You’ve set your menu. You’ve picked suppliers. You’re so close to opening your doors for those first hungry customers… but wait! Are you forgetting something?
If you haven’t gotten restaurant insurance yet, the answer is yes!
Not sure what kinds of insurance a restaurant needs? Then this guide is for you. We’ve broken down the most important coverage types, from the basics to beyond. Plus, download your free restaurant insurance checklist to keep track of the coverage you need!
At a Glance: Must-Have Coverages
- General liability for injuries to other people and damage to others’ property
- Product liability for injuries relating to your food/beverage products (e.g., food poisoning)
- Workers compensation to cover your employees’ medical costs, rehabilitation, and lost wages if they are hurt on the job
- Business interruption to replace lost income if your restaurant closes temporarily
- Commercial property to cover theft or damage to your business property
- Employment practices liability (EPLI) to cover your legal expenses if an employee accuses you of illegal business practices
Optional Add-Ons
- Cyber liability to cover expenses if your business is the victim of a cyberattack (data breach, phishing, etc.)
- Tools and equipment (inland marine) to cover the cost of repairing or replacing broken or stolen mobile business equipment
- Product recall for expenses related to a product recall (notifying customers, destroying contaminated products, etc.)
- Liquor liability to cover the cost of injuries and property damage caused by an intoxicated customer
- Professional liability for claims related to your professional advice (e.g., cooking classes)
- Commercial auto to cover damage and liability involving your work vehicle
The Core Insurance Every Restaurant Needs
While no two restaurants are exactly alike, there are some types of coverage every restaurant needs to shield against the most common claims.
General Liability
General liability insurance is crucial for every business because it covers some of the most significant risks they face, from customer injuries to misleading advertising.
Coverage Triggers
- Third-party injuries (not you and your employees) that happen at/because of your restaurant
- Third-party property damage (not your own property) caused by your business operations
- False advertising or defamatory statements you make about another person or business (personal and advertising injury)
What It Covers
- Medical expenses
- Property repairs/replacements
- Legal costs (attorney’s fees, defense expenses, settlements, and judgments)
Claim Example
A customer slips on a wet floor in your restaurant before you can put a caution sign down and injures themselves. They sue you to cover their medical expenses and the wages they missed at work while recovering.
Product Liability
Every restaurateur worries about a customer suing them over food poisoning or an undeclared allergen. Product liability insurance is designed to cover those costs in the event of the worst-case scenario.
Coverage Triggers
- Third-party injuries caused by the foods or beverages you sell
- Third-party property damage caused by the foods or beverages you sell
What It Covers
- Costs you’re held liable for (medical expenses, property repairs, etc.)
- Legal expenses
Claim Example
After eating a sandwich at your restaurant, a customer has a serious allergic reaction to undeclared pine nuts in the pesto spread. They file a lawsuit against you, claiming negligence.
General Liability vs. Product Liability: What’s the Difference for a Restaurant?
Product liability and general liability are both designed to cover third-party injuries and property damage, but they have different coverage triggers.
Product liability insurance is specific to claims caused by the food and beverage products you sell. On the other hand, general liability insurance can cover these claims, as well as injuries and damage that have nothing to do with what you serve (e.g., damage you cause to your rented space while installing a new oven).
Swipe →
| General Liability | Product Liability | |
|---|---|---|
|
Core Purpose |
Covers third-party bodily injury, property damage, and personal and advertising injury caused by your business |
Covers third-party bodily injury or property damage caused by your food or drink products |
|
Typical Claims |
Slips and falls, non-employee injuries, damage to someone else’s property, defamation/slander in ads |
Foodborne illnesses, undeclared allergens, cracked teeth/injuries from foreign objects in food |
|
Who Can Claim |
Customers, bystanders |
Customers who consumed your food or beverage product |
|
Main Exclusions |
Injuries to you/your employees, damage to your own property, professional services, alcohol-related liability |
Known defects, product recall costs, intentional acts |
Workers Compensation
Every state has workers compensation laws designed to protect employees who suffer job-related injuries or illnesses. These benefits typically cover lost wages, rehabilitation, and can also cover funeral costs if the employee passes away.
Workers compensation insurance is designed to cover the cost of these benefits, which can easily total tens (if not hundreds) of thousands of dollars. It can also cover you, the employer, if you’re hurt on the job (if allowed by your state’s law).
All states except Texas require employers to carry this coverage, often after you hire your first employee.
