Insuranks
Insuranks

Restaurant Insurance: Cost, Quotes & 101

icon Your information is secure with us and solely used to connect you to relevant insurance offers, companies and services.

So, you want to start a restaurant or you already have one, and struggling due to the recent pandemic. However, as life begins to get back to normal, and new ways of ordering food have become more common (delivery, socially distanced dining, home food business, and reservations) the restaurant industry is making a huge comeback.


There is also a greater number of government loan programs and low-interest SBA loans that you can apply for that can help you get your restaurant off the ground!


One of the most important things that many restaurant owners forget to incorporate into their budgeting and planning is restaurant insurance. Just like any other business, you'll need to at least have general liability coverage and other protections depending on your needs.


Restaurant insurance can help protect your business from the unexpected and ensure that not a single mishap breaks the bank. Not only is it smart to insure your restaurant business, but most city ordinances, landlords (if you rent your space), and banks (if you pay a mortgage on your space) require you to have your business and its property properly insured.


Below, we'll cover and answer some of the most commonly asked questions regarding restaurant insurance, its average cost, and the best companies.


Also read:

What Are The Different Types of Restaurant Insurance Policy?

Restaurant insurance policies are

  • General liability

  • Commercial property

  • Workers comp

  • Business interruption

  • Workers comp

  • Commercial auto


It's a good idea for your financial safety net to have insurance. Even if you have a small home-based business that caters to small parties, having at least a basic general liability insurance policy is the best way to ensure that you never find yourself in over your head. Businesses in need of insurance coverage could include:


What Kind of Insurance Do Restaurants Really Need?

The most basic kind of commercial restaurant insurance is general liability insurance coverage, which helps cover any costs associated with a guest and other third parties being harmed in your place of business. Whether they trip and fall or get sick from the food, this coverage ensures that you won't pay their medical bills out of pocket. Commercial property insurance, workers' compensation insurance, and business interruption insurance are also crucial. So keep reading, because these are discussed below. 


Also read:

Compare Restaurant Insurance Quotes

Get all the best quotes from leading providers in a click of a button!

Restaurant Liability Insurance

Restaurant general liability insurance will cover personal injury and property damage claims from customers and other third parties. Basic general liability coverage for small restaurants provides $1 million up to $2 million coverage. On the other hand, large restaurants can apply for a general liability coverage offering more than $5 million. So how does general liability insurance work in practice?  

Function 



General liability insurance will pay for medical expenses if a customer or any other third-party sustains injuries due to an accident on your restaurant’s premises 




General liability insurance will provide reimbursements if a customer or any other third-party had his or her property damaged by your restaurant’s business operations 


You can turn to general liability insurance for help if a customer or any other third party decides to take legal action after sustaining personal injuries or property damage.  It will pay for lawyer fees, settlements, administrative costs, and other legal expenses 


General liability insurance can provide enhanced protection. This restaurant business insurance has optional products liability coverage, rented premises liability coverage, and advertising injury coverage. 

  • Products liability coverage - General liability insurance for restaurants and bars has an optional products liability coverage. Product liability coverage covers the medical treatment of customers who got sick after eating spoiled or poorly prepared dishes from your restaurant. Also, it takes care of attorney fees, administrative costs, and other expenses

  • Rented premises liability coverage - Only add this to general liability insurance if you’re renting a commercial space and using it as a restaurant establishment. Rented premises liability coverage will reimburse the landlord if his or her commercial space is damaged by fire

  • Advertising injury coverage - Advertising injury coverage will cover legal expenses if your restaurant is sued for slander, libel, copyright infringement, and other offenses considered as advertising or reputational harm 


Why is General Liability Insurance Insurance Important for Restaurants?

Generality insurance is one of the most important types of insurance for restaurants due to the likelihood of slips, falls, and other accidents. Slips and falls are the most common accidents that happen in restaurants. 


In fact, according to the NRA ( National Restaurant Association ) customers, who slipped and fell, file the vast majority of general liability claims against restaurants. In addition, the NFSI ( National Floor Safety Institute ) states that restaurants pay $2 billion a year on average for slip and fall accidents customers and employees sustain.


