As with any type of business insurance, restaurant insurance can protect your business and minimize some of the risks that usually take place in this industry.
Having said this, however, you will find that when it comes to restaurant insurance, there are not only various policies to consider, but the cost is often bigger compared to other industries.
In this article, therefore, we will list the important restaurant insurance types, as well as factors affecting the cost—so you have all the information required to properly protect your eatery.
What is Restaurant Insurance?
First of all, there is no single type of restaurant insurance. Although some carriers might be working with and offering covers for restaurants, your restaurant coverage includes various policies that are available to other businesses as well.
At a minimum, you are likely to have public liability and commercial property insurance for your restaurant. Additionally, if your food establishment has employees, you are required to have workers compensation insurance. Finally, as we will explain below, there are other insurance types for the restaurant. It will be up to you to decide what coverage you require.
Types of Insurance for Restaurant
Public Liability Insurance:
Public liability insurance financially protects your restaurant from the third party claims arising from injuries and damages caused by your business operation.
For example, you can be sued if you or your waiter spills a hot coffee over the customer. The customer can ask for compensation or else take you to the court. Public liability insurance is created for such scenarios.
Although it is not mandatory insurance, it is important for business insurance, especially for a restaurant where the risk of getting an injury or causing damages if often higher than in other industries.
Commercial Property Insurance:
Commercial property insurance is another important insurance for a restaurant. As the name suggests, it financially protects your property from various damages such as fire breakouts. It goes without saying that fire is the key threat in any restaurant.
It can be even triggered by grease traps, faulty wirings and leaks. Not having commercial property insurance can be a huge financial setback. Commercial property can also help you if someone steals from your restaurant.
Business Interruption Insurance:
Many restaurant owners are not aware of business interruption insurance, but this can be extremely useful when you need help the most. If your restaurant is damaged by fire or natural disaster, it is not just the damage to your property that needs to be taken care of.
Depending on the intensity of the damage, your restaurant might also be out of business or closed for a while until it is restored. During that time, you can face a big loss as you revenue and cash flow have been interrupted. After all, continuity is the basic step to success.
Business interruption cost pays for on-going cost unless your company is up and running again.
Equipment Breakdown Insurance:
Equipment breakdown covers the equipment and machinery of your restaurant such as oven, stove, refrigerator, etc. These are an important part of your productivity. Equipment breakdown generally covers the costs to repair or replace any damaged machinery.
Workers Compensation Insurance:
It is a mandatory insurance type in Australia for employers. This insurance will cover the hospital fees and rehabilitation costs of your injured or ill employees at work. Also, it can pay for lost salaries if the affected member is unable to work for a certain time.
Commercial Auto Insurance:
If your restaurant uses vehicles to deliver food or for other business purposes, consider commercial auto insurance. Your auto insurance won’t cover your business vehicle. Separate commercial auto insurance will be required to cover injuries and damages to and caused by your business vehicle.
What’s the Cost of Restaurant Insurance in Australia?
The premium cost is determined by the risks present in your environment. Each restaurant has less or more risk factors than others. Or you can say that the unique qualities of your restaurant expose them to certain risks.
That’s why the insurance cost for two restaurants is less likely to be same. An insurer is likely to check the factors such as the types of food you offer, cooking methods and building and employees.
For example, a small coffee shop with a limited menu and cooking can have lower insurance cost compared to a large multi-cuisine restaurant being equipped with fryers, and ovens.
The size of your staff also affects the cost of insurance for a restaurant. Security and fire protection measures can also be checked.
You might have higher premium rates if your restaurant is located near mines, airport, and railway station as they are assumed by high-risk areas by some insurer.
Restaurant insurance is as important as your menu, staff and other things. After all, this industry is more vulnerable to risks than others.
Although restaurant insurance can seem straightforward on the surface, it can become complicated as you go through the various options available. This blog must have helped you identify the key options for your restaurant.
What do you think? Let us know by commenting below!
*Important: Cover may be available subject to meeting insurers underwriting criteria. Some of the covers listed may or may not be available or may have limitations or exclusions. Cover inclusions vary significantly from insurer to insurer. DO NOT rely upon the above. Check your policy schedule carefully for inclusions and exclusions and limitations. Talk to a business insurance broker for more information.
Romit Malhotra is the brand representative of Smart Business Insurance, a leading Australian insurance broker. A big foodie, he loves to travel the world. Also, a diligent businessman, Romit likes to pen down his thoughts on related topics whenever he finds some free time.