Coverage Triggers
- Employee/employer injury at work
- Employee/employer illness caused by work
- Employee/employer death at/because of work
What It Covers
- Medical expenses
- Lost wages
- Disability benefits
- Death benefits
- Employer liability (employee injuries/illnesses that aren’t included in your state’s workers compensation laws)
*Note: Exact workers compensation benefits vary from state to state
Claim Example
One of your employees strains a back muscle while lifting a heavy bag of flour. Their doctor tells them to rest for a month and go to physical therapy to recover, making them unable to work in the meantime.
Business Interruption
If you need to close your restaurant due to a covered event, like a fire or natural disaster, business interruption insurance can replace your lost income and cover ongoing expenses.
Coverage Triggers
- Covered incidents that cause your restaurant to close temporarily
What It Covers
- Lost revenue you would’ve earned had your restaurant been open
- Ongoing expenses (rent, utilities, taxes, etc.)
- Employee wages
- Temporary relocation
- Extra expenses (e.g., costs beyond your normal expenses to help your restaurant reopen)
Claim Example
A massive windstorm hits your city and causes significant damage to the roof of your restaurant. The damage is so severe that you are forced to shut it down while you pay for repairs.
Commercial Property
Your business property — everything from your kitchen appliances to the building itself — is critical to keeping your restaurant running smoothly. If it is damaged by a covered event or stolen, commercial property insurance is there to cover repairs or replacements.
Coverage Triggers
- Fire damage
- Vandalism
- Natural disaster
- Theft
What It Covers
- Repairs or replacements for damaged, destroyed, or stolen business property
Claim Example
A kitchen fire destroys multiple appliances, including your ovens, refrigerator, and walk-in freezer. Each of these items is unusable in its current condition and needs to be replaced before you can open for business again.
Employment Practices Liability (EPLI)
Part of hiring a team means your employees (or even job applicants) can sue you over what they claim are unfair employment practices, such as harassment, discrimination, and wage theft. Employment practices liability insurance (EPLI) is designed to cover your legal expenses if an employee or applicant sues you over something like this.
Coverage Triggers
- Lawsuit from an employee or job applicant alleging any of the following:
- Wrongful termination
- Discrimination
- Harassment
- Retaliation (e.g., firing an employee after they filed a complaint)
- Breach of employment contract
What It Covers
- Legal costs
- Settlements
- Judgments
Claim Example
One of your former employees sues you, claiming you fired them because they reported that another employee was harassing them. While it’s true that they filed a complaint, that’s not why you fired them. You let them go because they routinely failed to show up for work without notifying you ahead of their shift.
Optional Add-Ons for Well-Rounded Protection
It’s important not to skip out on the essentials, but the fact is that most restaurants need coverage beyond the basics.
Restaurant owners often think about the big, obvious risks — fires, slips, or food spoilage — but today’s threats extend far beyond the four walls of the kitchen. A data breach from an online ordering system or a recall tied to a supplier can be just as damaging as a property loss. Exploring coverages like cyber liability or product recall isn’t about buying more insurance. It’s about making sure one unexpected event doesn’t close your doors for good.
If we think about restaurant insurance like a burger, the coverages mentioned in the section above are the two sides of the bun. The ones we’re about to explore below are the fixings: patty, lettuce, cheese, etc. — that really complete the meal.
Cyber Liability
Most restaurants use digital technology to manage their day-to-day operations, from point-of-sale systems to inventory tracking software. Unfortunately, this tech is vulnerable to hackers who want to access payment information, routing numbers, and other confidential information about your customers and your business.
Cyber liability insurance is designed to cover first- and third-party expenses stemming from a cyberattack, protecting your business from the financial fallout.
Coverage Triggers
- Data breach
- Phishing scam
- Hacking
- Ransomware
- Blackmail
What It Covers
- Expenses you face after a cyberattack (cost of replacing/restoring your data, notifying customers, etc.)
- Legal expenses if an affected customer sues you because of a cyberattack (their payment information was compromised, their sensitive information was sold, etc.)
Claim Example
A hacker installs malware on your point-of-sale system to steal your customers’ credit card information. This goes on for weeks before customers start reporting fraudulent charges to you.
Tools & Equipment (Inland Marine)
While commercial property insurance covers the gear and inventory you keep at your restaurant, tools and equipment insurance covers mobile or off-site property.
