October 31, 2022

Restaurant Insurance | Coverage, Exclusions, Benefits, and Cost

Restaurant Insurance | Coverage, Exclusions, Benefits, and Cost

Restaurant Insurance is a Business Insurance policy designed to protect restaurants, hotels, cafes, and similar businesses against some common perils. It offers both liability and property damage coverage, protecting a restaurant and other eateries from a large number of risks, such as damage due to fire or floods, theft of raw materials, damage to furniture and interior decorations, accidental injury to a customer, and a lot more.

When it comes to eateries like restaurants and hotels, there’s always a of a risk of a customer slipping and injuring themselves, or an employee suffering an accident in the kitchen, or perils like storms and floods causing irreversible damage to restaurant property.

All these unfortunate events can run you into deep financial trouble. Recovering from an expensive lawsuit or a devastating fire is impossible without a financial safety net. And this is where Restaurant Insurance can help you out.  

Restaurant Insurance works by reimbursing you for any financial loss that you suffer during the policy period, whether in the form of damage to your property, compensation to a customer, or legal fees incurred during a lawsuit.

This insurance specifically caters to those businesses working in the food and beverage industry, and can thus be customised to cover different sets of perils unique to each business. For example, if you run a catering business or have an in-house food delivery system, you can get a Commercial Vehicle Insurance policy added to your Restaurant Insurance package. If, on the other hand, your business relies heavily on the dining experience, you can pay more attention to your policy’s Sum Insured to cover all important assets, like furniture, fittings, and decorative accessories.

Restaurant Insurance offers comprehensive coverage against a wide range of risks. It is a form of Package Insurance policy and thus encompasses both Property Insurance as well as Liability Insurance under its scope, offering businesses total protection against any unforeseen disaster. Here are some of the most important risk covers offered under Restaurant Insurance:

  • Damage to restaurant property- Assets like furniture, cooking equipment, tools, inventory of raw materials, cash on hand, important documents, and expensive furnishings can all be covered against any accidental loss or damage when caused by the following risks -

    • Fire, explosion, or lightning
    • Natural disasters like floods, earthquakes, cyclones, and storms
    • Riots, strikes, or intentional damage by a third party
    • Burglary or theft
    • Impact or collision with a vehicle or animal
    • Water leakage or bursting of pipes
    • Implosion or explosion of a boiler or apparatus
    • Electrical arcing, short circuit, or other related risks
    • Terrorist activities or any missile testing operations being carried out in the vicinity of the business
  • Legal liability to pay compensation to employees for any accidental injury, illness, or disability suffered during employment

  • Compensation to employees’ family members in the event of any accidental death occurring on the business premises

  • Any injury or illness suffered by customers on the restaurant premises or due to the restaurant’s food

  • Any third party property damage caused on the premises

  • Business interruption in the form of loss of profits or increased cost of working due to a major disaster at the restaurant (Note: this cover is only available if you opt for the Loss of Profits policy)

Restaurant Insurance will not provide any reimbursement or indemnity to your business in the following events:

  • Any loss of goods in cold storage due to changes in temperature
  • Normal wear and tear of machinery, tools, or other property
  • Damage caused due to the negligence or wilful misconduct
  • Any damage caused due to a war or a pandemic
  • Losses caused by radiation or other nuclear risks
  • Any loss or damage caused by pollution, seepage, or contamination
  • Any fines or penalties levied by a public authority

Restaurant Insurance provides businesses working in the hospitality industry a ton of benefits. It shields them against numerous man-made as well as natural disasters and safeguards their finances from running dry in times of need. If you own or manage a restaurant or cafe, this policy can help in a number of ways:

  • Financial security: One of the most fundamental benefits of Restaurant Insurance is the sense of financial security and economic safety that it can offer. For many businesses in the food and beverage industry, a single accident, such as a fire, flood, or riot, can be enough to bring down years of hard work. But with Restaurant Insurance, businesses can easily get financially reimbursed for their loss and quickly get back on their feet
  • Comprehensive coverage: Another advantage of getting Restaurant Insurance is its extensive list of covers. With this policy, you can easily protect your business against fire, riots, theft, floods, earthquakes and over a dozen other perils.
  • Flexible plan: A Restaurant Insurance policy can be customised based on each business’s needs. You can opt for several add-on covers by paying an additional premium to make your policy more personalised to your business.

Restaurant Insurance in India can be surprisingly affordable– especially for small businesses and MSMEs. Insurers usually consider the following factors when determining the exact premium for Restaurant Insurance:

  • Location: Where your business is located will determine how high or low your overall insurance premium will be. If your area is prone to frequent fires, floods, or riots, your premium will likely be on the higher end. If, on the other hand, your business is located in a safer neighbourhood less vulnerable to common perils, then your premium will also reflect your lower risk profile
  • Coverage: Another important determinant of your insurance premium is how many covers you have opted for in the policy. Restaurant Insurance comes with a number of optional and add-on covers that can end up raising your base premium by a lot (depending on the insurer’s rate). However, keep in mind that limiting the number of covers in your Restaurant Insurance policy can put you at the risk of being underinsured
  • Size of your business: The size of your restaurant or cafe will also determine how high your exact premium comes out to be. For bigger restaurants that have a large volume of inventory, equipment, and high-value furnishings, the cost of insuring them would also be high

Restaurant Insurance offers businesses a convenient safety net in their times of need, protecting each of their assets, from tools and equipment to stock of raw materials, from unexpected damage. Its all-inclusive and customisable coverage makes it the perfect risk management tool not just for restaurants, but for all kinds of businesses working in the hospitality industry including cafes, hotels, bakeries, caterers, resorts, and bars.

Know more: How to file an insurance claim online

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.