Everything You Need to Know About Restaurant Insurance in New Mexico
Find the right restaurant insurance policy for you.
Christine Lacagnina |February 23, 2019
You're opening up your own restaurant in New Mexico, and you're eager to get things rollin'. You've already scouted out your location and perfected your menu, but before you can actually hang that "OPEN" sign on your doors, you'll need to set up your business with the right coverage. Risks like potential lawsuits and other mishaps can seriously dilute the delicious aspects of restaurant ownership.
Fortunately, we're here to help give you the lowdown on restaurant insurance in New Mexico. We'll cover the basics, like what restaurant insurance, what's included in a typical package, and then point out some unique requirements for New Mexico. And when you're ready, our independent insurance agents will help you zero in on the right coverage for you. So, prepare yourself for some insider knowledge that's as just as spicy as your menu, and let's dig in.
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 Mexico?
Before we tackle New Mexico's state-specific requirements, we'll check out an overview of what kind of coverage ALL restaurant owners need. 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 Mexico, 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.
Optional Add-Ons to Restaurant Insurance in New Mexico
The basic restaurant insurance package is a great start, but in reality, it probably won't be able to meet ALL of your unique needs. Your agent will hook you up with all the additional coverage necessary, but for now, let's take a look at some 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 Mexico'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 Mexico, 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 the Land of Enchantment's unique laws. They'll also explain the costs associated with each level of coverage.
You Might Need Additional Wildfire Coverage for Your Restaurant
New Mexico has to deal with visits from wildfires. The state's unfortunately prone to these disasters and tends to see several of them each year. Take some time to make sure your restaurant insurance includes coverage for wildfire damage. Many policies will include coverage, but go ahead and ask your agent to double-check your policy to make SURE that it lists wildfire protection, specifically. Having coverage in place from the start can save you from having to pay out of pocket for damage, later.
How Much Does Restaurant Insurance Cost in New Mexico?
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 Mexico 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 other words, they'll make it happen.