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8 Restaurant Insurance Exposures (and How to Cover Each)

By June 28, 2018September 6th, 2022Personal Insurance
restaurant insurance NY

Kitchens get crazy… Insurance helps.

To the untrained eye, restaurant insurance seems like it would be a very ordinary product. There are restaurants on every road, in every town, big or small throughout every country in the entire world. It’s reasonable to think that insurance carriers at this point have figured out restaurant insurance and the coverages that are necessary to properly protect a restaurant.

However if the establishment owner does not purchase the proper restaurant insurance coverages that address their unique risks then bad things can happen when there is a claim. The following is a list of restaurant insurance exposures that are very common among all restaurants of all shapes and sizes. By understanding how these exposures impact a restaurant, the restaurant owner can purchase the proper insurance and ensure that in the event of an accident their business will be up and running as quickly as possible.

Before we start let’s quickly define, for insurance purposes, what a restaurant is:

A restaurant offers a full menu of food items and may or may not offer alcoholic beverages. Often times restaurant specialize in specific types of cuisine. Additionally restaurants may offer entertainment promotional or of vent services.

8 Restaurant Insurance Exposures

Property Exposures

The property insurance exposures of a restaurant can be quite substantial. The major hazard associated with a restaurant is cooking. Grease vapor that is produced from cooking activities can accumulate throughout the kitchen leading to a high exposure for fire.

Additionally, cooking surfaces such as grills and deep fat fryer’s can contribute to how easily fires spread within a restaurant kitchen. It’s important all restaurants that engage in cooking have an automatic fire extinguishing protection system including hood and filter systems. Fuel shut offs for grills and deep fat fryer’s should be easily accessible and tagged as well as handheld fire extinguishers spread in easily retrievable places throughout the kitchen. Unless you live in an area with a high frequency of natural disasters the most threatening exposure to the building property of a restaurant is fire from the kitchen.

Crime exposures

Restaurants tend to be cash heavy businesses. Many restaurants also carry expensive cuts of meat and bottles of alcohol as part of their stock. Fine dining restaurants may have expensive works of art or collectibles, or memorabilia if it’s a sports restaurant, on the walls. Cash, expensive stock and valuable items make restaurants a prime target for criminals. Irregular cash drops into a safe, consistent checking of stock shelves and security cameras or security personnel help to decrease the chance of crime related exposures.

Inland Marine Exposures

Inland Marine insurance covers items such as off-site records, cash registers, cooking equipment, office equipment and computer equipment. Additionally valuable painting, statues, fine arts and memorabilia used as decorations throughout the restaurant can be insured for their intrinsic value through an Inland Marine policy.

Liability Exposure

The most common understanding of business liability insurance coverage is losses resulting from slips, trips and falls or any bodily injury or physical damage resulting is an interaction between serving staff and the customer.

A commonly recognized insurance claim for liability exposure happened when McDonald’s was sued by a customer who was handed a scalding hot cup of coffee and then spilled that cup of coffee upon themselves. These types of losses that result in customer injury or physical damage to customer property are liability related claims. The easiest way to prevent liability claims is training and diligence against spills and wetness or the handling of hot beverages or food plates. Uneven floors or surfaces or slippery surfaces should have non-slip mats.

Products Liability Exposure

Insurance claims resulting from food poisoning and/or allergic reactions are products liability claims. Monitoring the quality of food received and posting a list of ingredients as well as maintaining proper storage temperatures can reduce your risk of food poisoning or allergic reactions.

Liquor Liability Exposure

Liquor liability insurance exposure depends on the amount and type of alcohol served and the inherent state policies on who can be served and how much they can be served. It’s important that you consult an insurance professional with knowledge of the specific state  in which your restaurant is located to understand if there are any unique alcohol serving requirements in that state. Employees who serve alcohol should complete training courses in recognizing customer intoxication. Programs that encourage designated drivers or free taxi service can be useful in preventing liquor related claims.

Business Auto Exposure

The business auto exposure may be limited to hired in non-owned auto liability exposures from employees using their vehicles to perform business errands. If the restaurant offers valet parking, damage to customers vehicles is a concern. Make sure the you are checking the motor vehicle records and driving records of anyone handling customer cars or anyone who is sent out on business errands throughout the day. Driving record should be obtained for any employee parking customer vehicles. If valet parking services are contracted to another firm, the insured restaurant should be named as an additional insured on that contractors policy.

Workers Compensation exposure

Workers compensation insurance covers your employees and injuries thereof. Most employee injuries are the result of slips, falls, cuts, burns and heavy or awkward lifting, along with interactions with customers. It is very important to train employees on the carrying of heavy dish loads between the kitchen and the serving areas. Well-trained employees with an incentive to do their best will have the fewest injuries. Unfortunately employees of restaurants often tend to work for a minimum wage and  have a very high turnover rate. This can result in a higher volume of workers compensation related claims.

The Insurance Take-Away

There are many different restaurant insurance programs set up to cover the specific risks associated with running a restaurant. But as the business owner understanding the exposures that your business has can help you become a more informed insurance buyer. This in turn allows you to have a more educated discussion with your independent insurance agent and purchase the proper policy at what is the most competitive rate in your market.

At The Murray Group, we specialize in restaurant insurance and can help put all your policies with the same carrier. Working with the same carrier for all your restaurant insurance policies can reduce premiums significantly as well as expedite the claims process if you do have a loss.

If you’re interested in discussing your restaurant insurance or would like to receive a quote please call us at (518) 456-6688 or you can click here to begin by email.

Thank you and good luck,

Ryan Hanley, CIC

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