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You may have life insurance. You may have car insurance. You may have home insurance. Even so, we can guarantee that you will be brushing up on your insurance knowledge when you open a restaurant. It may not be quite as fun as say, planning your menu, but it is certainly important. And now that you are a real live grown-up with your own restaurant, you have to do some grown-up things (darn).
Although some insurances seem obvious there are others that may be more subtle. And understanding where your money could go will better help you to manage your budget. Getting all the insurance at once may not be the wisest way to stretch your business dollar. However, who said getting none of the insurance was any better?
We will break it down for you, one insurance at a time so it feels less daunting. It is your restaurant and it is your protection, so decide accordingly:
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Property Insurance – So what do you need to know? Well, first of all this is important in case mother nature decides to make a joke of your restaurant. And as much as you may be able to control certain things in your life, mother nature is certainly not one of them. Note that leaks are not often covered through insurance, so be vigilant with leaks as they appear. What is more important to you than the content of your restaurant? Maybe your family, but we assume it is pretty high up there.
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General Liability – Who doesn’t like an umbrella policy? Well, those who have no idea what it means, for one. Business is risky and general liability insurance is an insurance that recognizes that. It may protect you, your employees, and your business from claims involving bodily injury. Policies may shield you from out-of-court settlements, litigation and judgments, but for the love of Pete, read the fine print.
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Liquor Liability – You sell liquor and it is probably one of the more profitable selling points of your business. However, if someone goes to your restaurant and becomes grossly intoxicated and injures themselves (or another), you may be liable. This type of insurance protects you from the liability claim that may result from someone being drunk and causing injury or property damage. It may cover altercations in your establishment (read: a bar brawl) and the damages that may occur with intoxication. Make sure your employees are covered if your employees drink on the job. Let’s admit it, none of us are our most responsible selves after we down a couple of cold ones. It is a hot debate: do you need to take responsibility for someone else’s lack of responsibility? You decide, just as you decide that those polka dot socks are a good fashion decision.
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Auto Insurance – You may think that you have it all together, but you can’t control the car that belongs to your restaurant (nor can you control the employee that drives that car). There are different classes of business auto insurance, but commercial insurance may be what you need if your vehicle is primarily used for delivery.
If you have a car that transports goods or people, this is important. If you deliver some food that makes a customer ill, auto insurance will often cover the damages. Unfortunately, chef and baker insurance policies may be in the high to middle range when it comes to rates. Partially this is because it is rare to find a restaurant with a standard 9 to 5 and accident rates are higher in the evening. Isn’t piece of mind worth it?
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Workers Comp – We mostly hear the negative side of this phrase, but we also need to understand: what the heck is it? Well, it helps to protect your workers (and yes, this includes you) from a work-related injury or an occupational disease. The work within a restaurant is extremely time-sensitive, leading to an increased probability of split second accidents. This type of insurance can cover everything that could happen in the presence of sharp knives and slick floors. Accidents can happen, even to the most seasoned professionals.
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Unemployment Insurance – This is for your employees when they no longer work for you and will keep them supported. It is the ex-employee “I respect you” insurance. There are other eligibility requirements but if your employee is unemployed by no fault of their own, they will have a cushion in the interim before they find a boss a fraction as good as you were.
The rate will be influenced by the amount of prior claims for unemployment insurance that have been filed against your restaurant. In some states, even business owners can apply for unemployment insurance, so you may be saving your own back in the end.
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Life Insurance – Not that we don’t anticipate that you (and your restaurant) won’t have the longest of lives. However, just in case that is not the case, let’s get things in order. You certainly don’t want to saddle your family with bills they are unable to pay. It can also provide income for your family members if they choose to continue in your footsteps. Agents may suggest whole life insurance (which is more expensive) but do ask about term life insurance which will save you some money.
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Loss of Income Insurance – Sounds a lot like unemployment insurance, but you would be wrong, our friends. Loss of income insurance is insurance that covers the loss of income after a disaster. Why, pray tell, is a disaster? A flood is a good example. However, in order to claim your covered losses, you must be a champ when it comes to records, profit and loss statements, and tax forms.
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Fire Insurance – This isn’t as unnecessary as you may think. Insurance industry statistics estimate that 1 in 100 restaurants suffer a fire in any given year. There are the obvious cooking accidents, but heating problems might also be an issue. Cooking with fire may be the most important factor in the success of your business, but it could also be a double edged sword. Protection is a way of acknowledging this.
There are a lot of needs for a restaurant that you may not have been aware of until you found yourself as a bona fide owner. A phenomenal chef and loyal customers are essential to the success of your restaurant, but insurance keeps you from risking everything. It is the difference between of peace of mind and barely peaceful.
Your turn: What is the type of insurance for your restaurant that made you breathe a sigh of relief more than any other?