Slip and fall accidents don't happen out of the blue, they may sometimes but this is not the point we’re trying to establish here. The restaurant environment highly contributes to the likelihood of slips and falls. Some common causes are

  • Leaky fryer

  • Leaky ice dispenser

  • Spill and sprays from the fryer

  • Unsuitable or poor floor construction (e.g using a material for the floor that heavily promotes slipping and falling)

  • Improper maintenance and cleaning of floors


Slips and falls in restaurants can also result in the death of customers. There is little to no research investigating this yet (none we’ve found so far). Still, many news articles feature restaurant-related customer deaths. Here are some examples:

  • A 75-year-old man died after slipping and falling on the premises of a well-known restaurant. The restaurant in question had to pay the family of the deceased a settlement fee as per the order of the court

  • Rochester, N.Y. - A 3-year-old customer died after falling into the grease trap of Tim Horton’s restaurant


Also read:

Commercial Property Insurance for Restaurants

Another one of the best insurance for restaurants is commercial property insurance. Commercial property insurance will protect your business’s tangible business assets. Here’s how it works:

Commercial property insurance will recoup lost investment if your restaurant’s building gets burned into ashes or wrecked by extreme weather. The insurance money you’ll receive will be equal to the actual cash value or replacement cost of the covered building  If theft, burglary, vandalism, fire, extreme weather, and other covered perils damage your restaurant’s building, commercial property insurance will provide money you can use for repairs 

Insurance companies underwrite coverages you can add to commercial property insurance. These add-ons are:

  • Stocks and contents coverage - Stocks and contents coverage will reimburse your losses if valuable items such as lighting, interior decoration, and furniture become lost or damaged due to fire, theft, vandalism, and other covered perils. 

  • Business equipment and tools coverage - Commercial property insurance, restaurants need, offers business equipment and tools coverage. This will reimburse losses if fryers, stoves, and other restaurant equipment become lost or damaged due to fire, theft, vandalism, and other covered perils


Note that commercial property insurance doesn't cover floods. To get protection, endorse flood insurance to commercial property insurance.


Why is Commercial Property Insurance Important?

Property damage is one of the greatest enemies of a restaurant. Theft, vandalism, and other similar exposures will cause minor damage to your restaurant’s tangible business assets. On the other hand, major damage, those kinds that might result in bankruptcy, might be caused by natural disasters that are impossible to stop if not unpredictable.


And so, don’t get complacent and expect business to stay alive and blooming. It’s best that you become a bit paranoid about things. Assuming your restaurant will sustain some physical damage sooner or later won’t hurt.


Restaurants experience property damage mainly because of fires. According to the National Fire Protection Association (NFPA), US fire departments have responded to 1,388,500 fire incidents in 2020. The agency did not state how many restaurant fires happened in the said year. Nonetheless, another report from the same agency provides insight. The 2014 NFPA report suggests that 5,810 restaurant fires happen each year. In addition, the cost of property damage from all restaurant fires is $119 million. Look at the table to know the most common causes:

Cause of FireNumber of Resulting FiresContribution to Property Damage (in 2014 million dollars)Contribution to Property Damage (in 2021 million dollars)
Cooking Equipment3,544$72.59$85.23
Electrical Distribution and Lighting522$24.99$29.34
Heating Equipment522$10.71$12.57
Smoking Materials406$8.33$9.78
Intentional232$11.9$13.97


For research purposes, here’s another table from the report showing the number of eating and drinking establishment fire accidents and their cost from 1980 - 2014.

YearNumber of FiresNumber of Civilian InjuriesCost of Property Damage as Reported on the Same Year*Cost of Property Damage in 2021 Dollars
198023,300210$188$634.15
198122,400358$176$538.16
198221,700297$212$610.62
198318,200369$203$566.50
198417,500225$193$516.30
198518,900327$210$542.46
198616,000280$126$319.54
198715,600223$129$315.63
198813,500299$178$418.21
198912,300242$146$327.26
199011,800240$173$367.90
199111,700179$174$355.09
199211,700190$192$380.37
199311,200272$163$313.53
199411,600204$167$313.21
199510,600146$129$235.27
199611,200195$171$302.93
199711,300233$173$299.60
199810,800166$176$300.12
19999,300135$412$687.36
20008,280127$197$317.98
20019,140132$255$400.21
20029,090129$172$265.74
20038,43094$174$232.63
20048,14074$154$226.60
20058,26099$173$246.21
20067,710106$328$452.22
20078,380110$190$254.70
20088,370112$299$386.00
20096,910133$220$285.03
20106,830116$193$246.01
20116,91099$169$208.83
20127,150120$154$186.43
20137,680125$167$199.25
20148,47090$140$164.37


Restaurants are not only susceptible to fire but water damage too. This is especially true for restaurants operating in US locations where flooding is common such as:

  • Massachusetts

  • Georgia

  • North Carolina

  • South Carolina

  • Virginia

  • New Jersey

  • New York

  • California

  • Louisiana

  • Florida


Water damage affects both the restaurant’s building and the objects inside. In severe cases, the owner will have to spend on sewage repair, piping repair, roof replacement, wallpaper replacement, flooring repair, and replacement of chairs, tables, carpets, etc.


