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Why do restaurants need insurance?
Whether your focus is fast food or fine dining, no restaurant business is immune to risk. Policies designed for restaurant owners provide financial protection from customers getting sick due to food contamination, kitchen fires, data breaches, and other common issues.
Add restaurant insurance to your risk management plan
An equipment breakdown, a claim of foodborne illness, or a chef's injury can happen at any restaurant. The resulting loss of income or cost of a lawsuit can hurt your bottom line – or in some cases, even force you to close.
Restaurant insurance can't prevent these incidents, but it will reduce your risk of the fallout.
What types of insurance coverage do restaurants need?
These insurance policies cover the most common risks faced by businesses in the restaurant industry.
Business owner’s policy
A BOP bundles commercial property insurance and general liability insurance under one plan. It’s one of the most popular and cost-effective options for a restaurant.
BEST FOR
- Food contamination and spoilage
- Damaged commercial property
- Business interruption incidents
Workers’ compensation insurance
Most states require workers' comp for restaurants that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Legal costs from employee injuries
General liability insurance
This insurance policy provides liability coverage and financial protection from common third-party business risks, such as a customer slip-and-fall accident at your restaurant.
BEST FOR
- Customer bodily injuries
- Damaged customer property
- Product liability lawsuits
Commercial auto insurance
This policy covers the cost of accidents involving any delivery trucks or other vehicles owned by your restaurant, including damage caused to another person's car to medical bills.
BEST FOR
- Medical bills from accidents
- Property damage from accidents
- Vehicle theft and vandalism
Liquor liability insurance
This policy covers legal fees, property damage, and medical costs if alcohol is served or sold at your restaurant to a visibly intoxicated person who then proceeds to harm others.
BEST FOR
- Injuries caused by intoxicated patrons
- Property damage caused by intoxicated patrons
- Legal defense costs
Cyber insurance
Cyber liability insurance helps restaurants recover from cyberattacks and data breaches. It's recommended for any business that stores customer information.
BEST FOR
- Data breach notification costs
- Fraud monitoring services
- Cyber extortion payments
Looking for different coverage? See more policies.
How much does restaurant insurance cost?
A restaurant that focuses on takeout will pay less for insurance than a large bar and grill.
Factors that affect restaurant insurance costs include:
- Restaurant equipment and property
- Business income
- Types of business insurance purchased
- Coverage options, such as policy limits and exclusions
- Location
- Number of employees
How do I get insurance for my restaurant?
It’s easy to get restaurant liability insurance coverage if you have your business information on hand. Our insurance application will ask for basic facts about your restaurant operations, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare restaurant insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurers to find coverage that fits your food business, whether you work independently or hire employees.
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Common questions about commercial restaurant insurance coverage
Review answers to frequently asked questions (FAQs) about liability insurance for restaurants and more.
If my restaurant is forced to close temporarily, will insurance provide protection?
Yes, business interruption insurance, also called business income insurance, can help protect your business from temporary closures due to a covered claim. This coverage is often included in your commercial property insurance or BOP.
Business interruption coverage safeguards you against financial losses if a fire or storm forces your business to close temporarily. It can pay for employee wages, rent, lost profits, and other day-to-day operating expenses.
Additionally, an extra expense insurance policy can help pay for even more costs from a closure, should you need to rent a new location or lease kitchen equipment until renovations are complete.
Business income coverage is essential for a restaurant, especially in the event of a kitchen fire, which is costly enough without factoring in lost profits and other expenses.
Are restaurants required to carry product liability insurance?
While not mandated by law, product liability insurance is a critical policy for restaurants and food trucks. That's because every business in the supply chain can face a product liability lawsuit. This coverage is typically included in your general liability insurance.
Product liability insurance covers several types of claims, including:
- Allergic reactions
- Foodborne illnesses
- Mistakes on food packaging
If your restaurant serves food that ends up harming a customer, they could sue your restaurant for medical expenses or lost wages. Your product liability policy would pay for the attorney's fees, court costs, settlements, and other legal expenses.
Does restaurant insurance protect against food poisoning and food spoilage?
Yes, the right type of restaurant insurance can help protect your business against both food poisoning claims and food spoilage losses – but they’re covered by different types of coverage.
If a customer becomes ill after eating contaminated food at your restaurant and decides to sue, your general liability policy can help cover legal fees, settlements, and medical costs. This type of policy is essential for restaurants since even a single incident of foodborne illness can lead to significant reputational and financial damage.
Food spoilage, on the other hand, isn't covered under general liability. Instead, it typically requires an endorsement to your business owner's policy (BOP) or commercial property policy. Spoilage coverage can help reimburse you for the cost of food that goes bad due to a covered event, such as a power outage, equipment failure, or refrigeration breakdown.
Without this protection, you could be on the hook for replacing thousands of dollars in inventory. To learn more about how these policies work and what’s covered, check out our full breakdown of food contamination and spoilage coverage.
What additional insurance policies do restaurants need?
To adequately protect your restaurant from several types of risks, you should consider the following restaurant business insurance options:
- Employee dishonesty coverage can be added to a BOP to protect your business from cash register theft and other dishonest acts. Another option is to buy a fidelity bond that'll reimburse your clients for employee theft.
- Equipment breakdown coverage covers costs when a freezer, refrigerator, or other kitchen equipment suffers a sudden breakdown. It also protects your restaurant's computer hardware, electrical systems, production machinery, and other equipment from sudden and accidental malfunctions.
- Electronic data processing (EDP) insurance helps safeguard your business should a computer lose important data due to a fire or power surge. Also known as computer coverage or data processing coverage, EDP insurance can help protect your business income.
- Employment practices liability insurance (EPLI) pays for your legal costs if an employee accuses your business of wrongful termination or another violation of their rights. EPLI can be added as an endorsement to a general liability or business owner's policy.
- Hired and non-owned auto (HNOA) insurance covers vehicles not owned by your business, such as a personal car driven for work. HNOA is a key policy if you don't use business-owned vehicles for work, as a personal auto policy won't cover business use.
How can I save money on business insurance for restaurants?
There are many steps you can take to get cheap business insurance for restaurants.
Start by comparing free business insurance quotes from leading insurance companies through Insureon’s online application. If you're unsure what restaurant insurance policies you need, our licensed insurance agents can help make sure you get the right, most affordable coverage for your insurance needs and peace of mind.
Most small businesses can get insured and download a certificate of insurance (COI) within hours of applying for quotes.