What Insurance Do You Need for A Restaurant?

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Restaurants need more than one type of insurance cover to protect them from the different risks associated with being in business. To provide that multi-level protection, cover can be purchased under an umbrella policy called restaurant insurance.

It is an exciting dream to own and run a restaurant, but with that comes risks.

When dealing with members of the public, there is a risk of being sued by someone being injured, becoming ill, or their property is damaged. This is risk is particularly higher in restaurants serving food and when alcohol can be involved. They can blame the restaurant and claim compensation. Public liability insurance will cover the cost of any legal fees if a claim is made and the compensation if the business is found liable.

If the restaurant has employees, then, by law, the business must have employers’ liability insurance. This protects in the event of a member of staff being injured or falling ill and blaming the restaurant.

If the restaurant owns the building it operates in, then commercial building insurance is necessary to give protection in the event of an incident such as a fire or a flood or even theft. In addition, if the building is damaged, then the policy will cover the cost of repairs or rebuilding.

Another vital type of insurance that can prove crucial to a restaurant is contents and stock insurance. Contents insurance, which is another type of commercial property insurance, can provide financial protection against accidental damage, theft or loss of valuable restaurant equipment such as fryers and till systems as well as furnishings.

Stock cover offers the same protection to stock held by the restaurant if it is damaged, lost or stolen. But it is essential to read the contract of the policy carefully as frozen food is not always included.

Product liability insurance will protect if a customer falls ill or is injured due to a business’s products, which would likely be the food in the case of a restaurant.

A restaurant may also want commercial vehicle insurance if it has vehicles to run a delivery service or transport goods.

Other insurances may be appropriate for a restaurant as well, including business interruption insurance, which offers cover if the restaurant cannot trade due to a disaster. But whether or not these policies cover pandemics is a source of confusion and debate.

Does a restaurant need public liability insurance?

Like many businesses, Restaurants need to have public liability insurance to protect against claims from members of the public. Any business that works with the public is open to the risk of claims if someone suffers a personal injury or falls ill and sues.

Though public liability insurance is not a legal requirement for a business, it is vital to avoid financial ruin should a claim be made. A policy can cover the legal costs that come with fighting a claim as well as covering the compensation payments if found liable. There are specific risks with restaurants, such as food poisoning, food being spilt onto a customer, or injury due to a customer being drunk. Plus, other risks are faced by other places of business open to the public, such as a fault at the restaurant, e.g. upturned carpet, causing injury.

How much cover a restaurant will need varies, but in the UK, public liability insurance is normally available as £1million, £2million, £5million or £10million.

Different forms of cover are essential for a restaurant to provide the necessary financial protection from the risks that come from being in business.

But there is one type of insurance required by law: employers’ liability insurance. This protects against work-related injury or falling ill or death but is specifically for employees. This type of cover includes temporary workers or those paid in cash.

Employers’ liability insurance will cover the compensation payments if a member of staff is injured at work or falls ill because of their job. The policy will also cover the legal fees of defending against a claim.

How much does restaurant insurance cost?

Restaurant insurance can start from under £1,000 a year, but the cost will vary and can easily reach into the thousands of pounds a year depending on what types of cover are included in the policy, the size of the restaurant, its location, and the turnover. The majority of restaurants will opt to add to their liability insurance with contents and stock cover and restaurant equipment insurance, which will significantly increase the policy cost.

Other factors that can increase the premium include:

  • Having a deep fat fryer,
  • The restaurant being licensed,
  • How many employees there are,
  • If there are late licenses,
  • If the setting provides public entertainment,
  • If there is an ATM,
  • Claims history,
  • The coverage limits.

When choosing an insurance provider, a few considerations must be made to ensure the restaurant gets the best policy and the best price. These include:

  • Finding customisable cover so it is possible to choose what cover is included in the policy.
  • Checking the financial health of the insurance underwriter to ensure they can pay out if a claim is made.
  • Reading the reviews of customers to get a good idea of the provider – places to check include Trustpilot.
  • Checking prices in the marketplace to compare quotes.
  • Looking at specialist insurance brokers to find the best policies and providers for restaurant owners.

Does a restaurant need insurance for private dance parties?

Restaurants come under the same rules as other businesses regarding liability insurance and need to have cover for employees and members of the public on their property.

By law, any business that has staff needs to have employers’ liability insurance. This cover would be needed for staff running or being employed for private functions, even temporary staff or paid in cash.

Any business which works with members of the public also needs to have public liability insurance. Though not a legal requirement, the cover is vital to prevent financial ruin if a claim is made. If a member of the public suffers an injury or falls ill, they may make a claim against the restaurant. Public liability insurance will cover the legal costs involved and any pay-outs awarded.

Restaurants should also consider restaurant product liability insurance, which will protect against a member of the public falling ill due to the produce. If a private function is catered, then this will protect the restaurant if someone falls ill due to the food.

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