Deeley knows restaurants! Our Hospitality Insurance Team has decades of experience in all facets of the foodservice industry. We’ll work closely with you to understand your specific risks and concerns. Together, we’ll build the smartest, safest insurance package for your restaurant to protect your property, patrons and employees.
Insurance Considerations for Restaurant Owners
Restaurant owners perform various operations related to foodservice management. Depending on the nature of their operations, they may provide a fine dining experience for their patrons or specialize in some form of fast casual or quick service. These professionals typically conduct their operations from establishments equipped with commercial-grade kitchens and designated dining areas. In some cases, these spaces may also include bars where patrons can consume alcoholic beverages.
Common tasks among restaurant owners include hiring, training and assigning shifts for food and beverage service employees (e.g., managers, hosts, servers, bussers, runners, cooks, cashiers, bartenders and dishwashers); ordering necessary food and beverage ingredients, equipment and supplies; overseeing kitchen operations; maintaining sanitary conditions in food storage and preparation areas; addressing any complaints regarding food quality or service; and upholding compliance with applicable health and food safety requirements.
Restaurant owners have a number of risks to consider, including property concerns, employee-related issues and liability exposures. A coastal location adds other considerations, such as wind and potential flooding. As such, it’s crucial that owners protect both themselves and their operations against possible losses by securing proper insurance.
Common Exposures
Here’s a breakdown of key exposures restaurant owners may face in their operations:
Property— Restaurant owners tend to operate out of owned or leased commercial properties. These professionals often leverage several types of tools and equipment (e.g., cutlery, mixers, blenders, ovens, cooktops, deep fryers, toasters, microwaves, beverage dispensers, refrigerators and freezers) to provide their services. Unfortunately, unexpected events—including fires, inclement weather and equipment breakdowns—may result in this property becoming damaged or destroyed, potentially leaving restaurant owners with significant recovery expenses. These professionals may also experience business interruptions (e.g., food spoilage, supply chain delays and temporary closures) amid the recovery process, compounding related losses.
Occupational Safety — Even if restaurant owners take proper precautions to protect their employees at work, job-related injuries and illnesses can still happen. Common occupational ailments in the restaurant sector include musculoskeletal disorders due to performing repetitive tasks; cuts, scrapes and puncture wounds stemming from the use of sharp tools; slips and falls due to hazardous walking surfaces; eye or skin irritation from the splashing of cooking oils and other potentially dangerous liquids; entrapment and amputation injuries resulting from the use of high-powered equipment; burns and scalds from contact with hot objects and surfaces; and bodily trauma due to incidents involving violent patrons. If their employees get injured or become ill on the job, restaurant owners could be held responsible for their workers’ subsequent hospital bills, treatment expenses and lost wages.
Employment Practices — Restaurant owners must provide their employees with a fair and supportive workplace with equal opportunities to succeed, free from the risk of retaliation for voicing any employment concerns. If these professionals contribute to a hostile work environment by participating in or permitting discrimination and harassment or taking adverse employment actions (e.g., discipline, lack of promotion or termination) against employees without reasonable cause, they could face costly legal action from disgruntled employees and potential regulatory penalties from employment agencies.
Employee Dishonesty — Because restaurant owners often have a steady amount of cash flowing in and out of their establishments and keep valuable materials and equipment on-site, they may face elevated crime exposures, namely theft and vandalism. While these crimes could stem from external threats, they may also arise due to dishonest employees. In particular, disgruntled employees or former staff may abuse restaurant resources, destroy equipment, commit money fraud or engage in other criminal acts for vindictive purposes or their own personal gain. These incidents could leave restaurant owners having to recoup any lost funds, missing goods or damaged equipment.
General Liability — If any third parties (e.g., patrons, suppliers or passersby) experience injuries or damage within restaurant establishments, these owners could be held liable for the associated losses. For example, a food supplier may file a lawsuit against a restaurant owner if they slip and fall when visiting the professional’s establishment to make a delivery.
