Restaurants carry a significant cost to the owner in terms of rent, as well as acquiring space, equipment, general food, and other supplies. Depending on your financial muscle, the business is either funded by a financial institution such as a bank, or your savings. Whatever the case may be, it is important to cover yourself against any risk that may disrupt your business and cause you significant loses.

Restaurant insurance

Most risks involved with restaurants and their related activities include:

  • Fire

  • Burglary

  • Accidents

  • Third party liability

  • Business disruption due to natural calamities or otherwise

  • Death of principal owner

While insurance may not stop these risks, it cushions the principal against the financial strain that comes with addressing these risks as they occur. For instance, if an employee or client gets hurt within your premises, they are in the right to sue you for the harm caused. General liability insurance protects you against these costs as it compensates the affected.

Nine types of insurance you will need for your restaurant business

Property – Property insurance covers you in case of fire or burglary within your premises. Property damaged or lost in this way will be compensated, helping you avoid major losses and be able to rebuild your business.

Personal accident for employees – In a restaurant, employees are exposed to risks such as fire or slipping on something while working. To protect yourself from lawsuits associated with these risks, it is critical you undertake a personal accident cover for your employees. It also pays for medical bills associated with these accidents, giving your employees considerable relief.

Business insurance – This is designed to cover you against business disruption. As a business owner, it pays you income for the number of days your business has been affected due to natural calamities or circumstances beyond your control.

General liability – This applies to third parties within your premises such as customers. If they get hurt while in your restaurant, they are liable to compensation. To protect yourself from this financial cost, a general liability cover is a must-have.

Liquor liability insurance – Most restaurants serve alcohol separately. If you serve alcohol at your establishment, you need a liquor insurance cover in addition to your beer or liquor license. This is to cover the cost incurred when a customer gets hurt as a result of alcohol consumed in your restaurant.

Health Insurance – Running a restaurant involves having a number of employees both full and part-time. Since the industry is highly competitive, as well as a short-term plan for part-time employees especially, a few incentives such as a medical cover will encourage your employees, especially management and those on a full-time basis, to continue to stick around for the long term.

Unemployment Insurance – Although you as a business owner are not responsible for employees who’ve stopped working for you, unemployment insurance provides them an income until they are able to secure another job. This is a show of good faith by you as an employer and quite instrumental, especially if you terminate contracts of certain employees without ample notice.

Life Insurance – When in a business partnership with others, a life insurance cover for each party protects the other in case one party dies while the business is running. This cover aims to protect the remaining parties against financial loss associated with the death of a business partner. These could be in the form of a business loan, a mortgage, or other financial expenses initially shared by two or more parties. Without a life insurance policy, all those things may become the responsibility of the remaining parties, depending on what you mutually agreed to offer to the bank as collateral upon starting the business. Financial institutions providing business loans may also insist on acquiring life insurance just in case the principal dies before finishing on repayment. This makes it possible for them to recover the owed amounts from life insurance of the principal.

Food contamination insurance – Since restaurants buy food in bulk, they are heavily reliant on refrigerators and freezers to keep the food fresh. Power loss for long hours may cause these foods to go bad, causing losses. Food contamination insurance compensates the owner in the event of such a scenario, eliminating that genre of loss as a part of the restaurant’s financial vulnerability.

Insurance remains a broad subject and entails various risks to the business, the owners, supporting staff, customers, and equipment. By speaking to an insurance expert, you will be able to determine the must have insurance covers for your restaurant. All nine of the above insurance types are indeed a worthy investment, as any such risk can happen at any time, regardless of the measures you create to prevent them.

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