Restaurant insurance helps protect restaurants, bars, nightclubs, and taverns against third-party claims, such as customer injuries, and operational disruptions from events like fires, equipment failures, or other unforeseen risks. The targeted coverage from this specialized insurance can help protect owners against lawsuits and penalties that cause financial losses. Misunderstanding what basic or standard insurance covers leads to misconceptions about the protections restaurant insurance provides. Here are a few misconceptions to clarify before buying this insurance:
General Liability Covers All Risks
General liability specifically protects hospitality businesses against third-party claims that result from property damage, libel, injuries, or negligence. This type of restaurant insurance may cover medical payments for customer injuries and legal defense costs associated with covered claims, subject to policy limits. It can be beneficial if your business experiences falling objects or spills or operates in high-risk, fast-paced environments. The coverage may also be ideal for restaurants that handle high customer volumes.
General liability provides coverage for certain reputational claims, such as slander, libel, or advertising injury, but does not cover malicious prosecution. This coverage also protects restaurants and similar businesses against advertising liability. The liability occurs if another restaurant claims that you used a logo similar to theirs and proceeds to sue your business for copyright infringement. General liability coverage excludes claims for:
- Alcohol-related incidents
- Foodborne illnesses
- Employee assaults
- Cyber breaches
Workers’ Compensation Is Optional
Fast-paced environments in restaurants, bars, and other hospitality businesses may increase the risk of low-impact injuries. Workers’ compensation insurance helps safeguard these businesses from losses by offering financial settlement to injured employees. This insurance also helps cover workers against work-related illnesses caused by exposure to foodborne pathogens, cleaning agents, or other risks.
By compensating injured or sick employees for medical expenses and lost wages, this insurance protects restaurants against potential lawsuits. Since workers’ compensation insurance is a legal mandate in most states, it can prevent fines, jail time, or stop-work orders. Workers’ compensation generally excludes intentional injuries caused by the employee or employer but covers most work-related illnesses, including exposure to hazardous substances.
A Basic Policy Is Enough
While basic general insurance provides a strong coverage foundation, restaurants and bars thrive with specialized policies tailored to their unique needs. Purchasing comprehensive or specialized coverage that extends to unique restaurant risks like liquor-related incidents and food contamination helps prevent underinsurance and denied claims. Relying on specialized insurance over basic coverage may minimize the risks of unexpected shutdown, reputational damage, and financial collapse due to employee lawsuits.
Business Interruption Coverage Is Unnecessary
Underestimating the operational vulnerabilities of restaurants may cause you to believe that business interruption coverage is unnecessary. The assumption that standard policy or general liability insurance covers against all risks and losses also causes this misconception. Business interruption coverage can help protect restaurants against lost income due to closures from covered perils. With additional endorsements, it will also cover risks like food spoilage or kitchen equipment breakdown. This coverage helps maintain payroll for employees during covered closures, reducing operational disruptions and turnover challenges.
Buy Restaurant Insurance Today
Debunking various misconceptions about restaurant insurance will help you select adequate coverage that matches your business’s unique exposures. Selecting the right coverage helps prevent underinsurance and overinsurance. Call a professional insurance agency today to purchase coverage for your restaurant.