Whether your restaurant is making classic favorites or serving up something else, you’ll need insurance (and an independent insurance agent to lead the way).
Your independent insurance agent will be an invaluable resource when it comes to basic things like types of coverage and more specific issues, like the risks that will influence your coverage.
Some of the factors that may affect your coverage and costs include:
As you can tell, your restaurant insurance in Kentucky will look a lot different than any other restaurant’s insurance. These aren’t even all of the factors that will play into your specific policy, either.
Those 3 types of insurance are:
Keep in mind that each type of insurance has sub-types of more specialized insurance. We’ll cover what you get with the general policy (because you have to purchase this) and what you may want to consider by way of specialty coverage.
Property insurance pays for the replacement value of two types of property:
Remember, property insurance covers the replacement value of property. This means that if you have specialty property, you need an appraisal so you don’t get shortchanged on replacement value.
You probably also have property that is bolted down to your building. Keep in mind that this isn’t covered by your general property coverage. This would include things like your kitchen equipment, and maybe even some furniture (if you have a bar, for example). Because this is typically going to be separate coverage, it’s something you should talk to your independent insurance agent about.
There are other types of property coverage, too. These specialty coverage options include of the following:
Commercial general liability is just that: It’s general. It covers you for:
This means that general liability kicks in when there are slips and falls, or even if a customer trips over something in the parking lot that you should have removed.
Of course, there are specialty types of liability coverage, too. The two most common types of specialty coverage are:
Liquor liability is one of the most common add-ons for liability coverage. It keeps you protected if you sell, distill, or brew alcohol and your customer gets into an accident. Specifically, it’ll pay for the cost of (1) property damage; and (2) bodily injury. Liquor liability typically has a $1 million policy limit, but it’s not uncommon for restaurants to purchase up to a $5 million policy if they serve a lot of alcohol and want to stay covered. Your independent insurance agent will be able to help you determine how much coverage you need.
Directors and officers liability insurance is another, much more specialized type of add-on. It will cover you if a stockholder, employee, or city brings a lawsuit against your restaurant for an alleged poor corporate decision. It’s only necessary in certain circumstances and typically for larger restaurants. That being said, you may not need it at all. That’s something for you and your independent insurance agent to decide.
There are two types of employee insurance for your Kentucky restaurant: (1) workers' compensation; and (2) employment practices liability insurance.
Workers' compensation is what most people think about when they think of employee insurance. It’s legally required in Kentucky, and the cost will vary depending on (1) your payroll; and (2) the risk classifications for your employees. Generally speaking, your restaurant carries more risk when there are open flames and hot oil for deep frying. That being said, some of these factors might apply to your restaurant.
Workers' compensation covers the costs of:
Employment practices liability insurance is not as common, but is still worth considering if you’re a mid-size or large restaurant. It covers litigation costs for lawsuits brought for issues like sexual harassment, discrimination, bad behavior, and a hostile work environment. The best part is that this type of liability coverage protects officers and the restaurant entity itself.
Certain features and decisions you make about your restaurant can affect insurance coverage, too. Consider some of the following features and how they’ll play a role in the conversation you'll have with your independent insurance agent about what you need.
Your Kentucky location won’t change much about the coverage you need other than because of:
As we mentioned above, Kentucky is notorious for fried foods, including desserts. This will increase workers' compensation coverage, because a kitchen with hot oil is a higher risk. And, because Kentucky is an interior state, it’s likely that restaurants are relying on frozen food. This means that spoilage coverage is probably in the cards, too.
Before we go into how much restaurant insurance costs, it’s important to note that there are two different packages you’re paying for:
Workers' compensation is paid separately because the policies are written differently than property and liability, which are bundled together. It’s based on your payroll (per $100 of payroll) and your risk classifications (risks for workers based on what they do in your restaurant).
That being said, property and liability combined can be as little as $1,000 annually if you’re a corner hot dog stand, or as much as $100,000 annually if you’re operating a restaurant with multiple locations. Keep in mind that an underwriter cares first and foremost about risk. There is little risk if you’re operating a hot dog stand, but a lot to lose if you’re a restaurant employing hundreds of people, cooking with hot oil or over open flames, and packed with priceless personal property (like paintings).
If anything, it’s important to understand that you won’t have an accurate idea about the cost of insurance until you speak with an independent insurance agent.
An independent insurance agent will guide you through all of the general and specialized policies you need, including coverage for:
Independent insurance agents have the freedom to speak to different carriers and the flexibility to fashion a policy that works specifically for you. By working with your Trusted Choice independent insurance agent, especially knowing the details in this article, you can evaluate your options and get a policy that works for you at a price that works for your bottom line, too.