incurred despite no income.
Other insurances for restaurants can include product liability insurance, contents and stock cover, and commercial vehicle insurance. Restauranteurs may also consider personal accident insurance for restaurant employees.
What type of insurance does a restaurant need?
Restaurants need to consider the different types of cover available and the business’s risks when trading. Though most are not a legal requirement, there are many types of insurance that are essential for protecting the business should the worst happen.
Small restaurants may not choose the same levels of protection as larger companies, but the financial impact of being sued or being left unable to trade can be devastating. To avoid the possibility of financial ruin, insurance policies can include different levels of cover to suit the business.
It is important to compare the available policy types and look for one that can be customised so the restaurant can pick exactly what is required.
As a restaurant will employ staff, the business will be legally obliged to have an employers’ liability insurance policy. This is in case a staff member falls ill or is injured and blames the company or place of work. The policy will cover the legal costs of fighting the allegation as well as any compensation.
Public liability insurance offers protection in the same way but for members of the public. For example, customers may sue the restaurant if they are injured during their visit, become ill, or damage their personal property.
Business interruption insurance can offer the restaurant financial security at a time when it cannot open due to an event such as a fire or a flood, and therefore will not have an income. It can also help with the ongoing costs a business faces despite not trading while waiting for repairs or rebuilding to be completed.
If the restaurant also owns the property, then a commercial building insurance policy should be a priority for the business. For example, if an earthquake, lightning, fire or theft cause damage to the building, the policy will cover the cost of repairs or rebuilding.
Restaurants should also look at getting contents insurance to cover the fittings and furniture, including vital equipment such as fryers, ovens and till systems. The items would be covered from accidental damage, loss and theft.
Similarly, the stock cover offers the same protection, but for the stock the restaurant holds. Though this often excludes frozen food.
Restaurants may also consider product liability insurance. For example, if food from the business was to blame for a customer falling ill, they may sue. This insurance covers the legal fees of defending against the allegation and compensation payments if necessary.
Other types of cover include personal accident insurance for restaurant employees and commercial vehicle insurance if the restaurant does deliveries or moves stock.
How much does commercial restaurant insurance cost?
Quotes for restaurant insurance are hugely varied. For example, restaurant liability insurance, which typically includes employers’ liability, public liability, and product liability insurance, can start from as little as £500 a year. But most restaurants will pay in the thousands of pounds for comprehensive cover, according to NimbleFins.
There are factors that increase the rate of a policy, including if there is:
- A deep fat fryer on site,
- An ATM on site,
- A late license, and how many of them,
- Public entertainment.
The cost will also increase depending on the number of staff and the coverage limit.
Restaurants will often want to include other covers to the policy as well, which will impact the quote.
Does a restaurant need insurance for private parties?
If a restaurant hosts private parties, the business is susceptible to the same risks as being open to the public for dinner.
Public liability insurance is an essential cover to protect in case a partygoer is injured or ill and blames the restaurant.
Staff may be employed to cater for the event, and businesses with staff are legally required to have an employers’ liability insurance policy.
The restaurant could also be at risk if a partygoer falls ill and blames the food or drink served. A product liability policy would give the businesses protection by paying legal fees and compensation in the event of a claim.