Insurance for Restaurants

Restaurants offer a full menu of food items and may or may not serve alcoholic beverages. A restaurant may specialize in a specific type of cuisine or may serve a general menu. Some entertain customers with music, comedy, various promotions and special events. Some may have small dance floors.

Fast food restaurants are generally rated separately for business liability coverage and the cost of restaurant insurance varies between fast food and full service restaurants. The ratio of liquor to food sales is one of the largest determinants for restaurant insurance pricing. Restaurant insurance is a broad term and covers most eating and drinking places such as restaurants, buffets, sandwich shops, pizzerias, coffee shops, ice cream stands, caterers and cafeterias.

Recommended Insurance Programs for Restaurants

Minimum recommended coverage:

• General Liability
• Liquor Liability (if applicable)
• Property Coverage
• Hired and Non-Owned Auto
• Employee Dishonesty—Commercial Crime
• Business Income with Extra Expense
• Workers Compensation Insurance

Other commercial coverages to consider for a Restaurant:
Business Income and Extra Expense, Spoilage, Equipment Breakdown, Employee Dishonesty, Computers, Employee Benefits, Umbrella Coverage, Inland Marine Coverage, Bailees Customers Insurance, Cyber Liability, Employment Practices Liability Insurance and Liquor Liability.

Common Liability Risks Associated with Restaurants

General Liability Insurance
GL risks for premises liability are high due to public access to the premises. Servers move throughout the premises with trays of food and beverages, generating spills that can result in slips and falls. Quickly cleaning up spills is the only way to prevent falls. Temperatures of hot beverages must be limited to reduce injuries due to scalding. Steps and uneven floor surfaces should be prominently marked. There should be lighted emergency exits available in the case of emergency.

Lists of ingredients should be posted to prevent allergic reactions. All employees should be instructed in proper customer handling, including how to deal with disgruntled or overly enthusiastic customers. Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slips and falls. Outdoor security and lighting should be consistent with the area.

Products liability exposures for GL coverage exist due to food poisoning and allergic reactions. Monitoring the quality of food received, posting lists of ingredients and maintaining proper storage temperatures can reduce this type of liability.

Liquor liability Insurance (Dramshop Coverage)
A restaurant’s need for liquor liability depends on the amount and type of alcohol served. State laws can also be a major factor for liquor liability coverage. If liquor is served, any failure to comply with state and federal regulations can result in the loss of a liquor permit.

There should also be a set procedure to check ages of anyone attempting to purchase alcohol, as well as monitoring so customers purchasing alcoholic beverages do not turn around and give them to patrons who are underage or intoxicated. Employees who serve alcohol should complete training courses in recognizing intoxication and dealing with agitated customers. A procedure should be in place to deny serving intoxicated patrons. Programs that encourage designated drivers or offer free taxi services can also be useful.

Property Insurance
Property exposures are substantial from cooking, electrical wiring and refrigeration units. The more grease laden vapor that is produced, the greater the exposure to fire. All grills and deep fat fryers must have automatic fire extinguishing protection, hoods and filters. There should be fuel shut-offs and adequate hand-held fire extinguishers. The kitchen must be kept clean and grease free to prevent the spread of fire. Ammonia used in refrigeration units can explode. Spoilage exposure is very high.

A small fire or a power outage of even moderate duration can cause all fresh and frozen goods to be condemned as unfit for consumption or sale. Business income coverage with extended time coverage can be purchased by any restaurant. Losses can be minimized if there is an alternative location to continue operations and not lose customers. Returning to normal operations after a loss is difficult due to the lag time between reopening and returning to full income as regular customers may have moved to a new favorite restaurant.

Equipment breakdown risks can be high as restaurant operations are dependent on refrigeration and cooking equipment to do business.

Hired and Non-Owned Auto
Automobile liability is generally limited to hired or non-owned auto liability exposures from employees using their personal vehicles to run errands for work.

If the restaurant offers valet parking, a Garage Keepers coverage should be considered to cover damage to customers’ vehicles. MVRs and driving records should be obtained for any employee driving or parking customers’ vehicles. If valet parking services are contracted to another firm, the insured restaurant should be named as additional insured on the contractor’s policy.

Commercial Crime Policy
Crime risks are typically from employee dishonesty. Criminal background checks should be conducted on any employee handling money. If the restaurant uses expensive cuts of meat or sells and serves alcohol, theft of stock can also be a problem. If the cash receipts are high, employee dishonesty and hold-ups are a concern. There should be consistent rules on cash drawer management and job assignments. Money should be regularly stripped from the cash drawer and irregular drops made to the bank during the day to prevent a large accumulation of cash.

Inland Marine Coverage
Inland marine insurance is not typical for restaurants; however, exposures include computers for tracking inventories and payrolls, and valuable papers and records for supplier and employee information. Duplicates of all records should be kept off-site. Cash registers, cooking equipment and office equipment may have computer applications. Some restaurants may also have paintings, statues or other fine arts on premises. Some may have a bailees exposure from offering coat check services to customers or from storing entertainers’ property on site.

Workers Compensation Coverage
Workers comp liability comes from slips, falls, cuts, burns and heavy and awkward lifting, along with interactions with customers. Employees should be trained on how to carry heavy dishes between the kitchen and the serving areas. As with all restaurant businesses, hold-ups are possible so employees may benefit from training on how to respond in a prescribed manner.

Employees in many restaurants are minimum wage and turnover can be high. Well-trained employees with an incentive to do their best and who have clear direction will have the fewest accidents and injuries. Company incentives to encourage long-term employment are positive signs of good management controls.

Restaurant Business Liability Quotes

General Liability Shop.com offers affordable business liability insurance quotes for Restaurants throughout the U.S. Our Restaurant programs include all lines of business insurance, as well as our Target programs for Restaurant business owners policies (BOPs). Contact one of our business insurance Specialists today at 800-900-8657, or start a quote online now.

Restaurant Liability Insurance Classification Codes

Commercial insurance carriers use various liability classification systems in order to classify and rate restaurant program coverage, costs, and insurance premiums. Here are the most common business insurance classifications for Restaurants:

Business Liability Category: Eating and Drinking Establishments

SIC Restaurant Business Insurance Codes:

• 5812: Eating Places and Restaurants
• 5813: Drinking Places and Alcoholic Beverages

NAICS Liability Classifications:

• 722511: Full Service Restaurant
• 722513: Limited Service Restaurant
• 722310: Food Service Contractors
• 722515: Snack and Nonalcoholic Beverage Bars

Business Insurance ISO General Liability:

• 16900: Restaurant—No Alcohol—With Servers
• 16901: Restaurant—No Alcohol—No Servers
• 16902: Restaurant—No Alcohol—No Seating
• 16910: Restaurant—Alcohol <30%—With Servers
• 16911: Restaurant—Alcohol <30%—No Servers
• 16915: Restaurant—Alcohol >30%, <75%—Dance Floor
• 16916: Restaurant—Alcohol >30%, <75%—No Dance Floor
• 16920: Restaurant—Alcohol >75%—With Servers
• 16921: Restaurant—Alcohol >75%—No Servers—Dance Floor
• 16930: Restaurant—Alcohol >75%—With Servers—No Dance
• 16931: Restaurant—Alcohol >75%—No Servers—No Dance
• 16941: Restaurant—Alcohol >75%—Bar Service Only

Common Workers Compensation Class Codes:

• 9082: Restaurants
• 9083: Restaurants—Fast Food Service
• 9084: Bar, Pub, Tavern and Nightclub