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Your Guide to the Types of Business Insurance for Restaurant Owners

There are over one million restaurants across the country employing 15.6 million workers and they have suffered significant losses recently because of the COVID-19 pandemic. Despite this, passionate entrepreneurs are still operating.

Once the country starts returning to normal, the economy will begin recovering. As a result, new restaurants will hit the scene. But many of these restaurateurs won’t have extensive operational experience.

Keep reading for a deep dive on four kinds of business insurance you’ll require in order to run a restaurant.

1. Commercial Property Insurance

Commercial property insurance is a critical insurance for a restaurant policy to have. Without it, you’ll have to pay for damage to property and buildings your business owns out-of-pocket.

Typically, a commercial property policy will cover buildings (also referred to as real property) and Business Personal Property (BPP).

Under buildings, the policy covers all the fixtures, equipment, and machines you permanently install. Anything that isn’t attached to the building falls under the BPP category.

What if you own the building your restaurant operates in? The commercial property policy will cover both the BPP and the building. That’s a vital distinction that an experienced insurer should help you understand.

If you lease your space and make improvements, a commercial property policy will cover them. That’s as long as you paid for them and if they are not removable.

Additionally, such a policy covers property that you’re leasing and which you’re legally mandated to take out insurance on. If there’s any property under your care, within the building your restaurant operates in or outside at a certain distance, the policy can cover it.

A good commercial property policy should also offer additional coverage. The extra protection helps you cater to certain losses that you’d otherwise pay on your own.

For example, a good policy should have Debris Removal. Should the property suffer damage from covered perils, you’ll not pay to remove the debris from the covered property.

2. Employee Theft Insurance

As a restaurant owner, you don’t hire workers hoping they steal from you. The sad truth, though, is that some staffers will steal from you, and you need to protect your business.

An employee theft policy will compensate you because of financial losses you suffer when employees steal from your business. The beauty of this policy is that it’s broad, giving you robust protection.

The policy covers anything from funds transfer fraud, loss by forgery, and computer fraud. The only caveat is that losses from such acts are only eligible for compensation if perpetrated by employees.

However, there is an insurance condition under this policy you need to pay attention to. Under the “Termination As To Any Employee” condition, you or another business principal won’t receive compensation if you discover an employee is stealing.

Once you uncover the fact that an employee has stolen something, you can’t file a valid claim for anything else the same employee steals in the future.

3. Employment Practices Liability Insurance

The restaurant business is labor intensive, meaning you expose yourself to a lot of employee-practices-related issues. The Employment Practices Liability Insurance (EPLI) policy ensures your restaurant doesn’t buckle under claims emanating from employees feeling you’ve violated their legal rights.

For example, if an employee feels you fired them for the wrong reason, they can file a wrongful termination suit. Other issues that can lead employees to sue you include:

  • Retaliation
  • Wrongful discipline
  • Discrimination
  • Wrongful failure to promote
  • Harassment

Once an employee files such a case, it doesn’t matter whether you are right or wrong. You will have to cover the legal costs to defend your restaurant. The policy reimburses you for these costs, including judgments and settlements.

It’s vital to note that what you’ll pay for EPLI coverage varies. For example, if your restaurant employs a higher number of workers, you’ll pay more than a similar business with fewer employees.

You can get EPLI coverage as part of your Business Owners Policy (BOP) or as a stand-alone policy. Your restaurant’s financial requirements will dictate that decision.

4. Workers’ Compensation Insurance

Did you know that 2.8 million employees in 2019 alone suffered work-related injuries and illnesses?

Businesses employing others are required to take up worker’s compensation insurance. With this policy, you can protect your workers in case of any workplace injury or illness.

In the event your employee suffers an injury or falls ill on the job, the policy can cater to their medical bills and other costs relating to the injury or illness. If they have to stop working because of injury or illness, the policy will compensate them for their lost wages.

For workers who can recover but will need occupational therapy or other programs to nurse them back to health, worker’s compensation takes care of the related costs.

There are also scenarios where an employee recovers from the injury or illness but can’t return to their old job. Here, worker’s compensation pays for the worker’s training for a new job.

Should an injury or illness result in disability, workers’ compensation offers some options via temporary disability, permanent partial, or permanent total disability.

A workplace illness or injury leading to a fatality will cause the family of the deceased receiving compensation. Typically, the spouse or kids of the deceased employee can be eligible for 65% to 70% of the late worker’s pay.

As an employer, workers’ compensation helps you avoid unpredictable financial hits. You won’t be responsible for expenses relating to an on-the-job injury or illness.

If your restaurant operates in a no-fault state, an employee won’t need to prove you were at fault before getting coverage. That makes the policy even more critical.

Safeguard Your Restaurant With the Right Business Insurance

A business is like a child – delicate and in need of tending. To help protect your restaurant, you need to look up the appropriate business insurance policies to invest in. Doing so will protect you should the inevitable ever occur.

At Central Jersey Insurance Associates, we believe that it’s better to have insurance and never need it than require it but not have it. Talk to us today to learn how you can insure your business and protect your valuable investment.