Specialty Insurance and Why Your Restaurant Clients Need It
Do your commercial clients really need specialty insurance? If it’s available, the answer is YES. The beauty of a specialty program is that insurance liability professionals with in-depth domain expertise have already put together coverage that is designed specifically for your type of client.
The restaurant industry is an excellent example of a commercial segment that definitely need specialty insurance. Restaurants are home to a unique set of exposures, yet they are one of the most underinsured classes of business in the insurance industry. This is in part due to generalist brokers being unaware of a restaurant’s insurance needs.
From food-borne illnesses and stolen or damaged property through to kitchen fires, the risks in a restaurant are endless. A traditional business owner’s policy (BOP) is often inadequate for addressing these restaurant-specific needs. Since restaurant owners are focused on providing customers with stellar service and great food, and not so much on their insurance, the onus is largely on brokers to ensure their protection.
With a specialty insurance program, brokers are able to address their clients’ special needs with ease. Program underwriters are experts in restaurant industry risks and are constantly examining the changing market; brokers can rely on their expertise.
What Restaurants Won’t Get from General Coverage?
Cyber Liability
Pre-coronavirus, the vast majority of transactions were made via credit or debit card — 75% of restaurant purchases, to be precise — and now, amid curbside pickup and online delivery, the use of online systems has skyrocketed. With the ever-present risk of a security breach, strong cyber liability coverage is crucial.
Food Contamination
Surprisingly, most insurance policies do not cover food poisoning. If anyone were to sue your client, they would be liable for any medical expenses or damages awarded to the plaintiff. As a business centered around food, it is more than reasonable for restaurants to expect to be covered. And as a broker, it is your responsibility to make sure they are.
The Accountant Messed Up, What Now?
Wage and hour claims are the fastest growing claims in the country. Let’s say the payroll people paid an employee one penny less than they were promised. It’s only a penny, but that employee could sue your client and they would be liable. Make sure that your clients are covered. Not all EPLI policies are created equal.
Bad Storm, Tree Fell, No Power, No Pizza.
Business interruption coverage is included in most general policies, but it typically covers lost income after the first 72 hours. A weekend’s worth of missed income could be devastating to a restaurant — make sure your clients’ coverage kicks in faster.
Sewer or Drain Back Up
While property insurance typically covers water damage, many policies have limited coverage and coverage exclusions. For instance, if water is in a restaurant’s basement storage area, they will likely be out of luck. Traditional policies exclude damage from sewers, drain backup, and seepage from underground pipes.
Employee Theft
Restaurant employees may steal food, cash, and other property from their employers — especially those that handle cash, such as managers tasked with dropping off bank deposits. Most property policies exclude theft by employees, leaving restaurants without proper coverage.
The Bottom Line
General insurance policies fail to properly protect restaurants. As a broker it is your responsibility to ensure that your clients have appropriate coverage — and with a specialty program that is easy. Our program is responsive to the coverage needs of restaurants, offering a strong bundle and comprehensive add-ons that address nearly every risk.
Learn more about Distinguished’s Specialty Restaurant Program .
