A restaurant needs to have an insurance policy with multiple types of cover in order to be protected against a range of risks faced by being in operation. There are a number of different types of insurance available to cover incidents such as theft of stock, injury to an employee, damage to the property or to furnishings or even a customer falling ill and blaming the restaurant. Altogether, restaurant insurance costs can easily reach £3,500 a year, according to NimbleFins research.
By law, any business with employees must have employers’ liability insurance, which includes restaurants. This is to protect against a claim if an employee becomes ill or injured while at work. The policy would cover the cost of compensation if the business was found liable for the illness or injury, and it can also cover the cost of legal fees that come from fighting against the claim.
Public liability is another vital type of cover that can prove crucial for any business that deals with the public. Again, it’s not a legal requirement. Still, it is hugely important to protect a business against claims made from members of the public being injured, becoming ill or suffering damage to their property and claiming compensation.
A restaurant will also need to consider contents and stock cover for financial protection if produce or stock is damaged, missing, or stolen. Though this does not usually include frozen foods as standard.
If the business also owns the building, then commercial building insurance will be important to give financial security in case there is an event such as a flood, fire, earthquake, or theft.
Further insurances to consider include commercial vehicle insurance, product liability insurance, and business interruption insurance.
What business insurance do I need for a restaurant?
In the same way as all businesses, restaurants have to consider what risks they face when looking into insurance policies.
Even if they are temporary or paid in cash, businesses that have staff must legally have employers’ liability insurance to cover against claims of compensation from members of the workforce suing from becoming injured or ill.
That doesn’t mean, however, that employers’ liability is the only insurance a restaurant needs. There are other risks that a restaurant faces and needs protection from.
Businesses, such as restaurants, that deal with members of the public should protect themselves against claims they could make of injury, illness, or property damage with public liability insurance. The policy covers legal costs and compensation if the restaurant is found liable.
Restaurants also have their own specific insurance needs such as contents and stock to cover furnishings and important equipment such as fryers and ovens, as well as food stock. Though frozen food is not included in most policies.
There is also commercial property insurance if the building is owned by the business. This is important if an event such as theft, damage or an earthquake damage the building. If such an incident did happen, a restaurant would likely be left unable to trade and therefore lose access to income until the repairs or replacements have been completed. There is a way to protect against this loss of trading time with a policy called business interruption insurance.
If a restaurant has a delivery service or transports goods, then commercial vehicle insurance is another policy the business should purchase.
How much is insurance for a small restaurafnt?
The cost of insurance for a small restaurant varies depending on the types of cover the business has, the turnover, where the restaurant is, its size and other factors. Restaurant insurance can be also be arranged as a policy including a number of different types of cover to suit the specific needs of that business, which will impact the price.
Restaurant liability insurance can start from as low as £500 a year for a small restaurant. Still, most businesses will want to include extra cover such as contents and stock, as well as restaurant equipment which increases the cost dramatically.
Extras that could cause a higher policy rate include:
- If the restaurant is licenced,
- If there is public entertainment at the venue,
- If there is an ATM,
- If there is a deep fat fryer in the kitchen,
- How many employees there are,
- The limit of the coverage,
- What coverages are included, such as public liability and product liability, business interruption, stock cover and buildings insurance,
- Claims history.
There are other things to consider when looking into restaurant insurance as well as price.
- Look for an insurance policy that can be customisable, meaning the policyholder can choose the types of cover wanted and needed.
- The ratings of the provider’s underwriter to ensure they can pay out for claims.
- Read customer reviews.
- Compare prices.
- Consider going through an insurance broker that specialises in restaurant insurance.
Do restaurants need insurance by law?
By law, any business with employees needs to have one type of insurance – employers’ liability. This covers the business in the eventuality that a member of staff is injured or falls ill and claims compensation. This applies if staff are temporary or paid in cash, although there are some exceptions when some workers are not defined as requiring cover.
Each restaurant will have different needs, but there are other insurance types that are hugely important.
While not needed by law, other cover such as public liability, contents and stock insurance, commercial building insurance and restaurant product liability can be crucial.
- Restaurant insurance: nimblefins.co.uk/business-insurance/restaurant-insurance
- Restaurant insurance costs: https://www.nimblefins.co.uk/business-insurance/average-cost-restaurant-insurance
- Employers’ liability insurance: https://www.gov.uk/employers-liability-insurance