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Restaurant Business Insurance: What Operators Need to Know

Get an overview of restaurant business insurance and policies to consider, including general liability, commercial property, worker's compensation, liquor liability, and more.

7 min read
2/8/2024
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DoorDash is pleased to introduce a guest blog from our Merchant Benefits partner NEXT Insurance, which offers fast, tailored and affordable business insurance for thousands of US food service businesses. Get a quote for your business 24/7 online in less than 10 minutes.

You probably needed some kind of commercial restaurant insurance coverage to buy or rent your restaurant space. 

However, some restaurant owners don't realize that restaurant business insurance can actually save your business money in the long run. Why?

When you have the right commercial restaurant insurance package, you can get financial help when something unexpected threatens your bottom line. It could ruin everything you've built if you have to pay entirely out-of-pocket for things like a fridge or oven failure, an injured employee or guest, or a potential lawsuit against your business. 

What types of restaurant business insurance do I need?

If you're new to the insurance game (and we know you didn’t get into the restaurant industry to talk about insurance), it can be daunting to figure out what restaurant business insurance you need and how much of it. 

Here are some common types of coverage that many different food service businesses consider:

General liability insurance

This restaurant liability insurance is what you'd call on for help if a customer files a lawsuit, or asks for medical payments to cover an injury or claims of food poisoning. It can help after a slip-and-fall injury to non-employees or damage to property you don't own. 

It’s called "general" liability because of the broad protection it can offer. However, it's important to note that this type of coverage doesn't provide protection for property you own or workplace injuries to you or your employees.

Commercial property insurance

Food business owners who want protection for property they own — including equipment, inventory and structures — often purchase commercial property insurance.

If the electronic circuit control board in your walk-in fridge malfunctions and all of the food spoils, commercial property insurance can help you recoup some of those costs.

Other common risks this coverage can help with include costs related to theft, vandalism, or an unexpected temporary closure for a covered event (also known as business interruption insurance).

Business owner's policy (BOP insurance)

You might come across the phrase "business owner's policy" when exploring business insurance options. This coverage combines the benefits of general liability and commercial property insurance, often at a discount.

It's an appealing choice for many business owners because of its combined financial protection for liability and business property damages.

Workers' compensation insurance

If a server gets hurt slipping on a wet floor or your chef gets cuts or burns that require medical attention, workers' comp coverage could help pay for medical expenses and lost wages.

Depending on your state, this policy is often required if you have employees. 

Liquor liability insurance

If an intoxicated customer injures themselves or someone else or causes property damage, your business could be held liable for serving them too much alcohol. Consider liquor liability insurance to help cover legal defense costs and damages if you or an employee are involved in a claim.

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Restaurant business insurance might be required by law

Food and beverage industry insurance requirements vary by state and different situations, so make sure you're in compliance with local laws and regulations.

You may be required to get restaurant business insurance if you:

  • Serve customers. Property owners and local governments might want you to have restaurant liability insurance to help protect your business from the potential costs of property damage, guest slip-and-fall injuries, or medical payments.

  • Hire employees. Many states require workers' compensation insurance to help cover the costs of injured workers if you have employees.

  • Repair or replace property you own or rent. In the event of a covered catastrophe such as a fire, some property owners and local agencies might require commercial property insurance for the building you lease or own.

  • Deliver or drive for business. Business-owned vehicles typically need commercial auto insurance. In most cases, your personal vehicle insurance won't cover work driving.

How much does restaurant business insurance cost?

Your restaurant business insurance costs (called a premium in insurance lingo) can vary based on several factors, including the type of restaurant you own (e.g., fine dining, casual, fast food, ghost kitchen, etc.), your restaurant location, your payroll, and what your employees do.

The best way to know which type of insurance is right for you and what it will cost is to get a free restaurant business insurance quote from NEXT. You'll know exactly what your business will pay in under 10 minutes, and you can buy online or manage your business owner's policy 24/7 via web or app.

Protect your restaurant with commercial restaurant insurance

You're used to the many perils of the restaurant industry: Staff who don't show up, suppliers who can't deliver, no-show reservations, and much more. You do your best to plug holes and prepare for as many situations as possible — and restaurant business insurance is part of that strategy.  

Learn more about how DoorDash and NEXT have teamed up to offer DoorDash partners an exclusive discount, where permitted, on restaurant coverage from a company 100% dedicated to small business.

For additional offers for DoorDash partners, visit the Merchant Benefits page to explore valuable resources and discounts from industry-leading companies to help your business thrive.

Author

Karen Solomon

Karen Solomon

Senior Content Marketing Editor, NEXT

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