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Restaurant Insurance: Cost, Quotes & 101

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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 possible extra coverage, 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 property properly insured.

Below, we'll cover and answer some of the most commonly asked questions regarding restaurant insurance, its average cost, important information, and give you a brief breakdown of restaurant insurance coverage and the different types of insurance restaurants need. Once you feel knowledgeable enough and ready to find restaurant insurance near me, you will be able to easily compare quotes and get the best restaurant insurance quote that you are looking for using the get quotes button. Let's get started!

Restaurant Insurance Coverage: Types of Insurance for Restaurant Owners

Restaurant Liability Insurance: General Liability Insurance for Business Owners

General liability insurance will cover personal injury and property damage claims from customers. This is very helpful for accidents where the restaurant or the employee is at fault. 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. 

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 fall 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

Read more about commercial general liability insurance coverage (CGL insurance)

Commercial Property Insurance for Restaurants

Property damage is one of the greatest enemies of a restaurant. The passage of time brings minor damage such as wear, tear, and equipment breakdown. On the other hand, major damage, those kinds that might result in bankruptcy, might be due to 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.

Get commercial property insurance for restaurants as your primary precaution against property damage. The terms of this insurance policy will apply to your restaurant’s building and equipment. In simple terms, if your restaurant crumbles to the ground,  trust commercial property insurance to rebuild everything. 

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 of 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 (Business Income Coverage)

Restaurants are very vulnerable to failure when they experience a business interruption.  A decrease in sales can have a very profound impact because restaurants have to invest a lot of financial resources to operate - 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 to recoup capital. 

When restaurants face a sudden halt to their operations resulting in lost income, restaurant business interruption insurance policy is ready and waiting to lend a hand. This insurance policy provides reimbursement for any missed projected income for a given month, quarter, or year. Terms of business interruption insurance apply to sudden closures due to civil lawsuits, natural disasters such as hurricanes, temporary closure to make way for renovation, etc. 

Restaurants have the liberty to decide whether to get business interruption insurance.  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

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 Centers 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. 

Restaurants should always opt to get workers' comp insurance.  This is a legal requirement for business operations that have more than four employees. Essentially, this covers any medical bills or lost wages if one of your team members is hurt or injured on the job.

Read more about workers compensation insurance

Commercial Auto Insurance (For Delivery, Catering, and Food Trucks)

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 delivery cars, catering vans, or you operate a food truck, having your autos properly insured is vital in the event that there's an accident.

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 sometimes, reckless driving behavior. Data from 2019 show that food delivery drivers were involved in 60 transportation-related accidents,  a staggering 27 increase from the previous year. 

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 a 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

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.

Compare Restaurant Insurance Quotes

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Restaurant Insurance Frequently Asked Questions:

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 

No matter what type of restaurant or eatery you own, 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 a basic restaurant general liability insurance policy is the best way to ensure that you never find yourself in over your head. Businesses in need of restaurant insurance coverage could include:

Basically, if you serve food and have a business license, then you should have restaurant liability insurance, at the very least.

What Kind of Insurance do Restaurants Need?

The most basic kind of commercial restaurant insurance is general liability insurance coverage, which helps cover any costs associated with a guest 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. There are also some additional types of insurance that restaurant business owners should consider. So keep reading, because these are discussed below!

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 ($2,050 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, and what type of restaurant you are.

Restaurant Liability Insurance Cost

The average restaurant liability insurance cost is $68 per month or $816 per year for commercial general liability insurance. Restaurant general liability insurance protects restaurants from customer property damage and injuries.

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. For example, deli insurance, pizza shop insurance, and other types of small restaurant insurance premiums could get as low as $50 a month in terms of cost!

How do I Ensure my Franchise Restaurant?

If you're looking for franchise restaurant insurance, be it Subway insurance, American Deli insurance, Dairy Queen insurance, McDonalds insurance, or trying to insure any other franchised restaurant, then the process is no different than any other restaurant.

The only difference is that the Franchise's corporate regulations may require you to purchase additional insurance, based on their company policy. In some cases, your franchise sponsor may even be able to connect you with lower-cost insurance through their corporate insurers.

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.

Rank and Review Insurance Companies

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Best Restaurant Insurance Companies

NEXT Insurance

NEXT insurance is great if you're running a small restaurant. Insurance policies from these companies are tailored to the needs of small businesses. For the small business, NEXT offers various insurance policies which can be bundled for a 5% discount. For the owner, NEXT offers online certificates of insurance and an easy online insurance application process. 

Pros
  • Easy online insurance application process
  • Online proof of insurance
  • Discounted rates
Cons
  • Only insures small businesses

Best for: Small Restaurants

Our rating: 5/5

Coverwallet Insurance

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. 

Pros
  • Customizable insurance coverage
  • Online insurance agents ready to answer questions
Cons
  • Only ensures small businesses

Best for: Small restaurants

Our rating: 4.5

Hiscox 

If you want to get insurance with a generous amount of 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. 

Pros
  • Generous amount payable
Cons
  • Amount payable is generous (you can save on premiums by increasing your deductibles

Best for: Large restaurants

Our rating: 5/5

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