What Insurance Do Restaurants Need? A Guide To The Correct Cover

Near enough every business in the UK struggles with navigating the world of commercial insurance and finding the right cover year-after-year. But, when it comes to the types of insurance cover a restaurant needs, with their unique challenges and requirements, the stakes are even higher. A missed policy or overlooked detail can result in a substantial financial loss, not to mention the potential reputational damage. 

But how does a restaurant owner distinguish between essential covers and the ‘nice-to-haves’? From protecting assets against accidental damage to ensuring your restaurant can weather unexpected business interruptions, having the right cover in place helps cement the long-term future of any successful restaurant!

With so much complex (and at times contrasting) information available on the internet when it comes to insurance for restaurants, diving straight in and picking the first policy based on price will almost inevitably lead to the insurance being wrong! 

So, to help demystify the complexities of restaurant insurance, we’ve put together this helpful and detailed guide – shedding light on the policies that matter and pointing out the potential landmines to avoid when taking out or renewing insurance policies for your restaurant.

Why Do Restaurants Need Insurance?

You don’t get much more customer facing than a restaurant! And these bustling environments often play host to a vast array of potential challenges for restaurateurs in terms of insurance. From the unexpected kitchen mishaps to external threats, it’s crucial for restaurant owners to anticipate these events and be well-prepared. Let’s walk through a few of the most common things that restaurants in the UK would claim on their insurance policies for.

 

• • Material Damages: Just like with your home, damages to your restaurant’s premises through things like fires, flooding or criminal damage all need to be repaired – and this can often be quite costly. In an ideal world, this might be something you never have to make a claim on. But the risks are so high, it’s never going to be worth trying to ride your luck!

 

• • Business Interruption: Following on from material damages, it’s not just the repair work that’s going to cost you as a restaurant owner, should you find yourself with extensive property damage. You can’t welcome guests into a building with flooding or fire damage, so cover like Business Interruption Insurance is needed to ensure you can claim lost income and keep staff paid whilst you get the building back to its best.

 

• • Employee-Related Incidents: The hospitality industry is physically demanding. An employee slipping on a wet floor or sustaining burns in a busy kitchen can lead to claims. Employers’ Liability Insurance becomes paramount in such situations, covering the business against potential claims from staff.

 

• • Customer Incidents: Undoubtedly the most likely place a legal claim could arise from is a customer. Instances where a customer falls ill due to food poisoning or has an accident on the premises can turn into legal nightmares. It underscores the importance of having robust public liability coverage as a responsible restaurateur.

 

• • Damage To Stock Or Contents: It’s a nightmare scenario, but should for example your restaurant’s main freezer malfunction overnight and cause £1000s of premium meat, seafood, and other perishables to be spoiled. Then you’ll certainly need to have the right insurance in place to cover the costs of replacing all of this.

These are just some of the most common reasons for a restaurant to need the correct insurance, in truth, there are many many more examples of restaurateurs needing to claim on policies. But, being armed with the right insurance policies from day one can be a game-changer. Knowledge is power, and understanding the potential scenarios that give rise to a claim provides restaurateurs with a roadmap to future proofing their businesses.

What Are The Different Types Of Insurance Restaurants Need?

We get it – wading through insurance policy wording and trying to understand insurance jargon isn’t what a restaurateur is going to specialise in. It’s also not really the most invigorating and enjoyable way for any business owner to be spending their time at all! 

However, when it comes to insurance cover for restaurants, there are a number of different policies which are needed. Each establishment, with its unique characteristics, requires a tailored approach and some will need a higher level of cover than others, but as a general rule of thumb these are the common things that should be included in any restaurant insurance policy:

Property Insurance (Including Stock & Contents)

This is the cover which protects against potential damage to the restaurant’s physical building, as well as its contents. This includes everything from kitchen equipment to dining furniture. Whether it’s damage from unforeseen incidents such as fire or theft, having property insurance in place safeguards your restaurant’s assets.

Public Liability Insurance

As we alluded to earlier, having a bustling restaurant full of customers does increase the likelihood of needing to claim on a public liability policy. This insurance covers potential legal claims from customers who might suffer injuries or damages whilst on your premises.

Loss of Licence Cover

This is an absolute must if your restaurant is going to be serving alcohol to customers. There are a number of reasons that a premises can lose its alcohol licence, including for overserving or for failing local Police test purchasing, and should this happen a Loss of Licence Policy can compensate for the projected financial loss.

