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When you’re starting up a new restaurant, you tend to think about things like menu options, marketing, and design—one of the last things restaurant owners think about is insurance.  That can be a costly mistake.


That’s right—about 2 of every 5 restaurants experience a liability or property loss every 10 years.  That doesn’t include claims they need to file for other kinds of losses, everything from theft to water and wind damage, fires, customer accidents, damage to their reputations and vehicular accidents.  If you don’t have the right kind of insurance, those losses can be expensive.  For example, the average vehicular accident could cost you $45,000, and fire runs on average about $35,000.


That’s admittedly a lot to think about, but it’s important to carefully weigh your options when it comes to insurance for your restaurant business—choosing the wrong insurance, or the wrong amount of coverage, could hurt you substantially down the road.

As Small Business makes clear:

“It might not be the most exciting thing to think about when you’re planning to open a new restaurant, but it’s vitally important—you’ll need insurance. It’s one area in the restaurant business where you do not want to skimp.”

What that means more than anything else is that you should consult a competent insurance agent before making any final decisions.  That said, there are some kinds of insurance your restaurant can’t be without.  At a minimum, you should have the following 3 kinds of insurance:


You need property insurance to protect your restaurant if you have a fire, or if someone vandalizes the interior or exterior of your building.  It’s important to note that property insurance won’t necessarily cover you if there’s a flood—be sure to check with your insurance company to be sure what is and isn’t covered by your property insurance policy.


There are several kinds of liability for which you need insurance protection.  For example, if someone is injured or becomes ill from the food you serve, they could sue you to cover their medical costs.  In addition, it might be prudent if you serve liquor to make sure you’re covered in the event a patron is injured or has an accident after drinking in your restaurant (some states make this a requirement).  Finally, if your restaurant uses vehicles to deliver food, you’ll need to consider liability insurance that covers those vehicles.


When you hire someone to work in your restaurant, you assume certain responsibilities and obligations.  For example, if they have an accident while working for you, you might be required to pay for worker’s compensation (again, you need to check the laws in your state, and with your insurance carrier for specifics).

In addition, you’ll be responsible to pay for unemployment for any worker who lost his job through no fault of his own.  Each state has its own rules for how many former employees can collect, so be sure to check the laws for your state to understand the unemployment rules that apply to your restaurant business.


This list reflects the minimum insurance coverage for your restaurant.  There are other kinds of insurance you might want or need depending on your individual circumstances.  For example, you should discuss with your insurance company whether it makes sense for you to take out a life insurance policy, to take care of your family in the event you’re not able to.  In addition, if you’re in a flood zone, you should consider flood insurance.

The specific insurance you need to protect your restaurant is something that’s not necessarily pleasant to think about, but getting the right insurance is critically important for the future of your business.  Fortunately, there are experienced, competent insurance companies that can give you the advice and guidance you need.

To learn more about the ways our small business insurance services in New Jersey can ensure the protection—and profitability—of your restaurant, now and in the future, contact us today.