Specialized Restaurant Insurance: Costs, Coverages, and Exposures

Like any good chef will tell you, food is all about the details. Restaurant insurance is no different. Many general policies may look appetizing on the surface, but in reality, they lack crucial restaurant-specific coverages, like food spoilage, foodborne contamination or business interruption.

That’s why restaurant owners need insurance policies designed specifically for restaurants by experts with years of industry experience. This article will walk you through what coverages restaurants need, how much they can cost, and how Distinguished can help you and your clients get the coverage and financial protection they need.

What Insurance Coverages Do Restaurants Need?

Whether it’s property damage from a kitchen fire or scammers skimming POS data from credit cards, restaurants face a variety of exposures in today’s world. To meet those needs, they’ll need a variety of coverages that run the gamut from basic property to liquor liability.

Here are the most vital insurance policies every restaurant should have so they’re fully insured:

  • General Liability: Covers restaurants in the event of an accident. The most common incidents that general liability covers are slips and falls on the restaurant premises.
  • Property Insurance: Covers restaurants in the case of property damage, business interruption, and some other covered causes of loss. In restaurants, fire damage is the most common reason for needing this coverage.
  • Liquor Liability: Covers restaurants in case they illegally serve alcohol, which results in bodily harm or damages. For instance, this would provide liability coverage if one of your bartenders continued to serve drinks to a visibly intoxicated person and then that person got into a car accident.
  • Employment Practices Liability Insurance: EPLI covers restaurants if employees claim their rights have been violated. This can include claims of discrimination, wrongful termination, and sexual harassment.
  • Food Spoilage: Covers restaurants for the costs of food spoilage if they’ve suffered a covered loss like a power outage.
  • Cyber Liability: Covers restaurants if they suffer cyberattacks such as hacking or data breaches.
  • Food Contamination: Covers restaurants in the event of food contamination that leads to food poisoning. Many broad policies don’t include food poisoning in their policies, but it’s a necessity with restaurants.

How Much Does Restaurant Insurance Cost?

There’s no one fixed cost you can share with your clients. Each policy will have different circumstances that’ll lead to unique restaurant insurance costs. However, you can explain what contributes to those costs, so you can give them an idea of why their quote costs what it does.

  • General Liability: The price of GL will be largely based on the classification code of the restaurant. For instance, a restaurant that gets most of its sales from liquor will have a different classification code than one that doesn’t sell alcohol at all. GL will also be affected by a restaurant’s claims history and other risk exposures they have, like live entertainment.
  • Commercial Property: Commercial property costs will be ‌affected by the building itself. When determining the premium, underwriters will consider the age of the building, as well as its construction, occupancy, and claims history.
  • EPLI: EPLI costs vary greatly based on what the specific policy covers, a restaurant’s claims history, and employee training practices. However, the largest factor underwriters will look at is the number of employees at this business. 
  • Cyber Liability: Costs are determined by the annual revenues of that restaurant, a proxy for the restaurant’s size.
  • Umbrella Liability: The price is largely based on how much coverage is purchased, the underlying policies involved, and how risky that ‌restaurant is based on its loss history.

The best way to find out what restaurant insurance will cost your client is to get a quote from our team. If you have questions about our restaurant insurance or how to submit, please contact our support team or check out our restaurant insurance brochure.

4 Exposures Restaurants Need to Be Worried About

Restaurants aren’t just any other business. They have unique exposures a laundromat or a gym just doesn’t. Here are just a few of the most common exposures restaurants face on a regular basis.

1. Liability

Slips and falls can happen anywhere, but they’re particularly common in restaurants. Whether it’s a spilled drink or a recently mopped floor, it’s not uncommon to have customers slip and fall on your client’s premises. 

Signage and training play a part in reducing the odds of this particular liability risk. However, it’s also important to have coverage through a GL or umbrella policy in case bodily injury occurs on the premises.  

2. Property

Kitchen fires and water damage are both major culprits when it comes to restaurant property damage. Fires are a common risk in any kitchen, and they can quickly spread to damage expensive equipment, food, and decor.

