Restaurant insurance can cover a wide range of risks faced by a business. Restaurant owners want to be protected in the event of a customer being injured, damage to furnishings, or damage to the building (if owned by the business), contents cover and possibly even commercial vehicle insurance. Research and data-driven personal finance site, NimbleFins explains that having the right restaurant insurance can prevent financial ruin if the worst should happen.
Restaurant insurance can provide the necessary covers together in a package instead of having to organise all policies separately. While some are vital to protect against being sued or having to replace costly items, employers’ liability insurance is the only cover that is required by law.
A standard restaurant insurance policy will usually include public liability insurance and employers’ liability insurance, but most business owners will want to choose other covers as well such as contents insurance, stock cover and either building insurance (if they own the restaurants premises) or tenants’ improvement insurance (if they rent their premises).
When searching for a policy, it is important to consider a policy that can be customised to ensure the right cover can be chosen for the business including the types of cover required.
What kind of insurance does a restaurant need?
As a business, restaurant owners need to have a number of different types of insurance covers to protect themselves and their business from damage, theft, or loss.
If the property is owned by the business, then a commercial building insurance policy is needed in case of an event such as a fire or flood, lightning or even theft from the physical building itself.
Restauranteurs may also want contents insurance and stock cover in case of such an event occurring, to replace vital equipment such as ovens, furniture, or tills. Whether the business owns the building or not, contents insurance is vital as those items are necessary to continue running the business.
Stock insurance – which is often an additional extra to a contents policy – gives financial protection if stock is stolen, damaged or lost. But it is important to note that frozen goods are not normally included, so check with the provider when obtaining a quote.
Public liability is also essential for businesses dealing with members of the public. If a customer is injured on the premises or their property is damaged, they can sue. Public liability insurance can cover legal expenses as well as paying out for compensation.
Restaurant product liability is a special cover for restaurants to protect the business in case of goods or products, such as food, causing illness, injury, or damage to property.
Employers’ liability is a legal requirement for a business owner who employs staff, even those paid in cash or temporary.
Other cover that a restaurant owner may consider include commercial vehicle insurance, personal accident insurance, or business interruption insurance if the restaurant is unable to trade for a period of time. (Those with business interruption insurance can check if the policy covers coronavirus-related claims with the Financial Conduct Authority here.)
How much is business insurance for a restaurant?
A restaurant liability insurance policy, for a basic package of public liability, product liability and employers’ liability, starts from under £1,000 a year. This is dependent on turnover, location, and size of the restaurant.
It can also rise significantly depending on the risks being insured against. Most businesses will choose to add on restaurant equipment insurance, contents insurance and stock insurance to protect against damage such as fire, flood, or theft. This means the average cost of restaurant insurance can reach thousands of pounds.
When choosing a policy, there are things to keep in mind including:
- Finding a cover that can be customised so the restaurant can get the specific cover types needed for the business.
- Make sure to check the financial strength of the insurance underwriter, as insurance only works if the underwriter stays in business and can pay out for claims.
- Read reviews from customers on sites such as Trustpilot and io.
- Compare prices as they can vary from provider to provider – using a comparison site can make this quicker.
- Consider using an insurance broker specialising in restaurant insurance as some of the best insurance companies can only be found through a broker.
Do restaurants have to have insurance by law?
Restaurants, as with any business where there are employees, must have employers’ liability insurance by law.
Other insurances aren’t legally required but are vital in protecting the business from claims and huge financial costs if stock, furnishings, or the building is damaged.
Events such as a flood or a fire can cause extensive damage to the building, but it can also destroy stock and ruin furnishings. This can, in turn, cost a significant amount of money to repair, and there is also the issue that the restaurant cannot trade while the repairs are carried out.
Theft, damage, or a claim of injury made by a member of the public can mean financial ruin for a business. Insurance offers financial protection in these circumstances by replacing stock or furnishings, repairing the building, or paying legal fees and pay-outs if required.
Most business owners will choose a number of different types of cover for their restaurant insurance and will therefore be searching for a policy that can protect them from a number of different risks they face.