4 reasons why restaurant insurance is important (and how to protect yours)

Australia is home to some of the best restaurants, from local burger joints to award-winning haute cuisine. As a restaurant owner, you know that the food industry requires incredibly hard work for success. The last thing you want is for all that effort to disappear in a flash because of one unexpected mishap or incident.

Having the right insurance policies in place could protect your restaurant and your customers. Below we look at the benefits and protections that restaurant insurance can bring and the different forms of cover available.

Why is restaurant insurance important?

Restaurants are fast-paced businesses where no two days are the same. With so much happening in the kitchen and on the dining room floor, there’s a lot of opportunities for things to go wrong. Insurance for restaurants can help shield your business against the more common risks you might face.

Lawsuits: Having insurance protects you against the costs of any legal action from customers claiming that they have been injured on your premises or have contracted an illness through eating your food.

Bankruptcy: Most restaurateurs launch their business with loans and other financing. Unless you have enough money saved to completely rebuild your business from the ground up in the event of a catastrophic incident, you’ll probably need insurance.

Buildings and equipment: Even if an accident doesn’t wipe out your entire premises, it could damage expensive kitchen equipment that is vital to your operations. Without insurance you might struggle to find the money to pay for replacements to keep your business running.

Reputational protection: If a claim is made against you for damages, insurance can help you pay for lawyers to sort everything out quickly and amicably. This hopefully helps you avoid the damaging publicity a long-drawn-out court case might do to your business.

What kinds of insurance could restaurant owners consider?

There are two types of insurance that many restaurant owners may consider to protect their business: Public Liability and Business Insurance.

Public Liability insurance

Public Liability insurance for restaurants can help safeguard your business against claims of injury or property damage. It will help you protect visitors – customers, suppliers, or other third parties – should they unfortunately be injured on your premises. (It should be noted that Public Liability insurance doesn’t provide cover for any injuries your employees may experience; you should consider putting a separate workers’ compensation policy in place for them.)

Even in the best-run restaurants, the list of possible mishaps is huge: Kitchen fires have the potential to wipe out your entire business, customers might suffer trip injuries from carelessly positioned chairs, serving staff could accidentally spill hot substances on customers, and there is always the risk that a customer may claim your cooking gave them food poisoning.

The cost of defending claims made against you can be considerably huge, even if the claim is ultimately rejected. Public Liability insurance may meet the costs of your defence, including any compensation award made against you, for death, injuries or damages resulting from the operation of your business.

Business Insurance

Insurance cover to protect you against third-party injury claims is important, but those aren’t the only risks your restaurant may face. Equipment failures, fire damage, and needing to temporarily close up shop are all real concerns for restaurant owners. With insurance, the old adage “Hope for the best but prepare for the worst” is very much relevant, and it could help you get back to work after something goes wrong.

A Business Insurance policy can be customised to include protections such as:

Building cover: If you own the premises from which your restaurant does business, this type of policy will meet the cost of repairs or rebuilding if damage occurs as a result of events covered in your policy, e.g., fires, hurricane damage, floods etc.

Contents cover: If you add up all the money you have invested in your restaurant’s contents, you might be surprised at what a large sum it comes to. Even replacing small things, such as your crockery or cutlery, could cost a considerable amount. And if there is damage to expensive equipment, such as ovens or dishwashers, you could be looking at a small fortune. Contents cover will help to replace these things in the event of damage or destruction.

Business Interruption cover: This cover is provided as an add-on to Building and Contents insurance and will provide a certain amount of financial compensation for the losses of revenue that you may experience as a result of a catastrophic event. For example, if your premises are badly damaged by fire and you have to close for rebuilding, Business Interruption cover will pay you an agreed percentage of your average turnover for the time that you are closed for repairs.

Glass cover: It might seem a minor concern, but anyone who has had to replace glass windows knows it can be extremely costly. This type of cover takes care of the expense in the event of accidental damage or breakage.

Machinery Breakdown cover: Restaurants rely on all sorts of machinery, from coffee machines to freezers. This type of cover will pay for repair or replacement if your equipment is damaged or broken. Extensions can also be added to pay for any losses due to stock being damaged, for instance if food spoils because of a fridge breakdown.

Find Insurance for Restaurants with BizCover

Insurance can serve up much needed peace of mind for restaurant owners. From protecting your customers to helping you rebuild after a fire, the right insurance protections can help you stay in business and continue to cook up success!

Find out more about insurance for restaurants today.

The information provided on this page is general guide only and does not take into account your personal objectives, financial situation or needs. This information should not be construed as any form of advice. Consider your own personal circumstances, objectives, financial situation, needs, Product Disclosure Statement (PDS), and full policy terms and conditions before making a decision. Product descriptions on this page are intended only as a guide to coverage terms and conditions, and should not be relied upon to determine policy coverage. Policy coverage is subject to the specific terms and conditions of each policy wording.
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