5 Coverage Gaps That Could Shut Down Your Restaurant Overnight

5 Coverage Gaps That Could Shut Down Your Restaurant Overnight

Running a restaurant isn’t easy. Tight margins, high staff turnover, changing health codes, and demanding customers can keep restaurant owners busy and keep their mind off of the other risks that they may not be covered for. The wrong insurance coverage, or missing coverage entirely, can bring a business to a grinding halt. One unexpected incident can result in tens (or hundreds) of thousands of dollars in damages, and without the right insurance, could close your doors for good.

Here are 5 critical insurance coverages to consider that can help prevent a catastrophic loss from being the end of your restaurant.

1. Business Income Coverage

If a fire, storm, or equipment failure forces the temporary closure of your business, how would you pay to keep your staff, vendors, or building while you’re closed? The Business Income (or Business Interruption) coverage is the answer to this question. During the downtime, you would be reimbursed for expenses you would need to cover without having any revenue coming in up to your policy limits. Without this coverage, many businesses facing downtime wouldn’t be able to last very long.

2. Cyber Liability Coverage

Even if you don’t think of a restaurant as a “tech business,” they still handle digital transactions, online orders, and employee/customer data. A cyberattack could take down your point-of-sale system or lock you out of your payroll software and the attackers would demand ransom or threaten to expose the sensitive information you handle. It is happening to small businesses all the time and the number of attacks increase every year. Without proper cyber coverage, restaurants would be liable to pay the ransom, legal fees, and notifying affected individuals all on their own dime.

3. Liquor Liability Coverage

Serving Alcohol is a major risk that many restaurants take on. If a customer gets intoxicated and causes harm to themselves or others, you could be held liable (even if they leave your premises). Many general liability policies don’t fully cover alcohol related claims, and some business owners aren’t aware of this until it is too late. As a result, if your restaurant serves alcohol, make sure there is a dedicated liquor liability coverage/policy for your business.

4. Equipment Breakdown Coverage

What would your restaurant do if the walk-in freezer fails overnight and thousands of dollars worth of food spoils? What about if a vital piece of cooking equipment shorts out on a busy weekend? Standard property insurance doesn’t cover mechanical or electrical breakdowns, which can be some of the most common and costly disruptions in the restaurant industry. The solution is Equipment Breakdown coverage, which allows you to be covered of the costs of repairs, replacement, and spoilage.

5. Workers’ Compensation

You already have Workers’ Compensation (or you should), but when was the last time it was properly updated to match your business’ current employee profile? Injuries like slips, cuts, and burns are inevitable within the fast-paced environment of a busy restaurant. As a restaurant grows or evolves, it is important to make sure that the Workers’ Comp policy is reflective of the current job classifications and payrolls to prevent overpaying or being under-covered. 

Don’t Wait Until It’s Too Late

Insurance shouldn’t be about just checking a box. It is a tool that helps your business keep its doors open when the unexpected happens. One gap in coverage could be all it takes to put your business into bankruptcy. The good news? The gaps are avoidable with the right guidance and the likelihood of a catastrophic event can be minimized with the correct processes in place.

Want to know where your restaurant stands? Reach out or fill out the form for a complimentary review of your current coverage, and I’ll show you how well your business is covered and if there are any improvements you can make to lower your Total Cost of Risk!

Josh Sexton, CLCS 

Risk Advisor

[email protected]

(678) 450-6625