Employers Liability Insurance

Like Public Liability, this is a common type of commercial insurance and it works in almost the same way, only it covers you against potential claims from employees who might suffer injuries or illnesses due to their work. In the sometimes chaotic restaurant environment, where minor accidents can occasionally happen, this cover becomes crucial.

Business Interruption Insurance

We touched on this cover earlier, but should you be unable to keep the restaurant open due to physical damages. Be it a fire, a flood, or other unforeseen unfortunate event – this insurance covers the potential loss of income during such interruptions. 

Products Liability Insurance

For restaurants, the ‘product’ in this context is the food and drink they serve. But should a customer fall ill due to food that was served at the restaurant, then this cover is designed to help protect owners from the potentially costly legal claims which may arise. 

Fleet/Motor Insurance

Perhaps not applicable to every restaurant, but often a policy that gets forgotten for those who offer delivery. If the restaurant owns the vehicle used in deliveries, then fleet or commercial vehicle insurance becomes necessary. It covers potential damages or accidents involving your delivery vehicles.

Understanding the nuances of each of these insurance types can be tricky to begin with, but if you want to be a responsible restaurateur they are the cornerstone of ensuring your restaurant’s longevity and resilience against unforeseen challenges. 

Naturally, if you’d rather speak to an expert on insurance for restaurant businesses who can bundle all of this together into one clear and correct policy, then you can contact our team today and we’ll gladly answer any questions you have!

What Does A Restaurant Need To Get Insurance?

There are a number of things that you will need to provide to potential insurers before you can take out cover for your restaurant. The more precise and comprehensive your details, the more tailored (and often more cost-effective) your quote will be. Here’s what insurers typically want to know:

 

• • Type, age and capacity of building:  Whether it’s a historic tavern or a sleek, modern bistro, the kind of building you’re in, its age, and how many it can seat can hugely impact your cover.

 

• • Type of fire and security system: This one’s straightforward. The better your protection, the lesser the risk and the more likely an insurer is to provide cover for your restaurant.

 

• • Projected sales and number of customers: This helps insurers gauge how busy your restaurant is, and by extension, potential liabilities. It’s also going to be used as a way to calculate the level of support you’re entitled to when it comes to any business interruption claims. 

 

• • Value of inventory, equipment, and technology: From pricey kitchen gear to that state-of-the-art POS system, it’s crucial to cover the tools that keep your place running.

 

• • Number of employees: A small team or a full-on brigade? The amount of staff you have will either increase or decrease the likelihood of a potential claim on your Employers Liability Cover.

Misunderstood Coverages: What Restaurants Often Overlook

For as long as insurance has existed as a concept, there have been many misunderstandings and debates as to what is covered in some policies and what isn’t. Unfortunately, many restaurant owners have learned the hard way that not all coverages are as straightforward as they seem, and the consequences can often be soul-crushing for restaurateurs. 

The Reality of Business Interruption Insurance

The COVID-19 pandemic was a wake-up call for many in the hospitality sector. While business interruption insurance sounds like it should cover any interruption, in many cases, it specifically requires material damage to property. So, those forced closures? Not necessarily covered. At a time when restaurants were well and truly struggling, this realisation that their insurance couldn’t help them left them completely unprepared and exposed.

Insuring Contents and Stock Correctly

If a restaurant needs to make a claim against contents and stock that has been lost or damaged and the value which was initially given to the insurer upon quotation was too low, then claims could have something called ‘The Average Clause’ applied to them. This means that the insurance company will reduce the value of the claim in accordance with the amount by which assets were under-insured by. 

Many restaurants will have constantly varying levels of stock and will change equipment quite often too! It’s important that restaurateurs regularly review and adjust these figures, especially if you invest in new equipment or upscale your stock. 

Public Liability vs Product Liability

They might sound similar, but they’re distinct. While public liability might cover a slip, trip or fall in the restaurant, it wouldn’t necessarily cover a customer getting food poisoning from a meal. Remember, the food being served is what counts as a restaurant product, and even if the harm is done to a member of the public on the premises – it would be a claim that only Product Liability Insurance is going to cover. Not understanding the difference can be costly.

Watch Out For Exclusions In Policy Wording

Every policy wording has exclusions, those pesky ‘not covered’ bits. Before you accept a schedule from an insurance company, this is the part you need to make sure you’re read and fully understand. Those restaurateurs who do not heed this warning will be the ones who could get a very nasty surprise should it ever come to making a claim.