If your restaurant offers catering services, this coverage is a must. Commercial property insurance won’t cover any off-site equipment or inventory, so tools and equipment covers that gap.
Coverage Triggers
- Equipment or inventory is damaged in transit or off-site
- Equipment or inventory is stolen in transit or off-site
What It Covers
- Repairing broken gear
- Replacing broken/stolen gear
Claim Example
While unloading your catering van at a local event, thieves steal several chafing dishes and premade meals.
Product Recall
Consumers and manufacturers aren’t the only ones who need to worry about food recalls. Your restaurant can also be impacted by these incidents when a supplier has to recall contaminated or defective products.
Product recall insurance covers the costs you face in the event of a voluntary or involuntary recall, from notifying customers to extra expenses paid to manage it.
Coverage Triggers
- Notifying customers of a recall
- Investigating contaminated/defective products
- Collecting contaminated/defective products
- Disposing of contaminated/defective products
- Hiring a public relations or crisis management team
What It Covers
- Costs exceeding your normal business expenses to handle the recall
- Lost revenue caused by a covered recall
- Legal expenses tied to investigating, defending, settling, or appealing a claim
Claim Example
Your supplier alerts you about a shipment of flour you purchased from them two months ago. That batch has been found to contain lead, causing them to recall all potentially contaminated products.
Liquor Liability
If your restaurant sells or serves alcohol, you need liquor liability insurance.
Most states have dram shop laws, which hold alcohol-serving businesses responsible for injuries and property damage caused by their patrons. Because of these laws, restaurants are often legally required to have liquor liability insurance to get a liquor license.
While general liability insurance typically covers third-party injuries and damages in most cases, it will not cover alcohol-related claims.
Coverage Triggers
- Third-party bodily injury caused by an intoxicated guest
- Third-party property damage caused by an intoxicated guest
What It Covers
- Legal expenses
- Settlements or judgments
- Repairs to or replacements for damaged property
- Medical bills to treat injuries
Claim Example
After having a few too many beers at your restaurant, a guest drives home and gets into a car accident. They injure the three passengers in the other car and total that vehicle. Your state’s dram shop laws hold you legally responsible for this incident because you served alcohol to the driver.
Professional Liability
Professional liability insurance is a crucial coverage for restaurants that provide services beyond just preparing and serving food. This includes cooking classes or workshops, as well as catering services.
It’s designed to cover your legal expenses if you are accused of mistakes or negligence with your services. For instance, if a workshop attendee accuses you of bad instruction that led to them getting hurt.
Coverage Triggers
- Third-party bodily injury caused by your instruction or services
- Third-party property damage caused by your instruction or services
What It Covers
- Legal expenses you face if sued over your instruction or services
Claim Example
You show up an hour late to an event your restaurant is catering due to traffic. The event hosts sue you, claiming you did not perform the services they hired you for because of your tardiness.
Commercial Auto
Some restaurants rent, lease, or own vehicles for business purposes, such as food trucks or vans for catering operations. These vehicles are normally excluded from personal auto policies because they’re used for work purposes, which is why commercial auto is necessary.
Coverage Triggers
- Your work vehicle is damaged or destroyed by a covered incident
- Your work vehicle causes injury or property damage to others in an accident
What It Covers
- Third-party bodily injury expenses (medical bills, rehabilitation, etc.)
- Uninsured/underinsured motorist costs if your vehicle is involved in an accident with a driver who does not have sufficient (or any) liability insurance
- Medical payments you or any passengers in your work vehicle face after an accident
- Costs to repair or replace your work vehicle after damage not caused by a collision with another vehicle (e.g., a tree falling on your van)
- Costs to repair or replace your work vehicle if it is damaged in a collision, overturns, or rolls
Claim Example
As you and two of your employees drive your restaurant’s catering van to a corporate party, you’re struck by a driver who ran a red light in their truck. You and your employees suffer minor injuries, and your van is totaled after rolling.
Map Your Risks to Specific Types of Restaurant Insurance
Use the table below to identify which coverages your business needs based on the risks it faces.
Swipe →
| Restaurant Risk | Coverage Needed |
|---|---|
|
General liability |
|
Product liability |
|
Workers compensation |
|
Commercial property |
|
Business interruption |
|
Employment practices liability (EPLI) |
|
Cyber liability |
|
Tools and equipment |
|
Product recall |
|
Liquor liability |
|
Professional liability |
|
Commercial auto |
How Much Does Restaurant Insurance Cost?
