If any industry is filled with risks that could result in financial devastation, it’s the hospitality industry. Things like burns from a hot stove, foodborne illnesses, slip and falls, and cuts from sharp knives can create a minefield for customers and employees. Included in this industry class are restaurants, bars, nightclubs, cafes, caterers, fast food restaurants, and any other establishment that serves food either publicly or privately.
There are risks for the customers and employees that must be considered and then transferred to an insurance company using a comprehensive commercial insurance policy. When we consider the risks in a business that prepares and sells food, there are many to take into consideration:
Certainly, every restaurateur and caterer wants to prepare and sell quality food so that customers will leave fulfilled and choose to come back for more. But, things can go wrong, and when they do, it will affect your bottom line. The best and the only affordable way to mitigate the risks inherent to the industry is to purchase a comprehensive insurance policy that will cover the financial risks that every restaurateur is exposed to.
There are many coverages that should be considered for a restaurant owner and fortunately, most of the coverages can be purchased in a packaged policy:
Fortunately for hospitality businesses, many of the coverages described can be purchased as a package, which makes keeping track of the many coverages simple and typically more affordable versus purchasing each coverage separately. These packages are referred to as a Business Owner’s Policy (BOP) or a Commercial Package Policy which are both packaged policies that include liability and property coverage, depending on the insurance carrier.
The rates for a BOP or Package policy vary depending on your underwriting results and the coverages offered in the policy. In most cases, the following issues will affect your insurance cost:
According to several of the leading insurers that provide coverage for restaurants, the average premium for a BOP or Commercial Package policy will cost between $1,150 and $10,000 per year, depending on the size of the restaurant. The package policy will typically include general liability, property coverage, liquor liability, product liability, business interruption, and employment practice liability.
Since workers’ comp rates and regulations are typically controlled by each state, your cost for coverage will depend on the state your business is located, your number of employees, and any history of claims from previous workers’ comp insurers.
Fortunately, the rates for restaurant employees is relatively low at $2.25 per $100 of payroll. For example, if you pay your employee $30,000 per year, you divide the annual payroll by $100 and then multiply the result ($300) by the rate of $2.25, and your estimated cost would be $675 plus any administrative costs that may be added to the policy.
Although a BOP or Commercial Package can include many of the coverages that every restaurant may need, the following coverages will typically have to be purchased separately:
Depending on your location and the size of your restaurant, other coverage you may want to consider for comprehensive protection are:
The hospitality industry is a huge part of the marketplace when you consider all the types of businesses that are included. Those who are creative and love to serve others will typically find it very rewarding and in many cases, a great way to make a living. You must, however, be mindful of the many risks involved, and do everything possible to transfer those risks to a highly rated insurer who will have your back when things go terribly wrong.
Price ranges from $500 to $10,000 and also varies depending on the industry you are working in, years in business, number of customers, annual revenue, history of claims and others.