Restaurant Insurance. Most restaurant owners get into business because of their skill in the kitchen. Some are also good businessmen. Few however, are insurance experts. The tendency is to put insurance by the wayside with the minimum coverage you need. Most owners know to have a general liability coverage, property coverage, liquor liability (if serving alcohol) and insurance on their inventory.
From a risk management point of view, there are many exposures that are not covered by your standard BOP. Below are 3 exposures that restaurant owners should take into consideration.
Crime Exposures
While in college, I worked at Arbys for 3 years. We constantly received calls from the police department that someone was going around robbing fast food restaurants. Who needs to rob a bank these days when it is so easy to hit up a few restaurants?
Often times we do not think that anyone would be willing to steal from us, but sometimes people get desperate. You may not have anything of value other than food or money but that can easily be taken.
I love watching Food Network. A couple of my favorite shows are Restaurant Stakeout and Restaurant Impossible. While these shows are for the most part entertaining, they do present a good point on how we see our employees.
We would never expect any of our employees to be dishonest. Why would we hire someone we knew was going to steal money from us? Most restaurant owners feel they do not need to purchase insurance to protect from employee theft but sometimes things just go wrong.
It could be expensive cuts of meat, money, or alcohol; whatever is most tempting to that individual can easily create a bad situation for us. Do not let your optimism stop you from protecting your money and your valuables from theft.
Product Liability
All business’s have a liability policy. (If you do not, you need to fire your insurance agent right away!) Unfortunately we think this protects us from every liability situation when it definitely does not. If someone has an allergic reaction to your food, receives food poisoning or somehow gets hurt from your food, your general liability coverage may not cover it.
Product liability insurance is the protection you need so that you do not have to pay out of pocket to cover someone’s hospital visits and medication after they are injured.
Do not think just because you post your ingredients and use fresh food daily that someone will not get sick. Sometimes it is by chance or the customer’s fault 100% but just like a slip and fall in your restaurant you are liable.
Equipment Breakdown Coverage
I once researched the prices of starting a restaurant. The thing that got me was how expensive the commercial cooking equipment was. At Arbys, our slicer alone cost thousands of dollars. Take a look around your restaurant. The fryer, the grill, the ovens; take a look at everything and just see the dollar signs.
Such expensive equipment and I wondered why some restaurant owners do not get it insured. Soon I realized it was because most restaurant owners believe that their equipment is insured under their property portion of coverage.
In some ways yes and no. If there were something like a fire that ripped through and destroyed your equipment then it would be covered, but what about a power surge that led to a breakdown? In that situation you would not be covered.
Equipment breakdown will cover any repair or replacement costs to damaged equipment but we know if a major piece of equipment is down, then we are out of more money than just the repair costs. Income losses, spoilage of food, data restoration and a long list of other possible losses can stem from just one breakdown (depending on the machine). Luckily equipment breakdown coverage will cover these losses also.
The insurance take-away for your restaurant
These 3 commonly looked over restaurant insurance coverages are a couple of the many possible solutions that some restaurants are lacking. Your restaurant could have it all together or could be at risk from multiple exposures.
Talk with a risk management expert and get a free review of your insurance plan to ensure you are properly covered and not paying too much. Call 480-830-1800 or contact a Premier Choice Insurance online.
