The Payroll Blog

News, tips, and advice for small business owners

Insurance for Restaurants

Posted On
7/10/2019
By
Stephanie Davis

When opening a new business, there are many things to consider: the name of your business, the pros, and cons of renting or buying your location, and how many employees to have, just to name a few. What may not be top of mind is more back-of-the-house tasks like payroll or business insurance. Being a small business owner naturally comes with risks, but as a restaurant owner, you may find yourself juggling more than a typical business. For these restaurant specific risks, purchasing business insurance could be a smart move. Business insurance protects your business in various forms including, financial assets, intellectual and physical property from a covered loss due to lawsuits, property damage, theft, vandalism, loss of income, and employee injuries. Below you’ll find the most common risks associated with restaurants, and the ways business insurance can help.

Food and Alcohol Risks

In a restaurant, owners and employees must maintain high standards of food safety to avoid penalties or health code violations. Contamination can happen easily, which is why it’s important to be diligent in preparing and storing food safely. Additionally, when operating a restaurant, or bar, with a liquor license, you could face the risk of somebody leaving your restaurant, getting into an accident, and holding you responsible.

Management Risks

With any small business, there is always a risk that things won’t go according to plan, ranging from upset customers to employee complications.  From poor employee hygiene, employee’s stealing from you, and sexual harassment, as a restaurant owner, you are going to want to lessen these management risks. For example, did you know that more sexual harassment claims are filed in the restaurant industry than any other industry? As an owner, it’s crucial that you are keeping your employees safe and educating them on what constitutes sexual harassment and putting an end to it should the situation arise.

Environmental Risks

Mother Nature can be unpredictable, and recently, storms have been stronger and leave more destruction in their wake than ever before. As a restaurant owner, you need to have a plan in place in case a storm damages your business. Additionally, there are other scenarios to consider, such as how to keep your customers and staff safe if you operate an outdoor restaurant and a thunderstorm rolls through or staying on top of dry floors in the winter when people are dragging in slush, snow, and salt.

Technology Risks

While new technology is always exciting and offers more opportunities, security breaches are extremely common. From a Facebook account hack, email fraud, or a more serious hack to your bank account or payroll, keeping yourself safe from technology risks is crucial as a business owner. Some of these risks can be lessened by backing up digital files, using complicated passwords that you change frequently, and being conscious of which websites you are entering info into.

Property Insurance

Property insurance will protect the building your restaurant is located in, any equipment you use for the business, and other physical assets. Property insurance is good to have to protect against damages from natural disasters - fire, flood, and earthquake damage are a few examples. Property insurance can also protect you in the case of theft.

Liability Insurance

Having liability insurance as a restaurant owner is beneficial as it protects the restaurant against claims by customers or employees, resulting from accidents or injury. Liability insurance will also act as a legal defense against slander, libel, or similar types of lawsuits.

Workers’ Compensation

Accidents happen fast, especially in a restaurant when people are running back and forth from tables to the kitchen, working around hot appliances, and the neverending potential for slips, trips, and falls. No matter how hard you work to keep your employees safe, accidents are going to happen. Because of these accidents, you’re going to want to have workers’ compensation insurance. Workers’ comp insurance will protect you and your staff in the event of a workplace injury. It can also provide wage replacement and medical/rehab benefits to employees injured over the course of employment.

Commercial Auto Insurance

Do you own or lease a vehicle so you can deliver food to customers? It’s important to keep in mind that these vehicles, like your personal vehicle, will likely need to be insured in case of accident or theft. Commercial auto insurance will protect you and your business from liabilities and claims that may not be covered under a personal auto policy.

Should you purchase insurance for your restaurant?

As you can see, a lot can happen and go wrong while operating a restaurant. Because of the risks, it’s smart to invest in some type of insurance. At a minimum,  having property insurance, liability insurance, and workers’ compensation for your business will likely protect you from a majority of issues. When you’re putting so much into your business, you want to do your best to keep it, your employees, and your customers, as safe as possible to ensure you’ll be operating for years to come.