Restaurant insurance guide

You worked to open a restaurant because you know that food connects people. Your menu is designed with love, and each and every dish is cooked to perfection (or as close as your line cooks can get to it on a given night). Yet you also know that restaurants are an inherently risky venture. Changing supply prices and customer preferences play a significant role in your success, which is why you should always think two steps ahead.

That also means taking stock of your liability risks and purchasing appropriate insurance coverage. But what kind of restaurant insurance does your eatery need? In this short guide, we’ll go over the four most essential policies.

General liability insurance

Well-rounded insurance coverage is like a well-rounded meal. Different dishes cover different needs. And when it comes to insurance, general liability insurance is your meat and potatoes.

Restaurants see dozens of visitors each day, from customers to delivery drivers and beyond. Any one of these third parties could potentially bring a lawsuit against your restaurant should an accident occur. Even if they don’t have a good case, the cost of hiring a lawyer and going to trial could have a significant impact on your finances. General liability is designed to provide coverage for non-employee third-party claims of:

Bodily injury – Should a customer have an allergic reaction during their meal, they could sue you to recoup the cost of their doctor’s visit. General liability insurance could provide your legal defense as well as covering the cost of any payouts for damages.

Property damage – Should one of your waitstaff drop a whole plate on a bachelorette’s expensive white frock, she could sue you for the cost of its cleaning or replacement.

Personal and advertising injury – You’re always promoting your restaurant, whether through paid advertising or your social media. Should someone sue you for plagiarism, libel, or unauthorized use of their likeness, general liability insurance could help mitigate the financial damage to your business.

If you’re opening a pop-up or operating on limited hours, you may be hesitant to take out an annual insurance policy, but you still have options. General liability insurance via Thimble is offered by the hour, day, or month so that you’re only paying for insurance when you actually need it. Whether you’ve got a part-time food truck or a full brick-and-mortar operation, Thimble’s got a general liability option for you.

If you are a tenant (you rent your space from a landlord), your landlord will most likely require that you carry general liability insurance. Further, the landlord will also usually require it be added as an additional insured on your general liability policy.

Make sure you understand the specifics of your policy, including any exclusions (specific events that are not covered). For example, many general liability insurers exclude incidents that involve alcohol.

Liquor liability insurance

You take on extra liability when you serve your customers alcohol. Restaurant ownership that includes serving alcohol, unfortunately, adds liability. These establishments require specialized coverages to ensure that your restaurant business is safe.

Should a patron drink too much during a meal and leave the premises while inebriated, they could cause property damage or bodily injury. In these cases, you could be held liable.

Liquor liability insurance is designed to provide coverage for third-party claims of bodily injury and property damage as a result of alcohol served at your eatery.

Keep in mind that it does not include:

  • Coverage if you serve patrons who are under the legal drinking age
  • Damage to your property

Workers' compensation insurance

While general liability and liquor liability can cover third-party injury under a variety of circumstances, it does not cover injuries sustained by your employees.

As a restauranteur, you employ front-of-house and back-of-house staff. They all face risks, whether from their chef’s knife or their interactions with customers. Should you have employees, workers’ compensation insurance is required in almost all 50 states. This coverage is designed to protect your business if your employees experience any of the following incidents:

Injury – If your chef drops a mallet on their foot, they could require serious medical attention. Workers’ comp covers the medical care costs.

Illness – If one of your workers incurs an illness while they’re on the job, this is where workers’ compensation insurance kicks in.

Disability – Should a work-related illness or injury become chronic and render an employee unable to work, workers’ comp covers their lost wages.

Research your state’s guidelines and make sure you meet your responsibilities. If you fail to take out workers’ comp, you could face employee lawsuits, along with steep penalties. Check your existing insurance policy to make sure that you have workers’ compensation insurance. If not, we can help you add a policy to cover your state-mandated workers’ comp requirements.

Commercial property insurance

If you rent your restaurant, your landlord generally carries insurance to cover damage to the building. (In rare instances, a commercial lease may transfer liability to the lessee.) However, the terms of your lease may require you to take out other types of insurance.

Having said that, you still need to consider commercial property insurance. Besides the building itself, your restaurant is filled with valuable commercial property that needs to be protected. From your tables and decor to your industrial ovens and dishwashers to your inventory of delicious food.

If that property is damaged or lost, it could financially impact your business. In some cases, you may even have to close until it can be repaired or replaced. Commercial property policies are designed to cover the following:

  • Damage to your restaurant space
  • Damage to some of your restaurant’s peripherals like signs
  • Damage to the property inside your restaurant
  • Business interruption due to covered damage to your property

Depending on the specific risks in your area, decide whether to take out “named peril” insurance which covers you in specific named events (usually including fire, theft, and rainstorms), or broader coverage all the way up to coverage for all risks other than a few excluded perils.

If you do catering work away from your premises, you may also want to consider Business Equipment Protection to cover your equipment from loss while you are on the job. (You may also hear equipment insurance referred to as inland marine insurance.)

Take out commercial property insurance and rest easy knowing your beautiful eatery is covered.

The recipe for success

As a restaurant owner, you employ dozens of people, all of whose livelihoods rest in your capable hands.

To protect your business from family meal to closing time, it’s important to take out appropriate insurance coverage. That way, you’ll be prepared for any financial obstacles that arise, whether as a result of vandalism, litigious customers, or just plain old bad luck.

Most restaurants can benefit from the following policies:

  • General liability insurance
  • Liquor liability insurance
  • Workers’ comp
  • Commercial property insurance

Assess your specific needs, take out appropriate coverage, make sure you understand your policy terms, and then get work! And always keep ‘em coming back for more.

The content on this page has been verified by
Terri Hitchcock, JD
Chief Insurance Officer, Thimble
Terri has 38 years of industry experience and knows a thing or two about insurance, so she reviewed and approved everything on this page.

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