On average, restaurant insurance from Food Liability Insurance Program (FLIP) costs about $2,500 per year. When you consider the tens (even hundreds) of thousands of dollars you could face in liability claims, the choice is clear: insurance is worth the investment.
Several factors can affect your premium, including:
- Your gross annual income
- The type of restaurant you own (full-serve, carryout, etc.)
- The number of employees on your payroll
- Your location
- Your previous claims history
- Whether you rent or own your location
- If you serve alcohol
Protect Your Restaurant (Fast) With FLIP
For quick, stress-free coverage, look no further than FLIP. Simply fill out our online application to get your free quote. From there, one of our licensed, U.S.-based agents will guide you through the purchasing process.
Meet legal requirements, boost your restaurant’s reputation, and enjoy the peace of mind that comes with knowing you’re covered if something goes wrong. Start your restaurant insurance application today!
Common Questions About What Insurance Restaurants Need
What Insurance Do Restaurants Need to Open?
The most essential coverages to have before you open your doors are:
- General liability
- Commercial property
- Workers compensation
- Business interruption
- Employment practices liability (EPLI)
- Liquor liability (if selling alcohol)
- Commercial auto (if using work vehicles)
Remember, you can (and should!) reassess your restaurant’s needs and risks as it grows. That often means getting additional coverage to protect it.
Does My Restaurant Need Workers Compensation?
If you have employees, you need workers compensation insurance. Even if your state doesn’t require it, workers compensation can save you hundreds of thousands in benefits expenses. Most businesses are not prepared to handle those costs out of pocket.
Do I Need Insurance to Get a Restaurant or Liquor License?
Generally speaking, yes, you must provide proof of general liability insurance to get a business license for your restaurant. If you plan to sell or serve alcohol, the same is often true for a liquor license. However, exact requirements vary by local government, so always check with your city or county to confirm what you need.
Is Liquor Liability Insurance Included or Separate?
Liquor liability insurance is not included in most restaurant insurance policies. With FLIP, you can purchase it in addition to restaurant coverage if you sell or serve alcohol.
Does Insurance Cover Food Spoilage or Equipment Breakdown?
Coverage for food spoilage and equipment breakdown is sometimes offered through an endorsement, or a document that changes what your policy covers.
If you have tools and equipment insurance, you can receive coverage for spoiled food in transit. In other words, food you transported to an event via catering or a food truck and not in your restaurant.
What’s Covered If a Kitchen Fire Shuts Down My Restaurant?
If you have business interruption insurance, you can receive coverage for your lost income during the shutdown. It can also pay for continuing expenses you face in the meantime, such as staff pay, rent, utilities, and taxes.
How Do I File a Claim and How Long Does It Take?
Filing a claim with FLIP is easy. Just follow these steps:
- Log in to your user account
- Go to “File a Claim”
- Fill out the fields with information about your claim (when it happened, who was involved, etc.)
- Submit your claim
Afterwards, a claims adjustor will contact you and guide you through the rest of the process.
Alex Hastings
Seattle-based copywriter and (WA) licensed insurance agent Alex Hastings leverages her experience as a lover of fast-casual food, baked goods, and iced oat milk lattes. She holds a B.A. in Creative Writing from Western Washington University. Before working at Veracity, she was a retail copywriter at Zulily and an English language teacher in South Korea. Alex is fully trained on FLIP insurance coverages and writes content that connects food and beverage business owners with the policies they need.
Seattle-based copywriter and (WA) licensed insurance agent Alex Hastings leverages her experience as a lover of fast-casual food, baked goods, and iced oat milk lattes. She holds a B.A. in Creative Writing from Western Washington University. Before working at Veracity, she was a retail copywriter at Zulily and an English language teacher in South Korea. Alex is fully trained on FLIP insurance coverages and writes content that connects food and beverage business owners with the policies they need.
Kyle Jude
Kyle Jude is the Program Manager for Food Liability Insurance Program (FLIP). As a dedicated program manager with 10+ years of experience in the insurance industry, Kyle offers insight into different coverages for food and beverage business professionals who are looking to navigate business liability insurance.
Kyle Jude is the Program Manager for Food Liability Insurance Program (FLIP). As a dedicated program manager with 10+ years of experience in the insurance industry, Kyle offers insight into different coverages for food and beverage business professionals who are looking to navigate business liability insurance.