Is your Restaurant fully insured?

Is your Restaurant fully insured?

September 11, 2018

Get the Buzz about Insurance in the Texas

Restaurant Biz

Entrepreneur and author Richie Norton once wrote (in his book The Power of Starting Something Stupid) that procrastination is "like going to a fancy restaurant and filling up on bread and not leaving enough for dinner."

Very funny. But if you're actually in the restaurant business -- or thinking about it -- procrastination, the avoidance of making a decision, has very serious implications when it comes to the topic of buying insurance.

Dining out, whether it's at a fast food burger joint or a Michelin starred restaurant is growing fast in popularity. But with that growth come new and bigger risks.

In the haste to serve your growing horde of customers, beat your competitors and earn a good profit, there's an increasing danger that you might overlook the protection you need to secure the future of your business.

It's maybe not that you totally forget about insurance -- although that happens -- but you procrastinate a la Richie Norton about deciding exactly what type of coverage to buy. Or you don’t make time to review the coverage you already have to check that it still meets your needs.

And you usually don’t find time to regret that until it's too late. So, why not take the time right now to put your thinking hat on and get this done?

It's important to know exactly what type of protection you need and where to find the answers to your questions -- and the best rates. Like eateries themselves, restaurant insurance comes in many shapes and sizes.

What Type of Insurance Coverage Does a Restaurant Need?

First, that depends on the type of restaurant. From small restaurant insurance through chains, from fast food franchises to a la carte fine dining, from pizza parlors to steak bars, from food trucks to outside catering establishments.

Every type of establishment should have restaurant insurance that's tailored to their specific needs, which is why it's always best to call in an insurance agent with specialist knowledge and experience of the restaurant and catering industry.

That said, there are several essential types of coverage all restaurants should have, plus a number of options that depend on your needs and your budget.

Here's a quick rundown of the main components and options:

  • General restaurant liability insurance. This is critically important. It provides coverage against the costs of lawsuits and court awards or settlements, in the event that someone -- a customer, supplier or other visitor -- blames you for damage or bodily injury they suffered in your restaurant.
  • Product liability coverage to provide protection against claims relating to food items you sell, including take-home consumer products.
  • Commercial property insurance to protect your business premises and its contents against a wide range of perils including fire, theft and vandalism.
  • Liquor liability coverage. This relates to the commission of a crime in which liquor that you served to the offender is held to have contributed to the incident.
  • Inventory insurance to protect against spoilage, fire and theft.
  • Commercial vehicle insurance and coverage for non-owned vehicles when employees use their own cars for your business.
  • Restaurant workers compensation insurance. Although not mandatory in Texas, many firms, including those in the restaurant industry, opt to provide workers comp protection to cover medical costs and lost wages for an employee injured at work.
  • Business interruption for extra expenses and loss of income insurance to protect you against unforeseen events that disrupt your restaurant business activities.
  • Identity theft insurance and cyber liability protection. This type of insurance covers illegal use of information, such as credit card details and other customer data that you collect and store. It's increasingly important -- restaurants rank highly among targets for hackers.
  • Umbrella insurance to provide "top-up" coverage when the limits of your main liability policies are breached.

For smaller restaurants and chains, one option worth discussing with your agent is a Business Owners Policy, or BOP. This type of protection rolls several types of restaurant insurance coverage into a single policy, which can save money as well as simplifying the process of getting covered.

In addition, if you are an individual owner with significant financial commitments, you should have a good life insurance policy in place.

How Much Coverage Do I Need and What Does it Cost?

This is an area where you ideally need specialist advice, The scope of your coverage obviously depends on the size of your business, the number of employees and the level of income.

Furthermore, different insurers charge different rates for the same or similar levels of coverage.

But, as an example, here in Texas, you could expect to buy a $1m Business Owners Policy for $2,000 to $2,500 a year. This would likely include a deductible, where you pay the first $500 to $1,000 of any claim yourself.

For a general restaurant liability policy, again covering you for $1m, expect to pay in the region of $750 to $1,000 minimum, while liquor liability might cost around $750 to $1,000 for coverage.

Workers comp coverage starts at about about $500 or more for $500,000 of protection.

These are all ballpark figures. It's possible you could pay significantly more dependent on your business circumstances. For example, a BOP could cost an excess $10,000. The type of construction of the building can play a factor in the cost of a BOP policy.

How Can I Find the Best Texas Restaurant Insurance for My Needs?

It's important to know that, like all states, Texas has its own laws relating to insurance and the restaurant business. In addition, some local governments impose their own regulations and codes.

By working with an experienced agent like Pasadena, you can tap directly into local knowledge and expertise gained over many years, and gather useful insight into managing risks in your restaurant business.

A good agent will also be able to customize a restaurant insurance program specifically to your business -- yet be flexible enough to make changes as and when needed. Without this expertise, you could end up paying for restaurant coverage you don’t need.

And, of course, you want to work with an independent agent that can secure the right coverage at the most competitive rates -- ideally one that, like Pasadena, works with multiple, reputable insurers.

If you're looking for good value, quality restaurant insurance in Texas, or if you'd like a no-cost review of your existing policy, please get in touch with us by calling us at: 713-869-6991 or email us at: