Restaurant Insurance Cost

Restaurants typically need the following types of coverage:

• Business income interruption: Can cover lost income and operating expenses if you close your restaurant due to a covered incident (e.g., fire)
• Commercial property: If you own your building, this covers damage to it and its contents (e.g., furniture, equipment, etc.)
• Cyber liability: Designed to cover expenses stemming from data breaches or other cyberattacks
• Damage to premises rented: If you rent your building, this covers damage to it within the first seven days of renting, then only fire damage afterwards
• Employment practices liability (EPLI): Covers costs stemming from employee claims of harassment, discrimination, or wrongful termination
• Equipment breakdown: Can cover the cost of repairing or replacing your kitchen equipment if it fails
• General liability: Covers expenses stemming from injuries to others or damage to their property caused by your restaurant operations
• Liquor liability: If you serve or sell alcoholic beverages, this covers legal expenses if an intoxicated guest causes injury or property damage to others
• Product liability: Designed to cover your expenses if a customer gets sick or injured from something you served them
• Workers compensation: Covers your state’s mandatory workers compensation benefits if your employee suffers a work-related injury or illness (e.g., lost wages, medical bills, rehabilitation, etc.)

Serving alcohol comes with a lot of risk for your business. If an intoxicated guest causes a car accident after drinking at your restaurant, your state’s dram shop laws could hold you legally responsible for the injuries or property damage they cause.

Liquor liability claims can be extremely expensive, sometimes costing hundreds of thousands — or even millions — of dollars. Insurance premiums are higher for liquor liability coverage to offset the increased risk.

Yes, FLIP’s coverage satisfies most landlord requirements. If your landlord requires you to carry coverage with specific limits, please let your customer service representative know after you submit your application so they can assist you.

Technically, yes, but it’s often illegal or impossible to get the licenses you need to run your restaurant without a Certificate of Insurance (COI). If you’re caught operating your restaurant without the proper coverage, you could face fines, have your licenses revoked, or be forced to close.

Being uninsured also means that if an accident happens, you may have to pay out-of-pocket for any resulting expenses. With insurance, some — or all — of those costs can be covered by your policy.

The limits you need can vary depending on the size of your restaurant and your revenue, but here are some typical limits you may be expected to meet:

• General liability: $1,000,000 per occurrence / $2,000,000 aggregate
• Liquor liability: $1,000,000 per occurrence / $2,000,000 aggregate
• Commercial property: Replacement cost
• Business interruption: Equal to 6–12 months’ revenue
• Equipment breakdown: $50,000 per occurrence / $100,000 aggregate

Restaurants face multiple types of high-severity risks, and insurance companies price policies based on the likelihood and cost of claims. Since restaurant claims can be expensive, coverage tends to cost thousands of dollars a year.

However expensive your premium may be, the cost of a typical claim is often much higher. Think of insurance as an investment in your restaurant’s financial safety. By paying a premium every year, you gain coverage for claims that might otherwise bankrupt your business or put you under serious financial stress.

If you own a commissary or rent space to other food business owners, you need commercial kitchen insurance. We offer this coverage through our sister company, Insurance Canopy. Fill out an online application today and protect your kitchen from the expense of property and liability claims!