FAQs On Insurance For Restaurants

Hopefully, you’ll have a much stronger grasp on the basics of insurance for restaurants by now, but there are still some common questions we’ve been asked that haven’t yet been covered in this article. If you’re still itching to have your query answered, take a look below and if all goes well you’ll find the answer you’re looking for.

What Is Restaurant Insurance?

Restaurant insurance is a combination of different insurance policies tailored to address the unique risks and challenges faced by restaurants. It encompasses everything from protecting your physical assets like the building and equipment to covering potential liabilities arising from employee or customer incidents.

Do Restaurants Have to Have Insurance By Law?

While there isn’t a blanket legal requirement for restaurants to have insurance in the UK, there are certain policies that are mandated. For example, if you have employees, even part-time, Employers’ Liability Insurance is compulsory. Other policies, while not legally required, are highly recommended due to the risks inherent in the industry.

What Is Liability Insurance For Restaurants?

Liability insurance for restaurants covers legal fees and compensation costs if a third party, like an employee, customer, or supplier, claims injury or property damage because of your establishment. It branches into public liability, product liability, and employers’ liability insurance.

How Much Does Restaurant Insurance Cost?

The cost varies significantly, influenced by factors such as the restaurant’s size, location, type of cuisine, annual turnover, and more. A personalised quote offers the most accurate estimate.

How East Yorkshire Insurance Brokers Have Helped Local Restaurants Get The Right Cover

As commercial insurance brokers, we have ensured a number of local restaurants and helped them realise the unique challenges that both their industry and the local East Yorkshire area present. Being ourselves based in Hull and serving the community in and around, we possess a deep understanding of the local restaurant landscape. This local expertise ensures we deliver personal service and correct insurance cover that precisely fit the needs of each restaurant we help.

East Yorkshire presents specific challenges for its restaurant owners. Proximity to coastal areas means many restaurants can be considered flood risks in the eyes of insurers. Whilst others, based in urban areas around cities like Hull may have to deal with higher than average crime rates increasing the potential risk of malicious damage in the eyes of insurance companies. Being acutely aware of these challenges, we are adept at recommending insurance cover that caters to these unique risks, ensuring restaurants have the correct level of insurance cover in place and are always well protected.

With East Yorkshire Insurance Brokers, restaurants in the region have a partner they can trust. We understand the unique blend of challenges and opportunities this area presents and are committed to delivering insurance solutions that meet the highest standards of excellence and reliability.

Why Choose A Broker When It Comes To Restaurant Insurance?

Now, there’s been a lot of information to take in so far, and a lot of it could be overwhelming if you’ve no experience with commercial insurance. For restaurant owners, just as with any business owner, every decision made can have long-lasting implications for their security and future. That’s why working with a qualified, friendly and local insurance broker can be all the difference between ‘stress & anxiety’ and ‘peace & serenity’ when it comes to getting the right cover.

Every restaurant, from a quaint countryside bistro to a bustling city diner, has its own unique needs. Unlike insuring directly yourself, with a generic policy that probably doesn’t include a huge number of things your restaurant needs, a broker dives deep into the diverse insurance market. They have access to an array of providers, enabling them to compare multiple quotes and policies. This all but guarantees that the coverage is specifically tailored to the individual needs of your restaurant.

But beyond the practicalities of policy selection, there’s the human touch that brokers bring to the table. Instead of navigating automated systems and faceless corporations, partnering with a broker means forging a personal connection. They take the time to genuinely understand the nuances of your business and use their knowledge of the insurance market to make sure you end up with policies that are fit for purpose. 

Yet, the benefits don’t end at policy selection. Insurance language can be notoriously complex, filled with jargon and intricate clauses. Brokers act as translators, breaking down complex terminology into comprehensible information. This ensures restaurant owners are not only informed but empowered in their insurance decisions.

The relationship with a broker isn’t just a one-off interaction; it’s an ongoing partnership. As your restaurant grows, evolves, or faces new challenges, your broker is there, ensuring that your coverage remains relevant and comprehensive. And if adversity strikes and you need to make a claim, a broker becomes an invaluable ally. They handle the intricacies of the claims process, liaising with insurers and advocating for your interests, making what could be a daunting process more seamless.

So, what are you waiting for? Contact us today for a free review and quote. Let us take the weight off your shoulders, leaving you to do what you do best – creating unforgettable experiences for your customers. Because every culinary masterpiece deserves a safety net, and every restaurant deserves the right cover.