Fine dining restaurants are not like other restaurants. You’re particular about everything you do, and equally particular about the business insurance you purchase to protect your business when something goes wrong.
If you own a fine dining restaurant, you may face more risks than other small businesses and other types of restaurants. That’s why it’s important to invest in a comprehensive business insurance program that carefully addresses all of your unique risks. A one-size-fits all approach simply won’t offer the tailored coverage you need.
An independent insurance agent in your city can help you understand all of your exposures, and find the insurance companies that specialize in protecting fine dining restaurants like yours.
Why Do You Need Fine Dining Restaurant Insurance?
There are literally endless possibilities and scenarios that can lead to costly financial losses for your fine dining restaurant. You’re livelihood is fueled by a constant stream of customers who are eating and spending time inside your restaurant. Your patrons can slip and fall, a waiter can spill a tray of hot food on someone, or a foodborne illness could make hundreds of people sick.
And that’s just the tip of the iceberg.
In addition to customer injuries or illnesses, you face risks like fire, theft and vandalism, severe weather, and workplace injuries. And you’re also at risk for a variety of more insidious threats such as:
- Food contamination or spoilage
- Breakdown of ovens, refrigerators, or other kitchen equipment
- Utility interruptions that force you to close
- Responsibilities related to serving alcohol
Fine dining restaurants need a customized package of property, liability, automobile, crime, and other business insurance policies that protect them from financial losses. It’s a good idea to work with an agent and an insurance company that specialize in fine dining restaurant insurance.
What Does Property Insurance Cover for Your Fine Dining Restaurant?
Your commercial property insurance offers protection for your building (if you own it), as well as everything inside it. If you sustain a property loss after a fire, a tornado, lightning, theft, vandalism, or some other covered event, this policy helps you pay to rebuild, make repairs, and replace destroyed or damaged furniture, kitchen equipment, inventory, dinnerware and cutlery, fixtures, office equipment, menus, computer systems, and even outdoor tables, umbrellas, and lighting.
So if a fire destroys your kitchen, it could cost tens of thousands of dollars to pay for the damage. Your commercial property insurance would help finance your recovery.
Talk to your independent insurance agent about the difference between insuring your business property for actual cash value or replacement cost, and how rented kitchen equipment should be insured.
Why Do You Need Business Interruption and Equipment Breakdown Coverage?
When you have a property loss, it’s likely that you might also have to close down for a while in order to make repairs, rebuild, and restock lost inventory and supplies. In these cases, your business interruption insurance helps replace lost income during the shutdown period. That way you can continue to pay some of your ongoing expenses like rent, employee, salaries, utility bills, and more.
Even when you don’t have a major property loss, the breakdown of a single important piece of equipment could force you to close or significantly limit your operations until it’s repaired. Equipment breakdowns can lead to a serious loss of revenue, and can even cause downstream losses if you lose food inventory due to spoilage or some other type of contamination.
Obviously you need your ovens, commercial ranges, dishwashers, freezers, and refrigerators to be in good working condition at all times if you want to continue to serve quality, fresh food. But if something essential breaks down due to a power surge, a user error, or some other covered event, you’re likely to need some help replacing the lost income and paying for repairs.
Talk to your independent insurance agent about your need for equipment breakdown coverage (sometimes called boiler and machinery coverage). It protects against costs associated with the sudden and accidental breakdown of machinery and equipment. It pays to repair or replace the equipment as well as any business interruption costs that accompany it.
What Does Liability Insurance Cover for Fine Dining Restaurants?
Liability insurance protects your business when you are considered to be negligent or blamed for causing harm to an individual or another business. This can be in the form of property damage, an injury, an illness, or some kind of reputational harm.
It is your financial lifeline if you are sued for some reason.
Commercial general liability (CGL) insurance provides broad protection for third-party bodily injury and property damage claims. It can help you cover the medical bills of injured individuals, repair or replace damaged property, pay for your legal defense if you are sued, and even cover penalties and judgments if you are responsible for a third party’s damages.
If a server drops a bowl of hot soup onto a customer, causing burns to her hand and ruining her clothes, you could expect to pay for the guest’s related medical bills as well as cleaning or replacing her soiled clothing. If the guest decides to sue you for additional damages due to the trauma caused by the event as well as ongoing pain and suffering, you’d need coverage to help you pay for your legal defense and any financial payouts.
Your general liability insurance would also respond in the event of a foodborne illness that originates in your restaurant.
General liability insurance also provides coverage for product liability, advertising liability, slander, and libel claims against your restaurant. Let’s say that in the course of advertising your restaurant in the local newspaper, you cause a financial “injury” to a competitor by copying their advertising ideas, or infringing on a copyright or slogan. Your CGL policy would protect you if you were sued for damages as a result.
