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Restaurants can be a dream to own, but as a business owner you face certain risks such as a customer getting food poisoning, a fire in the kitchen or an employee injury. Having the right business insurance in place can help you avert financial ruin in case of disaster. Here's what you need to know about restaurant insurance to protect you and your business.
What Kind of Insurance Does a Restaurant Need?
While each restaurant will have different insurance needs, here are some of the more common types of restaurant business insurance, including some examples to explain how each types works.
Restaurants owning their premises will want commercial buildings insurance (one type of commercial property insurance) to protect against damage or loss from perils like fire, flood and damage from theft.
A good policy can even provide emergency helplines to assist if you have a tax or legal matter or, say, if your glass storefront is shattered.
- Restaurant Building Insurance Example: A fire in the kitchen guts your building. Major repair work is required to . You claim on your contents and stock insurance to reimburse you for the loss so you can rebuild your business.
Contents and Stock Cover
Contents insurance (another type of commercial property insurance) can provide financial protection against accidental damage, loss or theft of valuable restaurant equipment (e.g., food graters, chippers or ovens), furniture, till systems, furnishings, and other contents of your restaurant. These items can be very expensive to replace, and you can't run your business without them. Whether you rent your restaurant premises or own them, contents and stock cover is critical.
Similarly, stock insurance affords financial protection if the stock you hold is lost, stolen or damaged. However, frozen food is typically not covered (nor is a general deterioration in stock) although you may be able to pay an extra premium to get this.
- Restaurant Contents and Stock Insurance Example: A fire results in the loss of your furniture, furnishings, computers, tills and all kitchen equipment—plus your stock. You claim on your contents and stock insurance to reimburse you for the loss so you can rebuild your business.
Restaurant Public Liability Insurance
Public Liability insurance is critical for any business that deals with members of the public, such as a restaurant. Why? If a customer or someone visiting your premises is accidentally injured, or their property damaged, they can sue you.
Public liability insurance protects against accidental injury and damage claims, covering legal expenses to defend your business and compensation claims if you're found liable. How much public liability insurance do you need? It's a personal decision but, for reference, public liability insurance is typically available with £1 million, £2 million, £5 million and £10 million of cover in the UK.
- Bodily Injury Example: A member of the public slips and falls on a freshly mopped floor, blaming you for negligence.
- Property Damage Example: There's a fire in your kitchen that damages the clothing shop next door to you. That business sues you for damages.
Restaurant Product Liability Insurance
Product Liability insurance protects against claims of bodily injury or property damage due to a business's goods or products—or in the case of a restaurant, primarily your food causing someone to become ill.
- Product Liability Example: A member of the public falls ill after eating your food and blames you for food poisoning.
Employers' Liability Insurance
Employers' Liability insurance is required by law for nearly anyone working for you, including casual or temporary workers (there are only a few exceptions when you don't need to buy this type of insurance). EL insurance can be expensive but it protects against compensation claims by current or former employees if they fall ill or are injured because of their work for you.
- Employers' Liability Example: An employee gets a severe burn at work, and they blame you and sue you for negligence. Plus, the NHS could claim for the cost to treat your employee and any ambulance call out charges.
Personal Accident Insurance for Restaurant Employees
Personal Accident insurance can provide a financial benefit if an employee has an accidental injury on the job and is unable to work—either temporarily (e.g., broken leg) or permanently (e.g., loss of a limb). Benefits can be in the form of a weekly payment or a lump sum amount, depending on the severity of the injury. Death can even be covered.
- Personal Accident Example: A waiter slips and falls, breaking his wrist. Personal accident insurance can pay him a weekly amount as a benefit while he's off work due to his broken wrist.
Commercial Vehicle Insurance
Commercial Vehicle will be necessary for any company-owned mopeds or other vehicles used to make deliveries or transport goods.
Other Types of Restaurant Business Insurance
In addition, a restaurant might need commercial buildings insurance, business interruption insurance or other business insurance coverages. If your business is mobile and you sell your food at events and fairs, you may need special market trader insurance as well.
How do I Find the Best Restaurant Insurance for Me?
When choosing a takeaway insurance policy, there are a few things to keep in mind:
- Look for customisable cover: Make sure you can get the specific cover that you need for your situation (e.g., public liability, employers' liability, equipment, etc.).
- Check the financial strength of the insurance underwriter: Insurance only works if the underwriter stays in business and can pay out on any valid claims. Check the health of your underwriter by looking at ratings by Fitch, Standard & Poor's, A.M. Best and Lloyd's.
- Read customer reviews: Online customer reviews can tell you what it's like to be a customer of a certain broker or insurer—check Trustpilot and reviews.io to learn more before you sign on the dotted line.
- Check prices in the marketplace: Since insurance quotes can vary significantly from company to company, compare the market with multiple sources—you can use a comparison site to make this process more efficient.
How Much is Business Insurance for a Restaurant?
The average cost of business insurance for a restaurant starts from under £1,000 a year for basic public liability and employers' liability insurance. However, restaurant business insurance costs can rise into the many thousands of pounds depending on the risks you want to insure against and the details of your application.
For example, the following factors can affect the cost of your restaurant business insurance in the UK:
- If you have a deep fat fryer in the kitchen
- If you have an ATM on site
- If your restaurant is licenced or unlicensed
- The number of late licenses
- If you offer public entertainment
- The number of employees
- Coverage limits
- Coverages (e.g., public and product liability, employers' liability, business interruption, legal expenses, personal accident, buildings, building improvements, contents, stock, liability, commercial vehicle, etc.)
- Claims history
- And more
Your premiums might vary significantly depending on your situation and the details of your application.
Insurance for a restaurant can cover a wide range of risks, such as injury to customers (public and product liability) or employees (employers' liability), damage to the contents of the restaurant (contents cover), loss of revenues due to fire or flood (business interruption insurance), help with legal expenses for contract disputes or tax investigations (legal expenses cover) and more.
To protect against the risks faced by the industry, a restaurant typically needs public liability insurance, employers' liability insurance, contents cover and stock cover. Plus, a restaurant might needs buildings insurance (if they own the building), cover for improvements made to a building (if they don't own it but they made improvements), business interruption cover, legal expenses or other types of restaurant insurance.
According to our analysis of ONS data on British household food budgets, the average household spends £32.80 a week on restaurant and cafe meals, drinks out of the home and takeaway meals and snacks—that's over £1,700 a year!
- Number of restaurants in the UK: 88,800 (in 2018)
- Number of people employed by restaurants: nearly 1 million
- Average restaurant and catering establishment managers and proprietors pay: £29,403 (full time)
- Average chef pay: £23,778 (full time)
- Average pay of waiters and waitresses: £16,286 (full time)
- Total restaurant and cafe meal spending per household: £1,009 per year
- Total alcohol spending out of the home per household: £416 per year
- Total spent on take away meals eaten at home: £281 per year