Starting or running a restaurant can be a tough job. It requires hard work, long hours, and with more than 1,400 restaurants closing their doors permanently in the year following June 20181 there can be no guarantee of long-term success.
That is partly down to rising staff and ingredient costs, which have seen even established chains struggle, even those with a celebrity chef’s name over the door.2 Along with weakening consumer demand and an over-supplied market,3 these factors make it all the more difficult to survive and succeed in the longer term.
All of which makes it all the more important to protect your restaurant business against the threats you can at least foresee and prepare for – from damage to property, right through to illness or injury befalling customers on staff. That, of course is the role of restaurant insurance.
How Much Does it Cost to Insure a Restaurant?
As with most insurance cover, the cost to insure a restaurant depends on your needs, which boils down to the nature of the business – everything from the type of catering equipment you use right through to whether you employ people.
That’s because insurers will work out the cost to insure a restaurant based on the risks it faces – the higher the risk, the more your restaurant insurance will typically cost.
But that doesn’t mean you should think about reducing the cost of your cover by reducing the level of insurance protection you take out. In the event something goes wrong and you need to make a claim, you could find some incidents are not covered, or that the pay-out does not cover all the costs you have incurred.
Restaurant Insurance Cost – Work Out What Cover You Need
The first step is to work out which insurance covers you need.
For instance, it’s likely you will need insurance for your premises, stock and equipment – to cover your costs if you suffer losses, for instance due to fire, theft, or flood. The level of cover you need will depend on considerations like whether you own or lease the building itself, how much stock you typically have on site and the value of the equipment you need to cover.
You will also need liability insurance to step in and help with things like legal fees and compensation costs if someone is injured or falls ill as a result of working or eating in your restaurant, and makes a claim against you.
The liability insurance cover you may typically require includes employers liability insurance, which is usually compulsory if you employ people and public liability to cover customers and the wider public. You may also want to take out product liability insurance, which offers similar cover for legal expenses and compensation if someone falls ill after eating food prepared in your restaurant.
Besides liability insurance, there are a range of other covers you may need too.
For instance, if you serve alcoholic drinks, you may want to take out loss of licence cover, which is designed to protect you if your license is revoked, giving you time to recover. Meanwhile, deterioration of stock cover will help cover your costs if a fridge, freezer, or cold store breaks down and food spoils. Finally, money cover will help to protect your cash flow by replacing cash stolen from the till.
How to Manage the Cost of Restaurant Insurance
Clearly, there are a great many issues to consider when buying insurance for your restaurant – you need to think about all the risks set out above and more – and, in the end, the right insurance will offer the protection you need to survive if the worst should happen, at the right price.
Arranging your own restaurant insurance means clearly understand your risks, and how much cover you need – for instance if you need cover for £5,000 or £10,000 worth of equipment – but it is vital to check the small print in a policy before you buy. You might find that things like deterioration of stock or money covers, for instance, are not included, which could leave you exposed.
That can be a time consuming confusing, and frustrating process, so you may be better off working with an insurance broker who understands the restaurant sector and can help you find the cover you need at the right price.
At smei we work with restaurants to understand their businesses and the risks they face in detail, before searching the market for appropriate, affordable cover. You can read about our insurance solutions for restaurants – we take away the hassle involved in finding the right cover and could save you over 20% on the cost of restaurant insurance.4
Why not contact us to find out more?
Quotes from well-known and specialist insurers, including: