Business owner’s policy for food business: What is it and what does it cover?

Why do food businesses need BOP insurance coverage?

Food and beverage businesses need BOP insurance because it covers the financial and legal risks of potential liabilities as well as the cost of repairing a business location damaged in a fire, windstorm or other covered event in one convenient insurance package. 

For example, if a waiter accidentally spills a hot cup of tea on a customer and they get burned, the general liability portion of a BOP would cover their medical expenses.

Additionally, a BOP covers damage to physical business locations, business property and kitchen equipment when it’s caused by a covered peril, like a fire or break-in. Your BOP will cover the cost of repairing the space and replacing lost business property.

Some examples of food businesses that can benefit from a BOP include:

• Restaurants
• Cafes
• Bakeries
• Food trucks
• Caterers
• Bars
• Personal chefs

What's covered by BOP insurance

BOP insurance for food businesses includes general liability insurance and commercial property insurance. Here is what’s covered under this type of policy:

• Third-party bodily injury and property damage: A BOP covers third-party claims for bodily injury and property damage. It will pay for another person’s medical expenses or property damage repairs and it covers your business’s legal fees if you get sued.
• Damage to business property: The commercial property portion of a BOP covers damage to physical business locations and business property due to events like fires, theft, vandalism and accidental water damage. It covers items that are stored at a restaurant, like tables, chairs, linens, dry goods and kitchen tools.
• Advertising injuries: A BOP covers claims against your business related to advertising injury, which include things like libel, slander and copyright infringement lawsuits. It covers settlements and your legal defense.
• Lost business income: If your BOP policy includes business interruption insurance and your restaurant is forced to shut down temporarily after a covered claim, the policy will cover lost income so you can continue pay rent, utility bills, loan payments and other necessary expenses.

How much is BOP insurance for food businesses?

The average cost of BOP insurance for food businesses is $1,770 per year, or about $145 per month, according to Insureon. Bars and busy restaurants pay more for general liability than other 

 businesses because they’re considered a higher risk for customer injury and property damage, according to Insureon. However, actual rates depend on numerous factors, including your location, insurance company and business size.

It’s usually cheaper to purchase a BOP than to buy general liability insurance and commercial property insurance separately. Insureon lists the average price of general liability insurance for a food and beverage business at $525 a year and commercial property at $1,368 a year.

Additional coverages tailored for food businesses

While many food businesses can benefit from a BOP, there are other types of insurance that they may need, including:  

• Workers’ compensation: Workers’ compensation covers an employee’s medical bills and lost wages if they get sick or injured at work. This policy is required for most businesses with at least one employee.
• Commercial auto insurance: Commercial auto insurance provides liability coverage for business-owned or leased vehicles, like a delivery van. It’s legally required in nearly every state.
• Commercial umbrella insurance: Commercial umbrella insurance extends the coverage limits you have on other liability policies, like general liability and commercial auto insurance.
• Liquor liability insurance: If your business serves alcohol, liquor liability insurance is an important policy to have. It covers your liabilities if an intoxicated customer injures another person or damages their property.

Factors that influence BOP costs for food businesses

BOP insurance premiums are different for every food business. Some of the factors that can affect the cost of your insurance coverage include:

• Location
• Type of food business
• Business property value
• Claim history
• Coverage limits
• Deductibles
• Number of employees

Benefits of a BOP for food businesses

These are some of the biggest benefits of a BOP for food and beverage businesses:

• Provides comprehensive coverage: A BOP combines general liability and commercial property insurance, two of the most important policies for restaurants. When you purchase a BOP, you get both coverages at a cheaper rate.
• Covers potential third-party lawsuits: BOP insurance protects your business against the financial and legal consequences of third-party bodily injury and property damage claims. Without insurance, these types of claims could have major financial consequences for your business.
• Pays for property damage repairs: If your restaurant or business property gets damaged in a covered claim, a BOP will cover the cost of repairing the space and replacing the items.

How to get the right BOP for your food business

When shopping for BOP insurance for your food business, experts recommend you do the following: 

• Find out what’s covered: When comparing BOPs, find out what coverages are included and what policy limits are available. If you aren’t sure how much coverage you need, an agent can provide a recommendation based on your business size, revenue and unique risks.
• Check out each company before purchase: It’s a good idea to read customer reviews to better understand an insurer’s strengths and weaknesses. Pay attention to reviews on claims handling, customer service and policy renewals.
• Ask about discounts: Some insurance companies offer discounts to BOP customers. For example, you might be able to save money by bundling a BOP with another policy or installing smoke alarms and fire sprinklers in your restaurant.
• Shop around: The cost of BOP insurance is different for various food businesses. To find the most affordable BOP, shop around and compare rate quotes from a few different insurance carriers.
• Understand the exclusions: Every BOP has exclusions. Read the fine print so you know what losses you aren’t covered for. To fill gaps in your BOP, you might need to purchase other types of insurance.

Food business owner’s policy exclusions

BOP insurance for food businesses doesn’t cover everything. These are some losses that aren’t covered under this type of policy:

• Employee injuries and lawsuits
• Accidents in business-owned vehicles
• Property damage caused by normal wear and tear
• Property damage caused by floods or earthquakes
• Intentional or criminal acts
• Liquor liability claims

What our expert says

Q: Why should food business consider BOP insurance?

Andy Lea Chief insurance officer at Embroker, a digital insurance company.

"For small businesses, a BOP is like having a financial safety net. It covers many potential liabilities associated with running a business such as someone getting hurt on the property and protecting against financial losses from damaged/stolen equipment."