What Forms of Insurance Do Restaurants Need? 


Getting everything in order to finally open your own restaurant after years’ worth of dreaming and hard work is exciting. You can set up your first menu and welcome in your first—and hopefully recurring—customers to enjoy your food.

However, running a restaurant comes with its own set of challenges and responsibilities. While you could handle most with hard work and sound advice, others require direct action, such as purchasing the right insurance policies.

But with all the different forms of business-oriented insurance policies on the market and the various risks and needs of every restaurant, which insurance policies should you invest in?

Workers’ Compensation Coverage

A workers’ compensation insurance policy covers your included employees’ medical bills, along with temporary salary replacement in case of a workspace accident. Workers’ comp coverage might not seem as necessary for low-risk workspaces, such as offices, but it’s still legally required for most businesses in all U.S. states (with the exception of Texas).

A kitchen poses a much riskier environment—your employees work around freshly-mopped floors that pose a slipping hazard. Not to mention, the restaurant industry is hectic, whether your employees work at the front with your customers or in the kitchen.

The foodservice industry’s fast-paced nature drastically increases the risk of accidents such as tripping, especially if your restaurant has more than one story. Plus, the risk of cuts and burns from working with sharp knives in tandem with hot water, oil, and open fire sources.

A Business Owner’s Policy (BOP)

A business owners policy (commonly known as a BOP) combines three of the most common forms of small business insurance. Like any other business owner, a restaurant owner should consider this policy bundle even though it’s not legally required. With a BOP, you get the following:

  • Commercial General Liability Insurance (CGL)– What is CGL and what does it cover? CGL is a broad form of insurance that covers multiple liabilities. It provides coverage against customer claims that your restaurant caused bodily injury or damages to their property. For example, this insurance policy covers you if a customer slips while in your restaurant or if they need medical attention for food poisoning.
  • Commercial Property Damage Insurance– Commercial property damage insurance policies cover a myriad of potential damages. They typically cover damage caused by fire, floods, and other natural perils, as well as theft. The coverage often includes all stationery property registered under your business’s name, whether inside your restaurant’s building or outside in the parking lot.
  • Business Interruption Insurance– A business interruption insurance policy substitutes your business’s income if it’s interrupted by a natural disaster or similar incident. And because restaurants can easily lose business and foot traffic due to a severe storm, this type of insurance is essential. Otherwise, you could lose weeks’ worth of revenue without compensation.

Commercial Auto Insurance

Commercial auto insurance works just like personal auto insurance, except it covers vehicles owned by your restaurant or driven by your employees. If you offer delivery or catering, this insurance is essential to protecting your fleet. You’ll also want to research your state’s laws for business vehicle insurance to ensure you meet the minimum requirements.

Liquor Liability Coverage

You only need this insurance policy if there’s a bar in your restaurant or if you serve your patrons alcoholic beverages. A liquor liability insurance policy provides coverage for damages that drunk patrons cause, such as property damage, assault and battery, and drunk driving.

Employment Practices Liability Insurance

In 2018, the overall turnover rate in the restaurant industry was 74.9 percent. With this astonishing figure in mind, you may want to consider protecting your business from the possibility of a current or former employee suing your restaurant.

Employment practices liability insurance provides full coverage against physical abuse or harm claims, sexual harassment, and poor working conditions. Whether the employee’s claim stands true or not, your insurance policy is responsible for the legal fees and any resulting repercussions, protecting your finances and your restaurant’s reputation in the process.

Preparing for the Worst

Purchasing several insurance policies when your restaurant is still new and hasn’t generated as much revenue can be daunting and downright costly. However, the average cost of all the insurance policies you need pales in comparison to the possible lawsuits or bills that you’d foot out of pocket without the help of your insurance provider. Getting the right insurance policies helps prepare for the worst when it comes to your business, leading to more success in the future.


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