Is your insurance agent preparing you for common restaurant risks?
There are a variety of risks a business must keep top of mind when it comes to navigating insurance. As a restaurant owner there are certain risks that are going to be more prominent than others that are unique to the industry. Because of this, it’s important you understand what is covered in your insurance policy.
When I opened my first restaurant in Denver, Colorado, I just did what my insurance broker told me to do without understanding what was covered or what was really needed. I had opened my restaurant right before covid hit, and if you are a restaurant owner reading this, you know all about the uphill battle of soaring labor and food costs. I decided to close the restaurant in November of 2021 and focus on helping fellow restaurant owners with their insurance programs.
During my time owning Northside Eatery, I was fortunate to avoid any large claims but there were several times a lot of questions came to mind. I just assumed my basic coverages had my back. Boy, would I have been mistaken if I wasn’t so lucky.
After learning the intricacies of insurance as an advisor, here are some of the things I have learned:
Workers’ Compensation
I never knew that I could exclude myself/salary as an owner of more than 10%. I also never knew there was a schedule credit of up to 35% in Colorado that could reduce the work comp premium with solid loss history and safety measures in place. I wish I would’ve pushed my broker when I opened the restaurant to negotiate harder with the carrier.
BOP v. Commercial Package Policy
BOP v. Commercial Package policy and the major benefits of a restaurant working with a carrier who focuses and specializes in the hospitality industry. There are so many restaurant-specific coverages built into BOP carriers v. larger national carriers, otherwise known as generalists.
As a restaurant owner, it was hard to even think of certain questions to ask my advisor. Many times, coverage is added after a claim happens, after it is too late. My goal is to help you be proactive, not reactive. Here are some questions you should be considering:
- How much and which coverages are necessary for a restaurant? What is an owner’s risk tolerance for certain kinds of unfortunate situations that can happen?
- What happens if an employee sues the business? Am I covered?
- What happens if there is a water back up or the sump pump breaks in the kitchen? Will my policy cover me?
- Am I covered and for how much if I can’t operate due to an unforeseen insurable event?
- If an employee steals cash or property will my carrier pay a claim?
- If a third party deliver service, such as Grubhub or UberEats, picks up a meal from my restaurant to deliver to a customer and that driver hits/injures someone en-route can the injured person come after my restaurant?
- Is my liquor inventory covered at the cost I paid or the restaurant selling price?
- If another tenant in the same building causes the rest of the building to shut down will my insurance cover me? If so, for how much?
- Am I covered if my restaurant hosts or participates in an event off premises?
- Are there safety/preventative measures I could take to get more competitive rates from carriers?
- If a storm or power outage causes food to spoil in my walk-in or freezer, am I covered?
It is more critical than ever for not only restaurant owners, but all business owners to understand and structure an insurance program that will serve them when they need it most. If you are looking to review your current policy, I am here to help.