So you're starting your own restaurant in New York, and you're eager to get cookin'. But whether you're a large-scale pizza chain, a fancy steakhouse, or a pretzel vendor on the streets of NYC, you'll need to get the proper coverage, first. Sadly, when it comes to running a restaurant, no one is immune to risks like potential lawsuits.
But there's good news. Our independent insurance agents are here to help you figure out what kind of restaurant insurance coverage you need in New York and to help get you the best possible deal. But first, let's start with an overview of restaurant insurance.
What Is Restaurant Insurance?
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 New York?
Before we check out some specific laws in The Empire State, we'll start by reviewing the basic coverage requirements for restaurant owners. Typically, a standard restaurant insurance policy 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 New York, 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 an 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 codes. 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. Handicapped-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 New York Restaurant Insurance
While the basic restaurant insurance package is a great start, truth be told, it might not meet all of your unique needs. Your independent insurance agent will hook you up with the additional coverage that's right for you, but until then, we'll look over some of the most common add-ons:
- 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 from things like theft and vandalism. Your restaurant will also be also held responsible for damage done by your driver while in a company vehicle. Food trucks will 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 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. This coverage is more necessary for smaller restaurants, since chains tend to have stricter serving rules and training policies in place to prevent mishaps.
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How Do New York'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 York, as well as most other states, a guest who injures themselves due to over intoxication 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 when a minor is served since minors are not legally allowed to drink in any state.
However, third-party liability coverage is crucial. If 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 York's unique laws. They'll also explain the costs associated with each level of coverage.
Hurricanes May Affect Your Coverage Needs in New York
New York's known to take some punches from hurricanes. In fact, these storms visit New York often enough to cause it to be one of 19 states that require a mandatory hurricane deductible as part of a homeowners insurance policy, and getting coverage for your restaurant can be equally important. The 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, to avoid being unprepared when it comes to hurricanes.
Blizzards/Flooding May Increase Your Coverage Needs, too
Blizzards actually beat out hurricanes for frequency of visits from New York's most common natural disaster foes. And when that heavy, cold blanket of snow melts, the water just might map out its escape route right into your restaurant. This 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.) wreaks havoc. If you're unsure whether you have it/need it, talk with your agent. They'll help make sure you're covered.
How Much Does Restaurant Insurance Cost in New York?
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 at 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 and features like salad bars, buffets, and liquor bars 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.
TrustedChoice.com Article | Reviewed by Paul Martin
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