Steak houses are an American favorite. Food fads come and go, but steak houses stand the test of time by offering comforting, delicious food and a warm, inviting atmosphere.
But while steak houses don’t seem to be in danger of becoming obsolete, individual steak houses face risks and dangers that can force them to close their doors.
If you own a steak house, you have a variety of unique risk exposures that need to be addressed with a carefully planned, tailored business insurance program. A one-size-fits-all approach simply won’t offer the coverage you need to protect your restaurant.
An independent insurance agent in your city can help you find the steak house insurance that you need.
Why Do You Need Steak House Insurance?
Restaurants can experience a wide variety of incidents and unexpected events that lead to a financial loss. Many of the problems you encounter can be covered with steak house insurance, allowing you to stay in business even after a devastating loss.
The very nature of operating a restaurant relies upon the constant stream of customers, suppliers, and other visitors eating and spending time on your premises. Trip and fall incidents are common. Picture a hilarious movie scene in which a waiter and a customer collide, launching a tray of food across the room and sending both people to the floor. It’s not so funny when it happens inside your steak house, for real. Both people could be injured, dishes could be broken, the injured customer could sue you, and the waiter could be out of work while he recovers from his own injuries.
And there’s so much more that could go wrong.
In addition to broken plates and trip and fall incidents, you face daily risk from fire, theft, vandalism, severe weather, and all kinds of workplace injures. 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
Steak houses 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 who specialize in restaurant insurance.
What Does Property Insurance Cover for Your Steak House?
Your commercial property insurance offers protection for your building (if you own it), as well as everything inside of 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 damages. 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 conditions 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’ll likely 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.
Contamination and Spoilage Coverage for Steak Houses
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.
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 states requirements, your annual sales, and several other factors.
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.
What Does Liability Insurance Cover for Steak Houses?
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, for example, 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.
Steak House Liquor Liability Insurance
Most steak houses 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 his 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 standalone policy. The coverage limits and specifications will vary based on your preferences, your states requirements, your annual sales, and several other factors.
Do Franchisees Need Steak House Insurance?
Many locally operated steak houses are franchisees of a larger restaurant chain. In these cases, do you still have the same insurance needs?
The answer is yes, you’ll need to purchase your business insurance on your own, whether you’re an independent owner or a franchisee.
Why? First, every state and municipality has different regulations regarding insurance. A franchisor couldn’t possibly provide compliant business insurance for all of its franchisees. What’s more, while the franchisor plays a role in your business, it has no control over your day-to-day operations, employees, or any other factors that could lead to liability claims. The franchisor cannot purchase business insurance for you or on your behalf.
But that doesn’t mean that the franchisor has no involvement in your business insurance purchase. Most franchisors will require franchisees to purchase certain types of business insurance, or franchise insurance, in order to comply with the franchise agreement.
If you’re a franchisee, you’ll likely be required to name the franchisor as an additional named insured on your franchise insurance, to ensure that the franchisor is protected from any claims against your restaurant.
Where Else Do You Have Exposures?
There may be several additional risk exposures in your steak house. Talk to your independent insurance agent about your need for these additional policies or policy endorsements (coverage add-on to a basic policy).
- Commercial auto insurance provides liability insurance if a business-owned vehicle causes an accident.
- Crime coverage protects your business if an employee or a group of employees engage in theft, forgery, or fraud that damages your business.
- Workers’ compensation insurance is required for any business that has employees. It protects your steak house workers from the costs of work-related injuries and illnesses. If the waiter involved in the collision with the patron sustained a back injury, workers' compensation insurance would pay his related medical bills, and it would also offer income replacement if he had to take time off of work to recover.
- Employment practices liability coverage protects you if a current or former employee sues you for discriminatory employment practices.
- Sign coverage pays for damage to outdoor signs that are not attached to your building that is caused by vandalism, theft, weather, or accidents.
- Utility interruption coverage provides income protection if you are unable to operate due to a covered utility (water, electrical) interruption.
- Commercial umbrella insurance 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.
If you offer valet services for your customers, ask your independent insurance agent about additional coverage that you might need to protect customers' cars that are in your care, custody, or control.
How Much Does Steak House Insurance Cost?
The cost of steak house 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 likely 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 Agent
Our agents simplify the search process for finding the right steak house insurance. They’ll walk you through the 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 omit 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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