Food and Liquor Liability — Restaurant owners have a responsibility to ensure the food they serve their patrons is safe and free of potential health hazards. Unsanitary practices and the improper storage or handling of certain foods (e.g., meat, fish and eggs) and allergens (e.g., gluten, nuts and dairy) could pose cross-contamination concerns, increasing the risk of patrons falling ill after consuming impacted dishes. Additionally, if foods named in product recalls aren’t immediately disposed of, they could still end up on patrons’ plates and cause serious health concerns. If they offer alcohol, these professionals must also take steps to avoid overserving patrons. Overserved patrons could hurt themselves or others while intoxicated, causing widespread damage (e.g., drunk driving incidents). In any of these instances, restaurant owners may be held liable by affected patrons and third parties for their associated losses, prompting costly lawsuits. These events could also result in business disruptions if restaurant owners need to halt their operations to address health hazards, dispose of inventory impacted by food recalls or work with industry regulators to ensure safe serving practices.
Cyber — Many restaurant owners increasingly rely on digital systems and software to store sensitive workplace records, keep track of food and beverage inventory, take orders and reservations, and process patron payments. Yet, amid growing cyberthreats, using such technology could make these professionals more vulnerable to data breaches, ransomware incidents and other digital attacks. Following such events, restaurant owners could experience prolonged business interruptions and encounter many costs related to notifying impacted individuals, recovering lost or damaged data and technology, handling associated legal ramifications and reputational losses, and implementing additional cybersecurity measures to prevent future incidents.
Coverage Considerations
To help address their exposures and stay protected amid potential losses, restaurant owners should consider the following forms of coverage:
• Commercial Property Insurance—This coverage can help pay the resulting repair or replacement costs if a restaurant owner’s commercial property—such as their physical establishment, cooking tools and kitchen equipment—gets damaged, stolen or destroyed due to a covered event.
• Equipment Breakdown Coverage—If a restaurant owner’s equipment stops working due to an unexpected electrical or mechanical breakdown or other uncontrollable circumstances, this coverage can help reimburse the cost of repairing or replacing the affected equipment.
• Business Interruption Insurance—Such coverage can help compensate a restaurant owner’s typical operating costs (e.g., business income, commercial mortgage and tax payments, lease and loan expenses, and employee payroll) if they are forced to temporarily close their doors due to direct physical damage caused by a covered event. This is especially relevant in a market like the beach, where businesses generate the majority of their revenue in a three-month season.
• Workers’ Compensation Coverage—If a restaurant owner’s employees get injured or become ill on the job, this coverage can help pay those workers’ hospital bills, treatment costs and lost wages.
• General Liability Insurance—This coverage can assist if a restaurant owner is held legally or financially liable for injuries, harm or damage to another party or their property. Such a policy usually includes coverage for foodborne illness claims stemming from patrons who consumed contaminated dishes.
• Liquor Liability Coverage—This coverage can help pay for costs stemming from bodily injuries and property damage due to an overserved patron’s actions, including fights and drunk driving accidents.
• Commercial Crime Insurance—Also known as fidelity insurance, this coverage can help reimburse a restaurant owner for losses caused by employee dishonesty and other business-related crimes.
• Cyber Liability Coverage—Cyber coverage can assist with certain first- and third-party expenses that may result from a restaurant owner experiencing a data breach, ransomware attack or other cyber incident.
• Employment Practices Liability (EPL) Insurance—In the event that a restaurant owner is faced with employee lawsuits alleging workplace discrimination or harassment, wrongful termination or discipline, or failure to employ or promote, EPL coverage can assist with the associated defense costs.
• Umbrella and Excess Coverage—If a restaurant owner’s claim costs exceed the limits for their primary liability policies, this coverage can increase those limits. Furthermore, umbrella policies can help broaden existing policy coverage.
Let us protect your restaurant so you can focus on what you do best — taking care of your customers. Connect with the Hospitality and Restaurant Insurance experts at Deeley Insurance Group. Call or text 410.213.5600 today.