The 2006 report from the American Institute of Research provides a clue on the cost of water damage that flood brings. Using the HAZUS simulation model, which provides accurate results through analyzing data from different sources, the researchers established the annual cost of water damage at $2 billion for those living in areas with high flood risk. In addition, the price of water damage per individual is $290 million up to $813 million.


With that said, water damage resulting from floods can be very costly. And so, it’s best to get flood insurance if your carrier offers it as an additional option to the commercial property policy. Flood insurance can be very effective. For example, there’s the National Flood Insurance Program that claims to mitigate the cost of flood damage by $1 billion annually.


Read more about commercial property insurance


Restaurant Business Interruption Insurance

You are very vulnerable to failure when business operations are interrupted. A decrease in sales can have a very profound impact because it results in difficulties in recouping capital - water bills, employee salary, food supplies, electric bills, gas bills, equipment maintenance and repair, and many more. It’s also a fact that restaurants sell perishable goods, which, unlike clothes or shoes, can never be sold at a lower market price.


Business interruption insurance for restaurants ascertains survival if business operations are halted. If you have to close temporarily to relocate, renovate your restaurant’s building, or wait for an economic crisis to pass by, business interruption insurance will provide the money to be used for paying employee wages, loans, taxes, and other operational expenses. 


Why is Business Interruption Insurance Essential for Restaurants?

Restaurants have the liberty to decide whether to get business interruption insurance or not. Nonetheless, getting so is essential, and here’s research reinforcing this point.


A study published in the Journal of Foodservice and Research explored the effects of hurricane Katrina on the restaurants in Southern Mississippi, one of the areas the hurricane severely affected. Remember that Katrina is the most devastating hurricane in U.S history. Going back to the topic, the study clearly showed that the restaurants, which Katrina severely hit, suffered major losses. The figures are shown in the table below:


Aggregate Income Before KatrinaAggregate Income After Katrina+Cost lof losses incurred (in 2006 dollars)Cost of losses incurred (in 2021 dollars)
Restaurants in Pass Christian$6,219,566$1,493,464$45,391,274$62,581,417.79
Restaurants in Long Beach$15,252,668$9,169,260$6,083,408$8,387,257.37
Restaurants in Biloxi103,036,96857,645,694$45,391,274$62,581,417.79


Read more on business interruption insurance


Workers’ Compensation Insurance for Restaurants

You should always opt to get workers' comp insurance. This is a legal requirement if one or more employees are working for you. Workers compensation insurance sees to it that your business won’t end up shouldering expenses if an employee experiences a work-related injury or illness. Here’s what it covers:

CoverageFunction

Employee Treatment/Medical Procedure
Your restaurant business’s employee will need medical treatment/procedure after experiencing burns, muscle overuse injuries, heatstroke, or any other work-related injury or sickness. Workers' compensation insurance provides the money you can use to cover surgeries, medical therapies, and more. 

Hospitalization
Hospitalization will be required if your employee experiences severe work-related injuries or diseases such as amputations, norovirus, etc. Workers' compensation insurance will provide money you can use to cover hospital bills 

Medication
Your employee will need medicines after sustaining a work-related injury or disease. Workers' compensation provides the money needed to make the purchase

Rehabilitation
Rehabilitation is required if your restaurant business’s employee has impaired bodily functions due to stroke, amputations, cuts, lacerations, etc. Workers' compensation insurance covers this. It will provide the money for therapist fees, rehabilitation equipment, and other associated expenses 

Lost Income Compensation
Work-related injuries or illnesses will force your employee to stop working for a while. Of course, you have to cover lost wages. Workers' compensation insurance takes this responsibility off your shoulders by providing the employee a weekly allowance equal to two-thirds or 67% of the average weekly wage 

Death Benefits
Your restaurant business’s employee might die because of a work-related injury or illness. Workers' compensation insurance helps with this by covering funeral expenses and providing financial aid to dependents 


Why is Workers Compensation Insurance Essential for Restaurants?

