Restaurant Insurance Trends & Impact on Exposures

This is an excerpt from our free “Broker’s Guide to Restaurant Insurance” eBook. Click here to download your copy.

Over the last couple of years, restaurants have implemented many changes to be able to run their operations during the pandemic, some of which were highly successful and continue today.

Outdoor Dining

Across the country, we saw outdoor dining become more popular (including establishments located in areas with freezing temperatures!), with streets, sidewalks, and parking lots converted to accommodate dining and social distancing. It turns out people like to dine outside, and the extended space gives restaurants additional square footage to accommodate more guests.

When city ordinances lifted restrictions and allowed restaurants to move their operation onto the street, there was concern over increased liability issues involving roadside dining and the potential for accidents involving pedestrians and vehicles. Several such incidents, in fact, made the news.

For example, a runaway truck crashed into an outdoor dining area in New York City and injured three customers. In another incident in Northern California, a van barreled into outdoor diners, leaving one person injured.

Restaurants with outdoor street dining must ensure they have protections in place, including parking cars between diners and traffic and installing concrete barriers. Establishments with temporary outdoor heating sources should examine potential fire exposures and burn hazards to guests and staff.

Ghost Kitchens

Ghost kitchens also gained significant traction in 2020, primarily because of the pandemic and the subsequent temporary closures of restaurants and surge in food deliveries. Ghost kitchens allow owners to quickly expand their restaurants into multiple locations with minimal upfront investment. Most ghost kitchens lease their space with significantly less square footage and lower property values at risk.

Their liability exposures are also lower, as there are no patrons physically on site, which reduces the potential for slip-and-fall or liquor liability risks. Although there is less risk due to the absence of customer and employee foot traffic, owners of ghost kitchens still require General Liability, Property, Cyber, EPLI, and Umbrella insurance.

Food Delivery/Order Takeout

Restaurant delivery has grown 20% in the last five years, accelerated by the pandemic and the proliferation of third-party delivery services like DoorDash, Postmates, Grubhub, and Uber Eats. Depending on the delivery model used, additional commercial auto liability exposures arise. Restaurants must ensure contractual agreements transfer their liability to the third-party vendor. The third-party vendor should also have a strong safety program in place to help mitigate risks.

Restaurants that have their drivers make deliveries should make sure they have the right coverage in the event of an accident. Employees using their vehicles to make deliveries will typically not be covered under their Personal Auto policy. A restaurant’s Commercial Auto insurance should include Non-Owned & Hired Auto coverage to cover vehicles the business leases and the employee’s personal vehicle used for work. However, this may be hard to find as most insurers don’t have an appetite for first-party delivery exposure.


From contactless payment options (QR codes, pay-at-table mobile devices, and mobile wallet apps) to tableside or kiosk ordering systems, online delivery orders, and other customer-facing technology, the use of automation at restaurants is increasing at a rapid pace. While restaurants are meeting consumer demands with advanced technology, there is greater exposure for customer information to be compromised.

Without Cyber insurance to help a restaurant navigate a cyberattack and help pay for the costs related to the loss, establishments leave themselves exposed to losses that could potentially shutter their operation or, at the very least, impact their bottom line and significantly damage their reputation.

Cyber coverage should no longer be considered “optional” for restaurants.


Robots are slowly making their way into restaurants, helping with staffing shortages and delivering operational efficiencies by streamlining repetitive work. Some robots are being used to make pizzas while others are working the fryer.

For example, pizza maker Piestro of Santa Monica, California, uses robotic pizza machines at brick-and-mortar and ghost kitchen locations. Miso Robotics, the maker of the Flippy 2 — a robotic arm that works the fryer at fast-food restaurants — has been deployed at Chipotle, White Castle, and Wing Zone.

Robotic waiters are also being deployed and tested in restaurants across the country. Additional underwriting issues need to be contemplated for robotics use in restaurants, including third-party bodily injury, property damage, and cyber liability.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, 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’s high-limit Umbrella programs remain the clear choice in its area 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.

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