If you’re the owner of a food service business, you know that preparing and serving food to the public comes with inherent risks. Not only are food service establishments noisy, chaotic
places behind the scenes, there’s a great deal of hustle and bustle in the dining areas as well. Spills, slips and falls and other accidents are likely, no matter how carefully things are run. Add to that the risk of food-related issues such as allergies and and food poisoning, and the list of hazards becomes very long.
Fortunately, most companies that offer commercial general liability insurance write policies for restaurants and bars. Here’s a quick overview of what you should be looking for to be certain your food service business is adequately insured.
General liability insurance
General liability insurance provides coverage for your business in the event you are responsible for damages in many different types of claims. These include:
If a customer slips and falls and breaks her hip entering your restaurant, general liability insurance will cover her medical bills, lost wages and any compensatory awards. It will also pay your legal defense costs in the event you are sued.
Similarly, if a customer eats food your employees prepared and later becomes ill, your general liability insurance will cover medical bills, hospital costs and any court-awarded compensation. It will also cover court costs and legal fees.
There are a number of accidents that can occur in a restaurant or food service business that could result in damage to a patron’s property. For example, an employee could spill coffee on someone’s brand new fur coat or expensive Prada purse, or a warming plate could malfunction at a party where you were providing food, causing a fire. In either case, your liability insurance would pick up the cost of repairing or replacing the damaged property as well as defense costs if you were sued.
Advertising and Personal Injury
If you advertise your business in print or online, your general liability insurance will cover claims of copyright infringement if you are sued for using intellectual property that belongs to someone else. For example, if you inadvertently use a logo that is very similar to the trademarked logo of a competitor, your insurance would pay any court awarded damages and defense costs if you are sued. Most policies also cover court costs and legal fees if you are accused of libel or slander.
Liquor Liability Coverage
If your establishment serves liquor or allows liquor to be consumed on the premises, your general liability insurance will not cover damages due to alcohol-related events. Therefore, liquor liability coverage is a must.
Most states in the U.S. have so-called “dram shop laws” that allow injured parties to hold bars, restaurants and alcohol retailers accountable for injuries caused by an intoxicated customer. These may be minor injuries caused by a physical altercation or a drunk-driving accident in which one or more victims are killed.
Not all dram shop lawsuits are decided in favor of the plaintiff. In order to prevail, the injured party must prove that the server acted recklessly, which typically involves establishing that the server:
- Intentionally served a patron alcohol
- Knew that the patron was a minor or was already intoxicated
- Consciously disregarded an obvious and substantial risk that serving liquor to that patron would cause physical harm to the patron or to others.
If found liable, your establishment could be responsible for additional damages for intentionally selling liquor to a minor or intoxicated person, violating state liquor laws or failing to properly train your employees. Such damages can easily add up to hundreds of thousands of dollars, so make sure you have enough coverage in place.
Property and Casualty Coverage
This coverage protects your business property, such as the building, cookware, equipment and appliances, computer systems, and furnishings in the event of a covered peril, such as a fire or theft. Some policies also covers property belonging to a third party that is left in your care, such as items left in a coat check or cars in a valet parking lot.
Worker’s compensation insurance covers the cost of medical care, lost wages and rehabilitation if an employee is injured on the job. Most states requires all employers, including small businesses, to have worker’s compensation in place. However, even if there is no statutory requirement that you have it, workers compensation insurance is always a good idea. If you are not covered and an employee suffers a catastrophic injury, he or she will be financially devastated and your business will undoubtedly be sued.
At Carmoon Group, we offer small business insurance coverage tailored specifically to your needs. Whether you own a restaurant, food truck, catering business or bar, we can get you the coverage you need at an affordable price. Call us any weekday between 9 a.m. and 6 p.m. at 516-292-3780 to make an appointment for your insurance review. No time to call during business hours? Request a free consultation online and we’ll get back to you at a convenient time.