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 benefit from restaurant insurance coverage designed by experts with years of restaurant industry experience. This article will walk you through what coverages restaurants need, how much they can cost, and why you should partner with Distinguished today for specialized restaurant insurance for your clients.
Why is Specialty Restaurant Insurance Essential?
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 switching to a specialty restaurant insurance provider is worth it for you and your clients:
- Specialty coverage options: Some specialized coverages may get left out with generic restaurant policies. Distinguished restaurant insurance was crafted by experts who understand that restaurants need coverages like cyber, EPLI, food contamination, and more.
- Industry knowledge: There’s nothing more frustrating than training underwriters on how to do their job. Distinguished has over 30 years of experience in underwriting restaurants, so we can offer customized policies fit for your clients’ needs.
- Higher limits: A severe foodborne illness outbreak or significant property damage event can cost restaurants millions — well above what a basic policy might cover. Our policies have higher-limit options with umbrella policies that can provide up to $140 million in additional coverage.
- Fair evaluations: 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 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.
What Insurance Coverages Do Restaurants Need?
Whether it’s property damage caused by vandalism 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 insurance coverages that run the gamut from basic property to liquor liability.
Here are the most vital types of insurance policies every restaurant should have so they’re fully insured:
General liability insurance covers costs related to legal actions against a restaurant. For example, if a customer slips and falls and decides to sue, liability coverage would cover the legal costs and any settlements.
This, unfortunately, happens all the time, and the costs can be hugely damaging. For instance, a woman was awarded just over $1 million after she fell down the stairs in an Atlanta restaurant, a sum of money most restaurants would struggle to come up with.
Commercial Property Insurance
Commercial property insurance covers damage to restaurant property, including the building and its contents. Most restaurant property coverage claims come from events like fire, theft, or natural disasters.
In 2016, a single accidental kitchen fire in a California restaurant caused around $1.5 million in damages.
If your restaurant serves alcohol, liquor liability insurance is a must. Unlike typical GL policies, it covers claims related to damages or injuries caused by intoxicated customers.
These suits can cost a restaurant millions of dollars, like when a Texas man successfully sued a restaurant for $5.5 million after they had overserved him.
Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) covers legal costs related to things like wrongful termination, discrimination, and sexual harassment.
Lawsuits of this nature happen all the time and can end up costing restaurant businesses a lot of money if they’re underinsured. For instance, in 2018, Chipotle was hit with an $8 million settlement after a former employee claimed she was wrongfully terminated.
Food spoilage insurance covers the cost of replacing food that spoils due to equipment breakdown, power outages, or other covered events.
Recently in 2023, a power outage in the San Francisco Bay Area caused a local restaurant to lose 2,000 pounds of brisket. Not only did they need to pay to replace this meat, but they also lost an estimated $100,000 in potential revenue due to the incident.
In 2022, a spree of cyber crime took place in Cincinnati, where over ten restaurants were locked out of their social media accounts, costing them “hundreds of thousands of dollars” in lost sales and damages.
Food contamination insurance covers a restaurant in the event of food poisoning or a foodborne illness outbreak linked to the restaurant.
In 2021, Californian restaurant Salt Creek Grille was charged $3.2 million after a woman suffered permanent nerve damage due to food poisoning.
What Types of Restaurants Will We Insure?
We insure all kinds of restaurant businesses, from fast-casual chains to the ultimate fine dining experiences. With Distinguished, you can get insurance for restaurants that fall under the following categories:
- Fine dining
- Fast casual
- Ghost restaurants
- Family/casual with full table service
- Small businesses and chains
- Wine bars
- Off-premises caterers
We will also consider:
- Sushi & raw bars
- Restaurants with hibachi-style cooking exposures
- Restaurants with incidental bakery, market, retail, or entertainment exposure
- New restaurant ventures with prior experience
What Does Restaurant Insurance Cost?
The cost of restaurant insurance is not a one-size-fits-all figure. Each policy is unique and based on the specific restaurant — for instance, a ghost kitchen won’t have the same coverage needs that fine dining will. However, understanding the factors behind these costs can help you explain to your clients why their restaurant insurance quote is priced as it is.
Here are some of the factors we consider for these different types of policies in our Restaurant Package Insurance:
- 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.
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 liability risk. However, it’s also important to have coverage through an umbrella or liability policy in case bodily injury occurs on the premises.
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.
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.
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.
Partner With Distinguished Programs Today
By partnering with Distinguished Programs, you can provide your clients with comprehensive, tailored restaurant insurance policies, helping them protect their businesses and giving you a competitive edge in the market.
Get started with Distinguished today by registering your agency. The process should only take around five minutes, and afterward, you’ll be eligible to submit business for any of our insurance programs, including our restaurant policies.
For more information, check out some of our restaurant insurance resources below.
- Distinguished Restaurant Insurance Policy Page
- Distinguished High-Limit Restaurant Umbrella Insurance
- Distinguished Restaurant Package Insurance Brochure
- Distinguished Restaurant Ebook
Distinguished’s Restaurant Insurance FAQs
Are You Available In All States?
Our Restaurant Package product is available in all states except Alaska. While our high-limit umbrella and cyber liability policies are both available in all 50 states
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.
About Distinguished Programs
Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with expertise in Fine Art & Collectibles, Environmental & Construction Professional, 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.