Restaurant insurance and what it can do for your business
If you own a restaurant, it is important that your business has been correctly insured. Although not all types of insurance are compulsory, if you’re doing business in the restaurant industry sector you should seriously consider obtaining cover that includes the following insurance types: public and employers’ liability; buildings; content; stock; business interruption; and legal expenses.
These are often sold as a standard package. However, the level of cover required can vary from one restaurant to another and for some restaurants, higher levels of cover are recommended. This guide aims to highlight the different types of cover applicable to your business, and outline some of the key reasons for taking them out.
This is an absolute must and covers against a range of workplace accidents. For example, a restaurant worker has recently taken legal action against his employer after having to have his finger amputated. The accident occurred when the worker accidently put his finger in a machine used to beat ice cream mix.
Employees who suffer serious injuries in the workplace are covered under the Workers Compensation Act 1996. This piece of government legislation means that organisations can be fined up to £20,000 if the appropriate precautions are not taken to prevent such accidents.
Food poisoning and other such risks can have extremely serious consequences for your customers and you need to make sure you’re covered for potential litigation. A man who was severely disabled after sustaining neurological damage from a restaurant food poisoning incident is currently claiming for £300,000 in compensation. It is therefore not surprising that people rank public liability as an essential part of restaurant insurance.
Business Interruption, Buildings and Money Cover
This is typically bundled with the standard restaurant insurance package. It means that if your restaurant suffers a fire or other insured risk and you need to close down for some time, you will get your money back for lost net profits and the necessary continuing expenses through your business insurance policy. This is particularly important as people are increasingly concerned with living on a tighter budget in today’s harsh economic climate.
This is important insurance if you don’t own the premises you occupy for your trade. This is typically bundled with a standard business insurance package or provided as an optional extra.
Buildings insurance is extremely important if you occupy additional buildings in connection with your restaurant business including outbuildings, walls, gates, fences and drives around them. What would happen if a driver crashed into one of the walls to your premises? This could affect the entire structure of the building and consequently affect business operations.
This is absolutely essential if you keep money in your restaurant, particularly at the end of the day when your takings will be at their highest. This ensures that you are covered if any type of money you hold is stolen. It is worthwhile mentioning that cheques and items such as stamps, gift vouchers, tokens and postal orders are also treated as money in this case.
This is crucial cover for your machinery, stock, computer records, documents, fixtures and fittings, and many similar items. If you’re like most restaurant owners, you will require insurance for almost all of these things. If something was to go wrong with any one of these items, the potential cost to your business could run into thousands of pounds.
The extent of cover provided for contents varies. Cover can be provided on an all risks basis, or on a fire or perils basis only. This cover could also prove handy if you were to be the subject of theft, as it helps you to cover the cost of new keys & locks.
Remember, the levels of cover required from one restaurant to another can vary significantly, and for some restaurants higher levels of cover are recommended.
Insurance Add-Ons: Buildings
There are a number of options available to you which can be included as standard or are available as an add-on, including:
Loss of Rent. Cover is provided for the loss of rent payable to the insured if he lets out part of the premises and does not receive the rent from his tenant following insured damage. It would also cover any loss of rent the insured has to pay to his landlord if he cannot occupy the property due to insured damage.
Accidental Damage to Fixed Glass. This could be valuable cover to your business, especially if it is situated on a busy high street. Some insurance companies bundle this cover within standard perils, while others may include this as a separate extension.
Property Owners Liability Insurance. This extension provides you with indemnity for your legal liability for third party injury or property damage arising from the ownership of your property. The third party could be anyone, such as a tenant, customer or a passer-by.
Trace and Access Cover. Absolutely essential in the restaurant business sector. Think of what would happen if one of your water pipes incurred damage but you didn’t know where the leak originated from. How would such a peril affect your business’ cash flow?
Insurance Add-Ons: Contents
Theft of Keys. This could prove a useful extension to your policy. Any business is heavily reliant on its keys and could suffer large replacement lock costs if they were to go missing.
Exhibitions Cover. For a little extra, your restaurant can be covered for damage to property whilst at an exhibition.
Loss of Metered Water. It is estimated that one in five cases of loss of metered water are caused by undetected leaks, and that one in three are caused by the meter being connected to an upstairs flat. This could be a pain if the upstairs flat isn’t yours. This cover transfers this risk to give you peace of mind.
Other Insurance Extras
Personal Accident & Assault. The HSE estimated that in 2006/07, over a fifth (22%) of all people assaulted or threatened at work were repeat victims. They experienced three or more incidents of workplace violence during the year, while a further 14% experienced two incidents during the year. Even if you are running a small restaurant, it could be worth shelling out a few extra pounds for this important cover.
Fidelity Guarantee. This option covers you for losses relating to money, stock or content that arise out of a fraudulent or dishonest act from employees. This cover includes the costs of auditor’s fees incurred to prove the loss. In 2008 alone, 105 investigations of fraud were initiated, leading to as many as 42 convictions. Fraud activity could put your business under even if it’s a one off, so this could be vital insurance.
If you are interested in any of the above insurance types, you can get a quick restaurant insurance quote online here. Alternatively, if you would like to discuss your business’ insurance requirements in more detail, please don’t hesitate to call us on 08081 68 68 68.
Restaurant insurance business guide sources: