Shifting the vision of running your own restaurant into a reality can bring a lot of rewards, but it can also bring plenty of potential risks. In addition to serving food to the willing public, your business has to look after its employees, and stand up against the elements of Mother Nature. Luckily, that's where restaurant insurance comes in to save the day. Fortunately we're here to give you the lowdown on New Jersey restaurant insurance, including the local requirements and more. And when you're ready to make it all happen, our independent insurance agents are here to bring it all home. So, grab yourself a snack and let's get rolling.
What Is Restaurant Insurance?
In short, restaurant insurance is a policy designed to cover all 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 over 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 Do I Need in New Jersey?
Before we nail down the specific requirements for the Garden State, we'll check out an overview of what ALL restaurant owners need, as far as coverage goes. A common restaurant insurance policy usually includes the following:
- General liability: This coverage protects 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 employee(s) should become ill, injured or die from a work-related incident, this aspect of the insurance will cover the financial ramifications. Coverage is mandatory in New Jersey, as well as in 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 paving services (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 electronic equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc. Property insurance MAY cover this stuff, but not always.
- Spoilage: This coverage takes care of the replacement costs of food that spoils due to power outages caused by storms, surges, etc.
- Communicable disease: Covers any illness transmitted to customers due to improper hygiene of your employees.
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Optional Add-Ons to Restaurant Insurance in New Jersey
While the basic restaurant insurance package is a good starting point and will probably meet a LOT of your needs, it most likely won't cover ALL of them. Your agent will help you to identify the right additional coverage for you, but we'll go ahead and take a look at a few of the most common add-ons:
- Commercial/business auto insurance: If you run a carryout restaurant that makes deliveries, you'll want to look into getting coverage for your company vehicle(s) from things like theft and vandalism. Your restaurant will be also held responsible for damage done by your driver while in the company vehicle. Food trucks would also need this coverage.
- Coverage for signage: This coverage 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, this coverage can fill in some important gaps. 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 more necessary for smaller restaurants, as chains tend to have stricter serving rules and training policies in place to prevent mishaps.
How Do New Jersey'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 New Jersey, 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 New Jersey's unique laws. They'll also explain the costs associated with each level of coverage.
Your New Jersey Restaurant May Need Hurricane Coverage
New Jersey's coastline attracts tons of visitors annually. . . including hurricanes.
Your property insurance under your restaurant policy typically WON'T cover damage from hurricanes, so you may need to get additional coverage, or make sure that yours lists these storms, specifically. Talk with your agent about double-checking your policy, in order to just be prepared from the start.
. . . and Possibly Some Flood Coverage, Too
Hurricanes actually come second to blizzards, as far as New Jersey's most frequent natural disasters go. When all of that snow melts, the water just might seek out your restaurant as its preferred escape. Which means, of course, that you'll ALSO need to check into flood insurance coverage. If your restaurant is located in an area deemed to be "high-risk" (or even if it isn't, in certain cases), you may be required to have flood insurance.
Flood insurance will cover your property (the structure of your restaurant and the merchandise inside) if natural water (i.e. rain, waves, snowmelt, etc.) decides to wreak havoc. Once again, if you're unsure if you have it/need it, talk with your agent. They'll help make SURE you're covered, so you're not left paying out of pocket for any potential damage.
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How Much Does Restaurant Insurance Cost in New Jersey?
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. However, a typical range for coverage starts on the low end of about $10,000/year for a smaller establishment with fewer employees and hits the 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 insurance 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 restaurant chain with tons of employees, features like salad bars and buffets, and a liquor bar are by far the priciest/riskiest venture. All the required workers' comp, property and liability insurance drives 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.
Finding/Comparing New Jersey Restaurant Insurance Quotes
Our wise and helpful agents will help you determine which types of coverage make 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 short, they've got your back.
TrustedChoice.com Article | Reviewed by Paul Martin
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