Restaurant insurance – a simple guide

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on June 26, 2024. Next review due April 6, 2025.

    There are tens of thousands of restaurants in the UK, and they sell every type of food there is. However, despite this diversity, they have one thing in common – they all need restaurant insurance to protect them from financial calamity if the worst should ever happen. 

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      What is restaurant insurance?

      Restaurant insurance is an umbrella term for a range of business insurance policies that can protect food businesses – restaurants, bistros, pizza parlours, steakhouses, even food trucks and hot dog wagons – from financial loss due to accident, negligence, theft, fire, flood, product problems, legal claims and more. 

      Why do I need restaurant insurance?

      Busy restaurants blend high levels of foot traffic with many trays of food and drink and a kitchen where slippery floors, sharp tools, hot surfaces, or even open flames are ever-present. It’s a heady mix that means accidents, mishaps, errors and omissions can happen at any time – and could deliver catastrophic financial impact to your business.

      What does this mean? Imagine if a fire in your restaurant destroyed your fixtures and fittings and all your stock, perhaps even took the building down. What would you do? Could you rebuild from scratch? Could you afford to find other premises to make a fresh start? Additionally, how would you cope if a visitor to your store tripped on a loose floor tile and made a large claim for compensation? Or what if one of your employees became sick because of the work they do for you? Could you afford to pay these claims? Could you afford to stay in business? 

      What’s more, it’s not only big incidents that could hurt your business. Even commonplace events can have serious consequences:

      Food poisoning

      Your restaurant sells unusual and delicious wraps and salads. Unfortunately, without your knowing, a batch of shellfish carries its own dangerous, exotic extras. The bacteria causes a customer to be violently ill, ending up in hospital. They sue you for neglect, causing harm, and their medical and legal costs. Public liability insurance will take care of the financial impact and the legal worries.

      Plastic found in a takeaway meal

      A small piece of plastic packing accidentally ends up in one of your takeaway selections and eventually, in a consumer’s mouth. Fortunately, their claim for compensation can be neatly handled by your product liability insurance

      Oven breaks down

      It’s Saturday night on a bank holiday weekend and your restaurant is fully booked. Then the oven goes down and you cannot operate. Business interruption insurance can cover you for loss of income until you can reopen.

      What type of insurance do I need for my restaurant?

      Restaurants are complicated businesses, and they present many different risks. Ideally, you need insurance that protects:

      • The building (if you own it) 
      • Furniture, fixtures and fittings
      • Equipment
      • Employees, customers, suppliers and service agents
      • Stock and inventory
      • Vehicles
      • The risk of legal claims from third parties
      • The financial damage a lengthy unplanned closure could bring

      What are the key types of insurance for food businesses?

      Essential insurance for your food business includes:

      Public liability insurance

      Public Liability Insurance protects your restaurant or food business if someone is injured, or their property is damaged because of the services that you or your business provides. This type of cover, also known as PL or Liability Insurance, is designed to protect your business against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your operating premises – whether you’re at fault or not.

      Product liability insurance

      Product liability insurance (PLI) – also known as ‘product insurance’ – is designed to protect companies, partnerships, sole traders and the self-employed from financial loss in the event that someone is harmed, or property is damaged due to the products that they supply. 

      Important tip: Product liability insurance for food businesses isn’t only for manufacturers, farmers or chefs. In the event of an accident, your food business could be held liable even if you only distributed the product and had nothing to do with its creation.

      Employers’ liability insurance

      Under the Employers Liability Act of 1969, Employers’ Liability Insurance (EL) is a legal requirement for most UK employers. EL protects you and your employees, (including those who no longer work for you), should they be injured or become unwell as a result of working for your business. EL typically covers the associated legal and compensation costs, and other damages of such events, but it can also cover accidental injury or damage caused by an employee to a third party, such as your customers. 

      Business interruption insurance

      Business interruption insurance covers you for lost income if your restaurant is unable to operate due to an unexpected event. This would include incidents such as:

      • Fire and flooding at your premises
      • Power black outs 
      • Major equipment failure 
      • Supply chain issues beyond your control
      • And more

      What extras should I add to my restaurant insurance?

      As well as the essentials you may wish to consider:

      • Contents and stock cover – if the contents of your restaurant, including food and drink, are lost to fire, flood or theft, this can help you recover the cost
      • Equipment insurance – you’ve invested in expensive kitchen and bar machinery. This type of cover can help you if it fails for reasons beyond the warranty or service contract. It may also pay for any other property damage – such as water leaks – that the equipment fault creates
      • Legal expenses cover – if a claim is made against you, this can help with legal bills such as solicitors’ fees and court costs. Some providers may also offer expert advice on a range of legal matters.
      • Money cover – this can protect any cash you keep in the till or locked in a safe on the premises. It may also cover money in transit, such as when you take your takings to the bank after cashing up.

      In what situations could restaurant insurance help?

      Restaurant insurance can protect your food business from the financial impact of many different situations, including common events like this:

      • A customer is made ill because you failed to correctly list the allergens in the food you sell. You’ll need public liability cover to help offset their claim
      • Your freezer breaks down over the only weekend you’re closed – spoiling hundreds of pounds of stock. Business contents and stock insurance can pay to replace your loss
      • A fault in the design of the cardboard trays you use to sell takeaway food allows sauce to leak onto a leather car seat creating a permanent stain. Product liability insurance can take care of the seat refurbishment and leave you in the clear
      • One of your waiters spills red wine onto a customer’s expensive suit. Employers’ liability insurance will cover the cost of buying them a new set of clothes
      • A burst water main floods your restaurant causing it to close for a month. You’ll want accident and business interruption insurance to get you through this crisis

      What does restaurant insurance cover?

      Restaurant insurance can cover food business against:

      • The costs of any claims by third parties or your employees for personal injuries or property damage they say has been caused by your business. The cover may also include your legal expenses or those claimed by the other party
      • Claims from third parties who say they have been harmed by the products you sell
      • Loss of equipment, stock, fixtures and fittings due to fire, flood, theft or vandalism
      • Downtime or closure of your business due to damaged equipment or premises
      • Damage to or complete loss of your business premises if you own the building
      • Damage to your business reputation or loss of trust by your customers

      How much does restaurant insurance cost?

      Insurance for restaurants can cost as little as £100 per month. However, the premium you pay will depend on a range of unique factors, such as the type of restaurant you run, the scale of your business, where you are located, and the number of workers you employ.

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let an accident, mishap or error fry your restaurant business. Contact Swoop today to compare top-quality restaurant insurance from a range of providers and to discuss all your business insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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