A Word about Liquor Liability Insurance
Most fine dining restaurants offer alcoholic beverages for sale to diners, and often have a bar as well.
Any establishment that sells, serves, or assists in the purchase or use of alcohol is exposed to liability claims that could result from a patron drinking too much and injuring someone or causing property damage. This means that your establishment could be held responsible if someone drinks at your restaurant and then goes on to cause an accident, damage property, or cause injury to themselves or others.
Liquor liability insurance covers your responsibilities associated with intoxicated guests who go on to harm others. It pays for bodily injury or property damage expenses caused by an intoxicated person who was served liquor by the policyholder. It also pays for your legal costs as well as any financial settlements for the injured parties.
So if you serve alcohol to a patron who then kills someone while driving drunk on their way home from your restaurant, you could be named in a lawsuit, and your liquor liability policy would respond.
Liquor liability claims are excluded from your general liability policy, so liquor liability insurance covers the gap. What’s more, your state or financial institution may require you to purchase liquor liability coverage. The coverage may be added as an endorsement to your CGL policy, or you can purchase a stand-alone policy. The coverage limits and specifications will vary based on your preferences, your state's requirements, your annual sales, and several other factors.
Contamination and Spoilage Coverage for Fine Dining Restaurants
Your business relies on the constant availability of fresh ingredients that are highly perishable. A power outage or refrigeration breakdown could lead to a serious financial loss.
Contamination and spoilage coverage is part of your commercial property protection. It pays for certain losses if perishable foods or ingredients are spoiled or contaminated due to refrigeration breakdown, utility interruption, or some other type of foreign substance contamination on your premises.
If your local board of health or another agency forces you to close because of food contamination, your contamination and spoilage insurance may cover you for lost income during the shutdown period, as well as costs related to cleaning contaminated equipment, and disposing of and replacing spoiled food.
Contamination and spoilage insurance does not protect you in cases where you accidentally serve tainted or “bad” food and a customer becomes ill, whether the contamination occurred on your premises or was because of food purchased from a supplier. This kind of incident is covered under your general liability policy.
Other Fine Dining Restaurant Insurance to Consider
You're likely to need several other insurance policies to protect you from financial harm and unexpected events. Talk to your independent insurance agent about your need for the following types of coverage for your fine dining restaurant.
- Commercial auto insurance: If you use business-owned vehicles for any reason, you need commercial auto insurance to protect you from lawsuits when one of your drivers causes an accident. It can also help you pay for your own car repairs after an accident.
- Crime coverage: Protects your restaurant if an employee or a group of employees engages in theft, forgery, or fraud that damages your business. It also covers theft or vandalism by customers or other visitors.
- Workers’ compensation insurance: Protects your workers—including restaurant managers, servers, chefs, line cooks, dishwashers, and hostesses—from the costs of work-related injuries and illnesses. This coverage pays for medical bills and lost wages for employees who sustain cuts, burns, slip-and-fall injuries, repetitive motion injuries, or any other injuries or illnesses related to their work.
- Employment practices liability coverage: Protects you if a current or former employee sues you for discriminatory employment practices.
If your CGL policy does not provide sufficient liability protection for your needs, consider commercial umbrella insurance. It adds an extra layer of protection with liability coverage above and beyond the limits of your CGL and certain other liability policies. It kicks in when the limits of your other applicable policies have been exhausted. If a customer or another third party sues you, this coverage can be the difference between financial devastation and complete recovery.
Flood insurance and earthquake insurance may be necessary if you live in an area that is prone to these natural disasters. Talk to your independent insurance agent about your need for this type of coverage.
Sign coverage pays for damage to outdoor signs that are not attached to your building when the damage is caused by weather, vandalism, fire, etc.
Utility interruption coverage provides income protection if you are unable to operate due to a covered utility (water, electrical) interruption.
If you offer valet services to your customers, you need to be sure that you have appropriate liability coverage in case a customer’s car is damaged or one of your valet drivers causes some kind of injury or property damage.
Your general liability insurance should cover certain incidents where a valet driver causes harm, including hitting a pedestrian or damaging property (e.g., other vehicles or buildings).
You might also need to purchase garagekeepers liability coverage. This would cover your customers’ cars when they are parked in the garage and in your care, custody, or control. If a customer’s car were damaged or stolen while under your care, this policy would respond.
How Much Does Fine Dining Restaurant Insurance Cost?
The cost of fine dining restaurant insurance depends on the policies you choose, the unique risks your restaurant faces, the value of your inventory and equipment, and other factors like your location, number of employees, and the size of your establishment. Serving alcohol, offering valet services, and any other unique exposures that you have and must address will probably add to your insurance costs.
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Insurance Agent
Independent insurance agents simplify the search process for finding the right fine dining restaurant insurance. They’ll walk you through some handpicked policy options and explain the details.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get—but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can leave out important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
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