Restaurant business insurance: What it covers and what it costs

What insurance does a restaurant need? 

There are a variety of insurance policies that cover restaurants, including:

General liability insurance

General liability insurance covers claims of bodily injury, property damage and advertising injury. This policy will cover settlements or judgments as well as your legal fees and court costs.

Workers’ compensation insurance

Workers’ compensation insurance covers an employee’s medical treatment and partial lost wages if they get sick or injured at work. This policy is required in most states for businesses that have at least one employee on payroll.

Commercial auto insurance

Commercial auto insurance covers a business’s financial responsibilities if a driver causes an accident behind the wheel of a business-owned or leased vehicle. It also applies to accidents that happen while delivering food to a customer. Like personal car insurance, business auto insurance is a legal requirement in nearly every state.

Business owner’s policy

A business owner’s policy (BOP) combines general liability insurance and commercial property insurance at a discounted rate. Commercial property insurance covers damage to owned or rented restaurant spaces, as well as your business equipment and inventory, like furniture, linens and cookware.

Liquor liability insurance

Liquor liability insurance covers your business against claims of bodily injury or property damage if you serve alcohol to a customer who injures someone or damages someone’s property. This policy is required in most states for restaurants that serve alcohol.

How much does restaurant insurance cost by month and year?

Here’s the average cost of restaurant insurance by policy type, based on rate data from Insureon.

Factors that affect restaurant insurance premiums

The cost of restaurant insurance depends on a variety of factors, including: 

• Location
• Number of employees
• Revenue
• Claims history
• Policy type
• Coverage limits
• Deductibles
• Insurance company

Small business insurance companies that serve restaurants

There are many reputable insurance carriers that sell coverage to restaurant owners, including:

• Geico: Geico is known for its auto insurance, but the company also offers great commercial insurance coverage for restaurants. Geico sells all the standard coverages that food businesses might need, as well as business income coverage, electronic data coverage and accounts receivable protection.
• The Hartford: The Hartford offers multiple coverage options for restaurants, such as workers’ compensation, liquor liability insurance and commercial auto insurance.
• NEXT: NEXT insures more than 10,000 restaurant owners. The company operates entirely online, so you can get a quote, purchase a policy, manage your policy and file claims from your computer or smartphone.
• Progressive: Progressive insures restaurants through the Progressive Advantage Business Program. The company covers a variety of different food establishments, including cafes, bars, diners and food delivery services.

How to compare restaurant insurance companies to get the best coverage

There are dozens of insurance companies that sell coverage for restaurant businesses. However, not all insurers are created equal. To find the best restaurant insurance carrier, it’s important to compare multiple companies. Follow these steps to find the best insurance company for your business:

1. Coverage options: Every restaurant business has different insurance requirements. When comparing companies, look at the coverage options available and choose an insurer that offers the types and amounts of coverage you need based on your potential risks.
2. Third-party ratings: Third-party ratings can help you better understand an insurer’s customer service reputation and overall customer satisfaction. It’s a good idea to check company ratings from reputable industry organizations, like J.D. Power and the National Association of Insurance Commissioners (NAIC).
3. Financial strength: Choose an insurance company that has an excellent or superior financial strength rating from AM Best. Financially stable insurers are able to meet policyholder obligations and pay claims. Companies that aren’t financially strong are at a higher risk of bankruptcy and may have a harder time paying claims.
4. Online tools: If you prefer to handle your insurance needs online, look for insurance companies that offer online tools, such as online policy management, online claims, live chat and risk management resources.
5. Cost: Before you purchase business insurance, get personalized rate quotes from a few different carriers. This will help you find the cheapest premium for the type and amount of coverage you want.

How to get the best coverage for your small business

Use these strategies to get the best insurance coverage for your business:

1. Consider your unique risks: Think about the risks that your business faces based on your industry, services, location and number of employees. Purchase policies that cover the potential risks you face, and choose coverage limits that offer adequate financial protection.
2. Find out what coverages are required: Your business might be required to carry certain types of insurance to satisfy local laws, client requirements or lease agreements. Make sure to get the policies you need and provide certificates of insurance to relevant stakeholders, like your landlord.
3. Read the fine print of your policy: Every commercial insurance policy has different exclusions. It’s important to read the fine print of your policy so you understand what is and isn’t covered. You might need to purchase other policies or add endorsements to fill gaps in your basic coverage.
4. Compare quotes: The cost of business insurance depends on many factors, and some policy types are more expensive than others. Before you purchase any insurance policy, compare quotes from at least a few different insurance companies to find the best coverage at the most affordable rate.

What our expert says

Q: What’s one of the big benefits of having the right small business insurance?

Brian White Vice President of Product Strategy at specialty insurer AmTrust Financial

"The right insurance policies enable stability and peace of mind, allowing business owners to focus on what they are most passionate about and do best – growing and running their business – without fearing how these unexpected events could impact them financially."