Restaurants belong to the group of businesses with high occupational risks. The Bureau of Labor Statistics provides the following facts supporting this claim:

  • There are 91,800 non-fatal injuries and illnesses in restaurants

  • Per 100 workers, at least 2 will suffer from an injury or illness because of work

  • 27.2% of all fatalities and injuries resulted to days away from work

  • Per 10,000 workers, 77 will suffer from an injury or illness resulting in days away from work


The Center for Disease Control and Prevention enumerates the most common hazards and provides additional insights into restaurant-related injuries and illnesses, which are: :

  • Sprains, contusions, and strains

  • Cuts and lacerations

  • Burns

  • Ergonomic injuries

  • Workplace violence

  • Occupational stress


In addition, here’s a table showing the approximate medical costs of treating the injuries we mentioned on the above bullet:

Sprains, contusions, and strains$2,626.53
Cut and Lacerations$5,531
Burns (moderately severe)$152,224
Ergonomic injury (upper extremity only)$1,353
Occupational Stress$7,351

True enough, the cost of restaurant-related injuries isn’t cheap. Therefore, if an employee demands reimbursement for the cost of their treatment, a restaurant can easily lose significant losses if there’s no insurance coverage.


Read more about workers compensation insurance


Restaurant Commercial Auto Insurance 

Does your restaurant offer food delivery, catering, or mobile food service? If your business uses any type of vehicle, then you'll want to purchase a commercial auto insurance policy for each vehicle. Whether you have your own food delivery cars, catering vans, or you operate a food truck, having your autos properly insured is vital. Commercial auto insurance for restaurant owners provides the following protection:

  • Auto liability coverage - Auto liability coverage will cover expenses if your restaurant’s vehicle caused an accident that damaged properties or injured third parties. This will reimburse the value of damaged property and pay for the medical expenses of injured persons. If an aggrieved party decides to take legal action, auto liability coverage will cover attorney fees, compensatory payments, and other associated costs
  • Physical damage coverage - Physical damage coverage has two types - collision and comprehensive. Collision physical damage coverage will cover parts repair or replacement if your restaurant’s commercial vehicle got damaged after causing an accident or getting involved in an accident. On the other hand, comprehensive physical damage coverage will cover parts repair or replacement if your restaurant got damaged because of fire, theft, vandalism, and other covered perils 


Why is Commercial Auto Insurance Important for Restaurants?

Delivering food is a demanding job. Aside from driving fast, the driver has to transact with numerous clients all by himself. The result of this is fatigue and reckless driving behavior. Data from 2019 show that food delivery drivers were involved in 60 transportation-related accidents.

Usually, it’s rare for restaurants to use trucks or cars to deliver food to customers, primarily because these vehicles have very limited mobility as compared to motorcycles and other similar vehicles. The problem is motorcycles are more hazardous than cars despite having lesser risk of crashing. The latest data from NHTSA show that there are 5,013 motorcycle crashes in the United States and deaths are 29 times more likely to happen when using a motorcycle than an automobile.


Read more on commercial auto insurance


Restaurant Liquor Liability Insurance

Dram shop/liquor liability laws don’t only apply to bartenders, bars, and pubs but also to restaurants serving guests with alcoholic beverages. Customers can hold restaurants liable when they sustain injuries after getting drunk.


The penalty varies per state but in most cases, it will reach up to more than $100,000. Also, aside from penalties, restaurants might need to pay a settlement which can scale up to millions depending on the severity of the injury the customers sustained.


With that being said, to protect themselves against the drawbacks of liquor liability laws, restaurants should consider getting liquor liability insurance. This insurance policy provides coverage the moment a drunk customer files a claim and tries to indemnify a restaurant.


Business Owner’s Policy for Restaurants

A business owner’s policy is an insurance product that combines general liability insurance and commercial property insurance. Many insurance companies decide to customize their BOPs to gain leverage against competition. And so, you’ll find a business owner’s policy having additional workers' compensation insurance, commercial auto insurance, etc.


Subway Insurance

Subway franchises can get covered through a restaurant insurance policy. However, the best protection is through a tailored subway insurance having general liability insurance, commercial property insurance, and stand-alone products liability insurance. 


Deli Insurance

Tailored insurance for delicatessens has general liability insurance with products liability coverage, commercial property insurance, and equipment breakdown insurance. Workers' compensation insurance and business interruption insurance can be added at an additional cost to deli insurance. 


