A cropped photo of a restaurant owner hanging the “open” sign

What Kind of Insurance Do I Need to Open a Restaurant?

Oct 12 2021

For many, opening a restaurant is a dream come true. It usually involves months or years of careful planning but it’s worth it when you get to actualize your dream and gain loyal customers who want to support your business.

However, as with any business, there are risks involved. In fact, this kind of business venture is one of the riskiest, with around 60% of independent restaurants failing within the first three years of operation. 

This is why it’s important to be prepared for issues that may arise; like with proper risk management in place through restaurant insurance. So, you may be asking “what kind of insurance do I need as a restaurant owner?” This guide will walk you through the ins and outs of insurance needed for restaurants and the types of coverage that KASE Insurance offers.

Let’s get started!

A restaurant owner smiling behind the counter

What Kind of Insurance Do I Need as a Restaurant Owner? 

In Canada, all restaurants need business insurance which is commonly referred to as restaurant insurance. Since different restaurants face different unique risks, the term “restaurant insurance” cannot mean just one thing. 

Some restaurant owners may prefer to stick to the basics, such as general liability insurance and commercial property insurance. These can be bundled together in what’s typically referred to as a business owner’s policy. A business owner’s policy for restaurant owners can cover risks such as:

  • Commercial property damage, theft, and vandalism
  • Business interruption due to commercial property damage
  • Customer injuries within premises
  • Food-borne illness or allergies

However, other restaurant owners may want a more complete insurance bundle that gives added protection for risks such as the following: 

  • Being accused of over-serving alcohol to a customer leading to an accident 
  • Accidents involving commercial vehicles during delivery
  • Fraudulent acts/theft committed by employees
  • Cyberattacks 

In the following section, we go deeper into the types of insurance that can be bundled together for restaurant owners and what kind of risks they address. 

Types of Restaurant Insurance Coverage 

At KASE Insurance, we personalize restaurant insurance so that it gives exemplary coverage while aligning with the needs of the business.

Therefore, a restaurant insurance bundle can include some or all of the following: 

1. Commercial General Liability Insurance 

We often say in our articles that commercial general liability (CGL) is a staple insurance plan for any business. However, it can be said that this goes double for businesses like restaurants, cafes, bars, and the like. This is because such businesses have a closer relationship with customers, serving them consumable products in the restaurant’s venue, providing takeout food, or making deliveries to customer’s homes. 

This type of insurance protects your restaurant from financial loss when your business becomes liable for third-party injury or third-party property damage. 

To expound on this further, here are a few example scenarios covered by CGL

  • A third-party individual (e.g. customer, supplier, etc.) is injured within your business premises.
  • Customers suffer a food-borne illness, allergy, or similar adverse reactions after consuming your food or drinks (i.e. product liability).
  • Your delivery personnel goes to a customer’s home and inadvertently damages property while delivering food or drinks.

In addition to the above, CGL also provides protection for reputational or advertising injuries, whether towards individuals or towards other businesses. A few examples include claims of slander, libel, copyright infringement, invasion of privacy, and so on.

CGL insurance covers medical fees, repair/replacement costs, and legal fees associated with the covered scenarios mentioned above. This makes it an invaluable part of any business insurance.  

2. Commercial Property Insurance 

Most restaurants have a physical location which exposes restaurants to various risks concerning third-party injury. 

Another risk is that any damage, theft, or vandalism inflicted on the restaurant’s venue can cause significant financial loss. Commercial property insurance can give the protection you need in this aspect. 

Here are example scenarios covered by Commercial property insurance

  • Your commercial property needs repairs because it was damaged by a covered peril (e.g. vandalism, fire, etc.).
  • Your equipment was damaged or lost due to a covered peril.
  • You experience business interruption due to property damage or loss.

In the above scenarios, commercial property insurance will cover repair/replacement costs as well as lost income due to business interruption. 

3. Liquor Liability Insurance 

The dram shop laws, also known as liquor liability laws, hold businesses accountable when they serve alcohol to evidently intoxicated customers or to minors who later on, under an intoxicated state, cause injury, death, or property damage. 

A restaurant can be sued in cases like this: 

  • An intoxicated minor leaves and injures themselves. 
  • An intoxicated guest leaves and causes a car accident.
  • Another guest was harmed by an intoxicated guest who was over served alcohol. 

For the above scenarios, liquor liability insurance can protect your business by covering associated repair/medical/legal costs. 

As an added note, there are nuances that can make a lawsuit more viable for the scenarios listed above. We discussed these nuances further in our article, “Does Your Restaurant Need Liquor Liability Insurance.”

Close-up of a glass of beer being filled

4. Commercial Auto Insurance 

If you have your own commercial vehicles for making deliveries or transporting goods, having commercial auto insurance is a must. In case your vehicles get into an accident or cause property damage, commercial auto insurance will cover the associated repair/medical costs, including repairing/replacing your damaged vehicle. This insurance also protects you in case your vehicle is lost, stolen, or vandalized. 

5.  Cyber Insurance 

As a restaurant owner, you may have a network of computers that help manage your sales, inventory, and so on. Aside from this, you may have valuable customer information stored such as credit card information. 

Cyber attacks can extract information from your device or impair your devices until you pay a ransom. Cyber insurance helps you recover quickly from such attacks by covering business interruption losses, the cost of investigative work, and legal fees.  

6. Crime Insurance

For business owners who are worried about employee dishonesty or employee infidelity, crime insurance covers financial losses associated with theft, forgery, and other fraudulent acts. 

Protect Your Restaurant Today with Personalized Restaurant Insurance 

In this article, we answered the burning question on every new restaurant owner’s mind: “What kind of insurance do I need?”. Ultimately, it boils down to the risks that your business is faced with and your own preferences as the business owner. This is why it’s crucial to get restaurant insurance that’s personalized for you. 

Personalized restaurant insurance is one of our specialties at KASE Insurance. We’ll make sure that you get exemplary coverage that aligns with your needs. You can count on our award-winning service, every step of the way. 

Get peace of mind as you focus on growing your business. If you have questions for us, please feel free to reach out or get started with a quick quote.

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