All the Details You Need on Restaurant Insurance in Alabama
(Because your food truck or fine dining establishment is worth protecting)
Christine Lacagnina |January 24, 2019
You're inspired to open your own restaurant right in the Heart of Dixie, so you can help spread your delicious recipes to willing customers. It's easy to dream about cooking and serving up items from your perfect menu, but with every new restaurant opened comes a host of potential risks . . . including lawsuits. You'll want to make sure you're protected backwards and forwards with the exact type of coverage you need.
In short, restaurant insurance is a policy designed to cover all the components involved in your restaurant, from your property and supplies to your employees and customers. Obviously, serving food to the public ties directly into concerns about protecting their health, but restaurant operation comes with many different risks that are important to consider before setting up shop.
What Type of Restaurant Insurance Coverage Do I Need in Alabama?
We'll get into specifics for your state in just a minute, but first, let's check out the type of coverages generally needed for restaurant owners, no matter their location. A restaurant insurance policy typically includes the following:
General liability: This protects you against lawsuits related to injury or property damage done by the business, and it's mandatory. Food poisoning claims would fall under this category.
Workers' compensation: If your employees become ill, get injured or die from a work-related incident, this aspect of the insurance will cover the financial ramifications. Coverage is mandatory in Alabama, as well as most other states.
Property insurance: This covers any damage to the physical building that houses your restaurant, in case of fire, etc. The type of cooking equipment your establishment uses will contribute to the risk of fire damage, and may influence the cost of your policy. Businesses with deep fryers that use grease, for example, are considered a higher risk. Note: Restaurants with a drive-thru will have extra property that needs coverage, and paved surfaces (like driveways) are not typically covered by general property insurance.
Business income: A part of property insurance, this aspect covers the financial loss suffered while a business is closed due to fire damage or other disasters.
Ordinance and law: Another part of property insurance, it covers the financial ramifications if your building is found to not be up to current state code. This coverage also applies in the event that you need to rebuild your restaurant, or if you're building one from the ground up, yourself. Handicap compliant features, fire safety equipment, and emergency exits are all factors, here.
Boiler & machinery: Also known as "equipment insurance," it covers electric equipment in the building (e.g., AC units and boilers) that break down due to power surges, etc. Property insurance MAY cover this stuff, but not always.
Spoilage: This takes care of the replacement costs for food that spoils due to power outages caused by storms, surges, etc.
Communicable disease: Covers any illnesses transmitted to customers due to improper hygiene of your employees.
Optional Add-Ons to Restaurant Insurance in Alabama
The basics included in a restaurant insurance policy may not cover all of your business's unique needs. Your independent insurance agent will know what add-ons to set you up with, but here's a look at a few that you might need (or just really want to have):
Commercial/business auto insurance: If you run a carry-out restaurant that makes deliveries, you'll want to look into getting coverage for your company vehicles for things like theft and vandalism. Your restaurant will also be held responsible for damage done by your driver while in a company vehicle. Food trucks will also need this coverage.
Coverage for signage: This protects your signage from things like weather and vandalism, since it's not typically covered under regular property insurance. It's especially important for restaurants with a drive-thru, with all the extra signage that could be damaged due to distracted or impaired drivers, or vandalism.
Art floater insurance: This option exists mainly for the bigger/fancier restaurants with artwork on display. Scheduling an appraisal for the specific pieces you want to cover is the first required step. In case of fire or even theft, this coverage can help prevent having to pay for the replacements out of pocket.
Liquor liability insurance: While not mandatory, it's a great idea to get it. General liability will NOT protect you if your employees overserve a customer who ends up with a DUI or other alcohol-related charge. Coverage is most commonly needed by smaller restaurants, as chains tend to have stricter serving rules and training policies in place to prevent mishaps.
How Do Alabama's Dram Shop Laws Influence My Coverage Needs?
Dram shop laws hold a business liable for serving alcohol to minors, as well as for harm caused by an individual who has been overserved by that business — even after they leave your establishment. A state's specific laws and set of associated penalties/fines for violating them can influence your liquor liability coverage needs, and the cost of your coverage.
In Alabama, as well as most other states, a guest who sustains injuries to themselves due to overintoxication may not sue the establishment, since it's considered the guest's personal responsibility to monitor how much they consume. So, liability coverage for first-party cases is mainly only required in the case that a minor is served, since minors are not legally allowed to drink in any state.
However, third-party liability coverage is crucial. In the case that another individual is harmed by an intoxicated guest, such as in a bar fight or auto accident, they may sue your establishment. For these cases, the third party will need proof that the intoxicated guest continued to be intentionally served past the point of visible intoxication by your restaurant.
Lawsuits can seriously cost you or your business, in the form of significant financial penalties, loss of employment or liquor license, or even jail sentences. Your agent will set you up with the proper liquor liability coverage based on Alabama's unique laws. They'll also explain the costs associated with each level of coverage.
You Might Need to Add Hurricane Insurance in Alabama
Alabama plays hosts to several hurricanes each year. The state's prime location smack dab on the East Coast means that it's prone to lots of these fierce storms. Since hurricane damage isn't typically covered by property insurance, you'll want to talk to your agent about possibly adding hurricane insurance.
Your agent will know if adding on coverage is the right way to go. Considering that Alabama is one of 19 states that require a mandatory hurricane deductible as part of a homeowners insurance policy, it just makes sense to get your business covered, too. These storms are kind of a big deal.
How Much Does Restaurant Insurance Cost in Alabama?
It depends on what kind of restaurant you run and a few other factors, such as if you've got employees, offer a delivery service, operate a drive-thru, or serve liquor.
A typical range for coverage starts on the low end at about $10,000/year for a smaller establishment with fewer employees, and hits a high end of more than $100,000/year for a much larger restaurant, like a chain.
A restaurant insurance policy is typically the cheapest and easiest way to go. This package offers most of the liability and property coverage you'll need, and you can always add on specifics as necessary. Your independent agent will know exactly what to hook you up with.
What's the Safest/Cheapest Kind of Restaurant I Can Start?
Obviously, smaller is going to be cheaper. A food truck or corner stand downtown will be by far the cheapest option, since there won't be as many sales as in a larger chain, there aren't any other employees (that would require workers' comp), and you won't be serving alcohol. Coverage costs would most likely be in the low thousands each year.
What's the Most Expensive/Riskiest Kind of Restaurant I Can Start?
On the other end of the spectrum, a large dine-in chain restaurant with lots of employees, features like a salad bar or buffet, and a liquor bar is by far the priciest/riskiest venture. All the required workers' comp, property and liability insurance drive up costs exponentially.
It ultimately depends on lots of specifics, like the number of employees and the value of the property, of course, but we're talking BIG numbers, like more than $100,000 per year.
What's So Great About an Independent Insurance Agent?
Insurance policies are often filled with lots of technical jargon. Additionally, it's a real process to hunt for the RIGHT policy. Fortunately, sifting through the available options and pinpointing the necessary coverage is a task that can easily be handed off to someone else. That's where independent insurance agents come in to save the day.
Independent insurance agents will not only help you get the best possible deal, but also the type of coverage that's right for you. They shop and compare insurance quotes for you, and even break down all that complex jargon into plain old English, so you understand exactly what you're getting.
Our wise and helpful agents will help you determine which type of Alabama restaurant insurance makes the most sense for YOU. They'll also compare policies and quotes from several different insurance companies to make sure they're setting you up with protection that's among the best around. In other words, they'll make it happen.