Dairy Queen Insurance

Tailored insurance for dairy queen franchises offers general liability insurance, stand-alone products liability insurance having a $3 - $5 million limit, workers’ compensation insurance, and business interruption insurance. Other available dairy queen insurance policies can be added as endorsements. 


Pizza Shop Insurance

Pizza shop insurance offers general liability insurance with rented premises liability and products liability coverage, commercial auto insurance, equipment breakdown insurance, and commercial property insurance. Business interruption insurance and workers' compensation insurance can be added. 

Rank and Review Insurance Companies

Help others make better decisions

Show more

Restaurant Liability Insurance Cost

The average restaurant liability insurance cost is $68 per month or $816 per year for a $1 million coverage. 


Cost per Month Cost per YearBest for
CoverWallet$51$612Restaurant insurance quotes comparison online
Thimble $53$636On-demand and short-term business owner’s policy for restaurants
NEXT $55$660Small restaurants
Hiscox $67$804Large restaurants


How Much is Insurance for a Small Restaurant?

If you have a really small restaurant such as a corner deli, bakery or cooking business, coffee shop, pizza shop, or an in-and-out cafe that doesn't take up a lot of space or serve a huge number of customers, then you may only need a small restaurant insurance policy. Small restaurant insurance premiums could get as low as $50 a month in terms of cost!


How Much Does It Cost to Insure a Restaurant?

For many of you who wonder how much is insurance for a restaurant, the average restaurant insurance cost per month is $171 ($2,052 per year total). Of course, the answer to the question 'how much does insurance cost for a restaurant?' could vary significantly, depending on the size of your business, the city, and zip code you're located in, the coverages purchased,  and what type of restaurant you are.


How Much Insurance Does a Restaurant Need?

Restaurants need a minimum of 1 million general liability coverage to protect themselves against customer personal injury claims. Owners/managers pay $2.15 per $100 payroll to provide workers comp to employees. On the other hand, restaurants will do fine having a commercial auto insurance policy offering $50,000 up to $250,000 coverage.

Compare Restaurant Insurance Quotes

Get all the best quotes from leading providers in a click of a button!

Best Restaurant Insurance Companies

You have many options when buying restaurant insurance. Here are some reviews that talk about the pros, cons, and pricing of the $1 million general liability coverage of the most recommended carriers.


Coverwallet Restaurant Insurance


Pros

  • Customizable insurance coverage

  • Online insurance agents ready to answer questions

  • Stable restaurant insurance cost

Cons

  • Only ensures small businesses


Coverwallet works similarly to NEXT. All of its insurance policies are tailored to small businesses and can be availed online. However, what makes Coverwallet different is that it allows customers to talk with online insurance agents immediately to get an idea of the best policies that fit their needs.


Best for: Restaurant insurance quotes comparison online

Average cost: $51 per month 

Our rating: 10/10


Thimble Restaurant Insurance


Pros

  • Get insured online

Cons

  • Customer representatives can’t be reached by phone 


Thimble’s restaurant insurance is an on-demand and short-term business owner’s policy that combines general liability insurance, commercial property insurance, and business interruption insurance under one roof. 


Best for: On-demand and short-term business owner’s policy for restaurants

Average cost: $53 per month 

Our rating: 9/10


NEXT Restaurant Insurance


Pros

  • Easy online insurance application process

  • Online proof of insurance

  • Discounted rates

Cons

  • Only insures small businesses


NEXT insurance is great if you're running a small restaurant. Insurance policies from this company are tailored to the needs of small businesses. NEXT offers various insurance policies which can be bundled for a 10% discount. NEXT offers online certificates of insurance and an easy online insurance application process.


Best for: Small restaurants

Average cost: $55 per month 

Our rating: 8/10


Hiscox Restaurant Insurance


Pros

  • Generous amount payable

Cons

  • The amount payable is generous (you can save on premiums by increasing your deductibles


If you want to get insurance with a generous amount payable, Hiscox will be a great choice. While most insurance companies offer $1 - $2 million coverage only, Hiscox decides to change the game by offering coverages that cover more than $2 million for settlements and legal costs.


Best for: Large restaurants

Average cost: $67 per month 

Our rating: 7/10


How to Find Restaurant Insurance Near Me?

Click the “Get Quotes” button on this page to know which restaurant insurance brokers and carriers provide tailored protection. Also, our restaurant insurance quote generator allows you to compare the offers and average restaurant insurance cost of brokers and carriers for an informed buying decision. 


Recent Reviews

Recent Posts