Navigating Restaurant Insurance: What Coverage Do You Need?


Running a restaurant is rewarding, but it comes with its challenges and risks. Busy kitchens, bustling dining rooms, and daily operations can all lead to unexpected occurrences. Insurance protects you against these incidents that could otherwise jeopardize your establishment. For the sake of your business, you need to understand how to navigate restaurant insurance to ensure you have the coverage you need.

Required Coverage for Restaurants

The United States federal government requires all businesses (with employees) to have workers’ compensation and unemployment insurance coverage. Liquor liability insurance is also required by law, but only if your restaurant serves liquor.

Individual states may also have required coverage for businesses, so be sure you visit your state’s website for more information. 

Workers’ Compensation & Unemployment

Naturally, you would never want your employees to hurt themselves, but accidents happen. Should your employees injure themselves onsite, workers’ compensation insurance includes coverage for:

  • Medical Bills
  • Physical Therapy
  • Disability
  • Lost Wages
  • Death Benefits

Liquor Liability Insurance

As mentioned earlier, liquor liability insurance is required by law if your restaurant serves liquor to customers. This type of coverage protects your business against property or bodily damage from intoxicated customers. 

Additional Coverage

Outside of required coverage, there are many other types of insurance that are necessary for restaurants. You can further protect your business if you have coverage that includes general liability, property, commercial vehicles, food contamination, liquor liability, business interruption, and criminal incidents.

Liability Insurance

Liability insurance, or general liability insurance, provides critical protection against claims involving onsite injuries and property damage. Some situations general liability may cover include:

  • Slander Allegations or Libel
  • Damages Caused by Employees
  • Medical Expenses Incurred by Customers

It’s safe to say that liability insurance coverage is the most important because it’s at the core of what your customers are doing. They’re eating, drinking, and always at risk of hurting themselves simply by walking into your restaurant.

Property Insurance

Imagine having a small electrical fire. What happens when you have to close for repair? If you have property insurance, your repairs and damaged equipment are covered with the right policy in place.

Commercial property insurance will protect you from the following:

  • Loss From Theft
  • Vandalism Damages
  • Accidental Fires
  • Physical Damage to Your Equipment
  • Electrical Issues

Please note that general commercial property insurance may not cover natural disasters like earthquakes and floods unless you add separate insurance coverage to your policy. Generally, earthquake and flood coverage isn’t recommended unless you live in an area prone to earthquakes and hurricanes, or if your business is located in a flood zone.

Commercial Vehicle Insurance

Do you or your employees routinely use company vehicles? If the answer is yes, then you want to ensure you have commercial vehicle insurance. It covers:

  • Vehicle Damage From Collision
  • Medical Expenses From Collision
  • Theft
  • Severe Weather
  • Fire

Food Contamination

Even with best practices and efforts, you can’t always guarantee zero contamination within your food. Foodborne illness can happen when you least expect it, resulting in a complete shutdown. When that happens, you’re at risk of losing profits. Food contamination insurance can help you cover these costs.

Business Interruption Insurance

Business interruption coverage is also a critical part of a restaurant insurance policy. It kicks in when businesses face an unexpected incident like a fire or a burst water main that causes a temporary closure. Adding business interruption coverage to your policy will cover the income you would otherwise lose during a closure. The coverage can also include expenses incurred by temporary relocation.

Crime Insurance

Commercial crime insurance can be an excellent addition to your policy. Depending on your policyholder, your standard commercial property insurance may not cover crime-related issues. Unfortunately, if fraud occurs or you experience theft, you may not recoup those costs without this coverage. Crime insurance fills this gap and ensures your restaurant will recover after dealing with criminal activity.

How Much Is Insurance for a Restaurant?

Insurance team reviewing paperwork with client

The cost of restaurant insurance varies based on several factors, including, but not limited to, the size of your restaurant, the location, the number of employees, and whether alcoholic beverages are served.

You can expect to pay anywhere from a few hundred dollars to several thousand dollars annually, depending on your needs. For a better estimate, please contact our knowledgeable agents at Allied Insurance Managers—visit our Bar & Restaurant Insurance page for more information.. 

Tips for Choosing & Purchasing the Right Policy

1. Read the Fine Print & Perform a Risk Assessment

Before you commit to any policy, always take the time to read and understand it. Conduct a risk assessment to ensure your policy covers all the risks unique to your restaurant.

2. Know Your Insurance Requirements

The state you operate in and your landlord or property management company may also have specific requirements. Familiarize yourself with these requirements and ensure your insurance agent is aware of them when creating your policy. 

3. Always Compare Quotes

Never accept your first quote. Reach out to multiple insurance companies and compare the quotes you receive from each one. Remember—the cheapest option is not always the best—ensure you’re getting the coverage your restaurant needs.

4. Consult Agents or Brokers

Insurance can be complicated, so if you have questions, ask the experts. They can provide insights and recommendations to ensure you get what you need.

Find Your Policy With Help From Allied Insurance Managers

Finding the right policy can be daunting, but you don’t need to navigate the insurance landscape alone. Allied Insurance Managers understands the complexities in the restaurant industry. Our team can help you customize a policy that meets your restaurant’s specific requirements, regardless of where you operate within the United States.

Contact us today to schedule a consultation with one of our agents. 

Chris Beardslee

Chris Beardslee's Bio

Chris Beardslee is a 2003 graduate of Michigan State University, with a Bachelor’s degree in Finance. Having worked as an account executive since graduating, Chris has a proven track record of dedication to his customers and commitment to customer service. Chris takes great pride in working with business owners to develop a strategic plan that will allow them to achieve their risk management objectives.