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What is restaurant insurance?

Restaurant insurance is coverage meant specifically for restaurants, which face their own unique set of risk – and there’s a lot to account for. You have to worry about your building, equipment, employees, food, customers, and if you serve it, alcohol.

Each one of these potential perils should being covered by insurance.  Your building and equipment can get damaged, leading to revenue losses. Customers may accidentally injure themselves on your premises, leading to medical and legal expenses. Employees can burn themselves when working with stoves or ovens. Food can spoil during a power outage. The list goes on.

The bottom line is that you need to be prepared for any and all potential risks. Otherwise, you may take a significant financial hit. And while insurance itself is an expense, it’s a predictable and manageable one. Not a surprising, one-time cost that may be large enough to threaten the very existence of your business.

Who needs restaurant insurance?

If you run a restaurant, you need insurance. Some coverages, such as general liability, are a must. You want to be protected from a potential slip-and-fall accident and other third-party injuries on your premises. If you serve alcohol, then liquor liability coverage is also a must.

If you’ve been in the industry long enough, you probably already know how many things can go wrong and how costly such incidents can be. But if you’re new to the business and you doubt the usefulness of insurance, consider where you are financially and how much you’ve already invested into your restaurant. Can you afford a potential lawsuit? Because if not, it could come at the expense of the business you’ve worked so hard to build in the first place.

Insurance isn’t something anyone really wants to pay for, but it is necessary. Essential, even. And it’s just as important to have the right coverage as it is to have coverage in the first place.

What does restaurant insurance cover my business for?

Your basic restaurant insurance should at least cover you in the following areas:

• Commercial general liability: Covers legal fees and settlements if a customer gets injured on your property.
• Commercial property: Protection against damage to your physical premises caused by fire, floods or other disasters.

These coverages represent the minimum protection a restaurant should have. But many food services businesses in Canada will opt for additional protection, since general liability and commercial property policies alone do not eliminate all exposure to risk.

What insurance coverage add-ons are recommended for restaurants?

Depending on your restaurant's specific needs, you might consider additional insurance add-ons, such as:

• Business interruption: Compensates for lost income if your restaurant has to close temporarily due to a covered event.
• Liquor liability: Essential if your establishment serves alcohol, protecting you against claims related to incidents caused by intoxicated patrons.
• Equipment breakdown: Covers the cost of repairing or replacing essential kitchen equipment if it fails unexpectedly.
• Product liability: This covers you in case a third party (e.g. customer) gets injured or has their property damaged because of your products. For example, a customer may allege that your meal has given them food poisoning. This coverage will pay the necessary medical fees.
• Commercial auto: If you deliver food to customers with a business vehicle, that vehicle needs to be insured. Even if it’s covered for personal use, it’ll need a layer of commercial auto insurance, since personal auto insurance doesn’t protect vehicles during professional use.

Not all of these add-ons are relevant for all Canadian restaurant owners. When selecting an insurance policy, consider your own needs so you can purchase the right level of protection.

It’s important to be covered in all areas that pose a legitimate risk, but equally important not to over-insure your restaurant, and pay for something each month that you don’t really need.

How much does restaurant insurance cost in Canada?

Each restaurant will have its own premium, based on its unique characteristics. Factors like restaurant size, location and revenue can all play a role in determining your insurance costs. For example, if your restaurant is in an area where break-ins are common, then your premium may be higher.

Most restaurants pay about $1,000 to $5,000 a year. Given your unique circumstances, however, your premium may fall outside of this range. So, if you want to know exactly how much you’ll pay, get an online quote. It’s fast, free and convenient. Plus, there is no obligation to accept the quote – you can always say ‘no.’

What factors determine the cost of restaurant insurance?

Several factors can influence your restaurant insurance rates. Here are some of the most common ones:

• Location: Restaurants in high-crime areas or regions prone to natural disasters may face higher premiums.
• Contents value and revenue: Larger establishments and those with higher revenues often pay more for insurance, because there is more at stake.
• Claims history: A history of frequent claims can result in higher premiums.
• Type of cuisine: Certain cuisines that involve high-risk cooking methods (e.g. deep frying) may also impact your rates.
• Number of employees: More employees can mean higher liability and workers' compensation costs.
• Alcohol: Restaurants serving alcohol usually pay more for insurance than those that don’t.

To find out how much restaurant insurance will cost you, get an online quote.

How does restaurant insurance work?

Restaurant insurance works by providing financial protection against various risks associated with running a food service business. When you purchase a policy, you pay a premium to the insurance provider. In return, the provider agrees to cover certain losses or damages that may occur during the policy period.

If an insured event happens, such as a fire or a customer injury, you file a claim with your insurance company. The insurer then assesses the claim, and if it's covered under your policy, they will compensate you for the losses, minus any deductibles.

This process helps ensure that you can recover from unexpected setbacks without bearing the full financial burden.

How to get the cheapest restaurant insurance quote

Finding affordable restaurant insurance doesn't mean you have to compromise on coverage. Here are some tips to get the best rates:

• Compare quotes: Use online comparison tools to get quotes from multiple insurers.
• Bundle policies: Some insurers offer discounts if you bundle multiple policies, such as commercial property and liability insurance.
• Increase deductibles: Higher deductibles can lower your premium. Just ensure you can afford the out-of-pocket costs if you need to file a claim.
• Improve safety measures: Implementing safety protocols can reduce the risk of accidents and may qualify you for lower rates.
• Review coverage annually: Regularly reassess your coverage to ensure you're not paying for unnecessary add-ons, and that you have the lowest market rate.