Although less dangerous than fires, water damage can cause massive damage surprisingly fast. Blown pipes in the winter are common in many locales; as well, dishwasher, drain, and sink backups are a threat year-round no matter what climate the restaurant is located in.

3. Crime

When most people think of crime in restaurants, they might imagine armed robberies. Although this type of robbery is possible, the more common exposure is employees stealing from the restaurant. 

Employee theft is a large exposure all restaurants face. For this reason, you’ll need to make sure your client’s restaurant insurance will cover this kind of loss, should it occur.

4. Umbrella

Umbrella liability insurance is most commonly used by restaurants to handle liquor-related claims. For instance, if an underage patron was served alcohol and later crashed their vehicle, the restaurant could be held liable for the accident and any damages caused by it. 

A basic GL policy might not have limits high enough to handle the damages caused by a liquor-related claim. For that reason, high-limit umbrella policies are crucial for making sure your client isn’t underinsured. 

Why Specialty Restaurant Insurance is the Better Choice

Because of their unique circumstances and risks, every restaurant needs specialty insurance written by restaurant insurance experts. Here are just a couple of reasons why.

1. Specialty Coverages that General Policies Lack

Restaurants need to ensure that they’re covered for all their exposures, not just the most common ones. When you choose generic policies not designed specifically for restaurants by restaurant experts, some of these specialized coverages may fall by the wayside.

Distinguished’s restaurant insurance was crafted by experts that understand what restaurants actually need in their insurance policies. That’s why we offer cyber insurance, EPLI, food contamination, and more. This way, restaurants can focus on what matters most — their customers. 

2. Industry Knowledge and Convenience

There’s nothing more frustrating than training underwriters on how to do their job. When you work with generalists who aren’t familiar with restaurants, you may just have to do that. Not only will this waste your time, but you may also get an inferior product that doesn’t meet your client’s needs.

Distinguished has over 30 years of experience in underwriting restaurants, so we know the industry. This expertise allows us to offer customized policies that fit the specific restaurant that’s being insured. For instance, a fast-casual restaurant doesn’t need the same coverages that a wine bar does, and we reflect that in our underwriting process. 

3. Fair Evaluations to all Restaurants – Even New Ones

Many new restaurants find it hard to get insurance because insurance providers aren’t willing to take a chance on them. Part of this reluctance is the insurer’s lack of experience in the industry. However, an experienced restaurant underwriter knows what questions to ask a new venture in order to qualify that particular account. 

Because of our experience, Distinguished is willing to consider new ventures. Our experienced underwriters can evaluate a restaurant based on its owner’s history, experience, and business plan. We won’t insure every new venture, but we won’t disqualify them out of hand either. 

Take Your Next Step with Distinguished’s Restaurant Insurance

Distinguished’s Restaurant Insurance is a cut above the competition because we combine 30 years of experience with broad coverages suitable for all kinds of restaurants. We’re also a one-stop shop where you can get GL, Commercial Property, EPLI, Liquor Liability, Cyber Liability, High-limit Umbrellas, and more in one convenient place. 

If you want to learn more, check out some of our resources below. Or, if you want to get a quote, sign up with Distinguished and download our Restaurant Insurance Application form

Distinguished’s Restaurant Insurance FAQs

Are you available in all states?

Our Package product is available in all states except Alaska. 

What is the turnaround time on quotes?

We don’t have a specific turnaround time on quotes. However, we do accept rush delivery and will do our best to meet even the tightest deadlines. 

Is your product admitted?

Yes, we’re admitted.

What is the financial rating of your carrier?

Our carrier has an A+ financial rating.

What are the specifics of your umbrella policy?

Our restaurant umbrella policy has limits up to $140 million, and it’s on A rated paper.

What do we need to get a quote?

To get a quote, you’ll need to fill in the Restaurant Supplemental Questionnaire and a copy of the restaurant’s loss runs and ACORD application.  

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About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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