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Restaurant Insurance  Highlights

Insuring Restaurants, Pubs, Fast Food, Diners, and Catering Halls

Protecting the financial interest of restaurants, pubs, and other types of eating establishments can be very tricky if certain aspects of risk management are thought out beforehand.  The predominant lines of coverage include injury from food poisoning, liquor and premises liability, and assault & battery. But what about protecting against an auto liability suit if a food delivery was made by a driver using their own vehicle.

Careful attention needs to be made in examining all aspects of a restaurant, tavern, pub, bar, or other type of food establishment.  Hence, a questionnaire which addresses basic to complicated issues that pertain to the food service industry should be utilized. Some of the questions may read as follows:

The proceeding questions address the third party liability issues that face most food establishments and catering facilities.  However it should be noted that there are many commercial property lines of coverage that can have a tremendous impact on a food service business in the event of a loss.    


The financial impact of a third party liability suit can be as devastating as the total loss from a hostile fire. Both types of losses can be very serious therefore it makes sense to discuss the type of policy that protects the liability issues along with the property coverage which is the business owners policy or BOP.

Business Owners Policy or BOP

Unless the size of the eating establishment is very large, most commercial general liability insurance is packaged with commercial property coverage. Often times these policies are written on a Business Owners   

Wine Basket

Policy form or for short - BOP.  Most BOP’s include loss of business income, monies and securities, hired and non-owned auto, valuable papers & records, food spoilage, mechanical breakdown, etc.  Usually BOP’s are defined by it’s limitations and exclusions as opposed to the named perils.  Another advantage of writing a restaurant or food establishment on a BOP form is that there is usually no annual audit.  This can save time and aggravation for all parties involved, but most important it allows the restaurateur to budget their insurance expense.  

How is the cost of these policies determined?

Business Owners Policies (BOP’s) are usually rated based on the contents limit.  Other factors may include location, type of establishment, and building construction.  

Commercial General Liability & Umbrella Insurance


When a restaurant is too large by either sales volume or number of locations, the type of insurance to cover it’s liability exposures would be a commercial general liability policy or CGL.  Often times, these forms are combined with a commercial property policy or CPP to form a commercial package policy or CPP.  If the liability insurance is written on the former than many of the above questions need to be addressed, but more care needs to be ascertained as these policies often contain many exclusions and limitations.  Therefore, based on the type of operation, coverage can be purchased on an item by item basis.  These may include; food & airborne illness, hired & non-owned autos, assault & battery, liquor liability, and employer practices liability to name a few.    

An umbrella policy typically adds an additional layer of liability coverage over the underlying or base limits.  A follow form umbrella generally matches the coverage including the limitations and exclusions whereas an excess liability policy defines what is covered which can deviate from the underlying policy.

How is the cost of these policies determined?

Commercial general liability policies are most often rated based on sales however payroll can be a factor.

Commercial Property Insurance

Similar to commercial general liability policies, commercial property policies typically cover perils on a named basis.  Therefore it is important to determine what risks are prevalent to the establishment.  These policies are generally written on either a basic, broad, or special basis. The first two defines which perils are covered, while the latter covers all direct physical losses except for the exclusions.  Again it is important to determine every aspect of what perils are inherent to the business.  

Workers’ Compensation & Statutory Disability Insurance

All states have workers’ compensation laws that require organizations to provide coverage or a means to pay for it’s employees claims in the event of an on the job injury or illness.  Please refer to the insurance department or the department of labor in the state for which the business operates and the employees are located or work in.  Statutory disability may also be required which provides coverage for off the job injuries and illnesses.

By William F. Schaake, CIC, CRM © 2011 All rights reserved

What types of coverage are important to consider?

Restaurants,  Bars & Taverns

Food & Airborne Illness

Spoilage - Contamination

Mechanical Breakdown

Loss of Business Income

Hired & Non-Owned Auto Liability

Employer Practices Liability

Temperature Change

Assault & Battery

Commercial Crime

Liquor Liability

Food Retailers, Distributors, Wholesalers and Manufacturers

Inland Marine

Product Liability


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