Picture this: You’ve set the grand opening date for your new restaurant or bar. You’ve ordered the cases of wine, contacted local vendors for fresh produce, and planned the first special for your opening night. Did you think about food liability insurance?
What is Food Liability Insurance?
As you plan your menu and your daily specials, you should also be planning for the unexpected. Food liability insurance protects your business and your customers. It takes shape in two forms: general liability and commercial property coverage.
General Liability Coverage
This insurance can protect your restaurant from accidents. It includes when the customer gets sick from an allergic reaction to an ingredient in their entree or a patron slips and falls in the restaurant. General liability covers your eatery from accidents that you may be responsible for.
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This type of coverage includes injuries to employees on the job. It can also protect you from advertising liability if someone claims you stole their holiday ad slogan.
The exact coverage you get in your policy will depend on what you request. Along with basic general liability, you can get add-ons to customize the protection to fit your business. A food truck will need different coverage than a stand-alone cafe.
Commercial Property Coverage
With this type of coverage, you’re protecting your business from physical damage. This type of protection includes the building and the furnishings and equipment. The coverage is limited to covered events, such as fire, vandalism, and sometimes water damage.
To verify that you have the necessary coverage from the most likely events, you should review both what is covered and what is excluded. Many insurance providers exclude water damage from flooding unless you purchase a rider for flooding.
Most restaurants, bars, and other eateries choose to purchase both types of coverage. This is known as a Business Owner’s Policy.
Why You Need Food Liability Insurance
Most if not all businesses should purchase liability insurance. The food industry is at the top of this list due to the risk of lawsuits. Even if your eatery isn’t at fault, you may need to defend your company from accusations of negligence in a lawsuit.
Attorney fees can add up quickly as they work to build a case in your favor. It may be better to settle the claim rather than fighting it to protect your future business success. The insurance provider pays out for the settlement up to the maximum amount of coverage.
Without adequate insurance for your food business, you would need to keep a large cash reserve. This could pay for medical costs and other damages for anyone injured at your establishment if you are liable. Without the cash on hand, you may end up selling your business to pay for a lawsuit.
It’s quite common for food establishments to receive complaints from customers about the food. The patron may be allergic to a food and fail to inform the establishment. If they do provide the information, it may not get back to the chef. The customer could get sick after eating at your restaurant and assume there was something wrong with the food.
Even with the best policies in place, your kitchen may use expired ingredients or cook food where other foods have been that cause an allergic reaction. You may need to cover the expenses of medical care for the affected customer.
How Much Will Food Liability Insurance Cost?
The cost of your policy will depend on several factors. Expect to pay more if you have a restaurant than if you serve food out of a food truck. A formal restaurant with a full menu will often have a more expensive policy than a breakfast and lunch cafe with limited options.
Multiple food trucks will cost more than one food cart while a large eatery may have a more expensive policy than a small diner. Expect higher costs if you operate a food booth at festivals because of the increased risk of foodborne illnesses.
Another consideration for the cost of your food liability insurance policy is the coverage. You don’t want to pay for something irrelevant to your business. When choosing a policy, make sure you review the different features. You should only be paying for the services that you request and need at your restaurant. You may not realize the extent of the coverage you need, but you can adjust your plan.
Other Coverage You May Need
If you serve alcohol, ask your insurance provider about host liquor liability insurance. This coverage protects you if a customer becomes intoxicated at your restaurant or bar and causes damage or injury. You will use this protection if the customer damages your property as well.
Protect yourself and your business with the right food liability insurance. Make sure you have the right add-ons and enough coverage in your policy for the worst-case scenario.
