Those who run restaurants in Ontario are often some of the most passionate business owners, investing their time and money to deliver high-quality experiences to their guests. However, there are lots of costs involved in setting up and operating a restaurant. And if you’re going to go through all of the trouble of setting up, you’re going to want to protect yourself and your business once you’re in operation. Read on to learn more about your Restaurant Insurance options, and what is required of you as a hospitality business owner.
What exactly is Restaurant Insurance?
Protecting your restaurant from property damage, client injuries, equipment breakdown, and liquor liability claims is a must, which is why restaurant insurance is so important. There’s more to the restaurant industry than just providing food and excellent customer service. Restaurant insurance is a customized policy designed to protect restaurant owners against specific risks associated with serving food and drinks. This includes third-party bodily injuries and property damages, unforeseen accidents, and equipment breakdowns.
What types of scenarios make restaurant owners require insurance?
There’s more to the restaurant industry than just providing food and excellent customer service. To determine which types of insurance you will need for your restaurant, it’s important to understand the risks associated with the restaurant business. As a business owner, you need to be aware of the different types of risks you may be exposed to, such as:
- Food poisoning
- Allergic reaction
- Broken teeth
- Drunk drivers who may have been overserved at your establishment
- Tripping or falling
- Cuts or burns
As a business owner, you also have to worry about liability with others, as well as worry about their own inventory and appliances. Accidents happen, so ensure your restaurant is protected. Having insurance that is specifically designed to protect restaurant owners against any risks associated with serving food and drinks is vital to running a successful business.
Restaurant Insurance options
Restaurant insurance will generally include Commercial General Liability (CGL) insurance, Commercial Property insurance, Equipment Breakdown insurance, Product Liability insurance, and Cyber Liability insurance:
1. Commercial General Liability (CGL)
Investing in a commercial general liability insurance policy can prove extremely useful in your restaurant. With the amount of food and beverages flowing constantly through your establishment, spills are inevitable. In the event that a customer slips on a spill, your restaurant can face a liability lawsuit. Cover those potentially-expensive settlements and legal fees with a comprehensive general liability policy.
2. Commercial Property Insurance
Starting a restaurant costs tens of thousands of dollars. In the event of a natural disaster, fire or explosion, you can see your hard work literally go up in flames. Take away the constant impending financial stress with commercial property insurance. Obtaining a commercial property insurance policy covers damage costs in the event of a fire, explosion and criminal activity. Additionally, it will take care of specific risks your restaurant may face. Speak with your isure broker about your property’s specific risks and how you can get coverage for them instantly.
3. Equipment Breakdown Insurance
To ensure the comfort of your guests, your restaurant depends on functioning equipment. Should you experience equipment breakdowns, such as HVAC system failures, power outages and appliance malfunctions, it can be costly. You may even experience business interruptions or a prolonged closure. What’s more, equipment breakdowns can even lead to major property damage should an appliance start a fire.
4. Food & Product Liability Insurance
If your own or run a restaurant, pub, or coffee shop, food and product liability can be a considerable concern. The potential for food poisoning, contamination, injury, spoilage and allergic reactions is ever present, making continued guest safety a challenge. Say one of your guests becomes ill due to your food. Or, they accidentally ingest a foreign object found in one of your menu items or vending machines. Your restaurant can face legal ramifications and suffer irreversible reputational damage. This is an important restaurant insurance option because you may also sell pre-made food. As a result, your restaurant is responsible for the safety of it.
5. Cyber Liability Insurance
As a business that deals with a large amount of personal customer information, protecting yourself in a case where data is breached is essential. As a result, customers may take legal action. Even if sensitive information isn’t leaked, you will need to replace software, hardware or conduct an investigation. Compounding your exposures, many restaurants offer guest Wi-Fi that, if improperly secured, can put you and your guests at risk of an attack. With cyber liability insurance, all these costs may be covered by your policy. It is perhaps one of the most important restaurant insurance options to consider.
Other Restaurant Insurance options
6. Food Contamination Insurance
When food spoils as a result of an event, like a power outage or long-term closure, it cannot be served to guests. Thanks to the natural bacteria and parasites that develop due to food contamination, potentially thousands of dollars in food will be wasted. Rather than facing the devastating loss yourself, charges can be covered by a food contamination policy.
7. Business Interruption Insurance
In the event your restaurant needs to close its doors as a result of an unexpected event, such as a fire or more relevantly, the COVID-19 pandemic, your revenue can be completely or partially subsidized with business interruption insurance. Depending on your specific policy coverage, business interruption insurance covers your revenue, wages and management costs. Business interruption insurance is only active if it was purchased before the closure. And as we have seen over the past few years, it’s never a bad idea to be extra prepared for anything that can happen unexpectedly.
8. Liquor Liability Insurance
If your restaurant serves alcoholic beverages to customers, you need liquor liability insurance. If a customer you serve gets too drunk and falls into an expensive plant outside the neighbouring restaurant, insurance may be able to cover the replacement costs. Alcohol or liquor liability insurance covers costs associated with negligent actions due to intoxication resulting from drinks served at your establishment.
Generally speaking, anyone who sells or distributes alcohol should have liquor liability insurance. This includes companies that sell alcohol daily, such as bars, clubs, restaurants, or grocery stores. Taverns, caterers, breweries, and liquor stores should also have liability insurance.
9. Workers’ Compensation Insurance
If you have employees, worker’s compensation insurance is essential. This type of insurance provides coverage for medical expenses and lost wages if an employee is injured on the job. Workers’ compensation insurance can also protect your business from lawsuits related to workplace injuries.
10. Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) provides coverage for claims related to employment practices, such as discrimination or wrongful termination. If an employee files a lawsuit against your restaurant, your EPLI policy can help cover legal fees and other related expenses.
11. Crime Insurance
Crime can be a real problem for restaurants. Your employees, guests and vendors all have the opportunity to steal from you. To make matters worse, thieves can strike at any time, leaving you to recoup any lost funds or valuables. Thieves steal cash, supplies, and even equipment.
12. Commercial Automobile Insurance
Depending on the services your restaurant offers, employees may be required to operate a vehicle on behalf of your business. In turn, this treats automobile exposures in the process. While important for daily operations, the improper use of a commercial vehicle can lead to potential accidents and major insurance claims. What’s more, if you allow employees to use their own vehicles for work, standard commercial auto policies are often not enough. Additionally, providing valet parking can also create unforeseen challenges if your customer’s vehicle is damaged.
Average cost of restaurant insurance in Canada
As you can see, after purchasing all of the insurance that you will need for your new restaurant, it can really add up. Once all of your policies are paid, you should expect to pay around $4,300 annually for insurance. Although insurance can be expensive, the cost of not having it can cost you more than your business is worth if you encounter a large claim. Having to pay out-of-pocket for injuries, damages, or losses that occur within your restaurant can be catastrophic. And given that there are so many risks involved, the best thing you can do is protect yourself against potential risks.
Whether you own a bakery, bar, coffee shop, dine-in restaurant, fast food restaurant, pub, catering company, or food truck, you will need insurance protection. Our experts at isure can help! We will provide you with the right restaurant insurance business policies and discuss the best policy for your business. Protect your restaurant against risks and ensure you’re covered by the best when you work with isure.