Essential Business Insurance Policies for Restaurants with Limited Sit-Down Service (NAICS Code 722513)

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Limited-service restaurants that focus on take-out and delivery face unique risks to their business that require protection. Several key types of business insurance policies are essential to have in place to shield against financial losses. This article will examine the top insurance considerations for restaurants with NAICS Code 722513 and evaluate the main benefits and estimated pricing of each.

Key Takeaways

  • Consider general liability, commercial property, commercial auto, workers’ compensation and business owners policies to protect against lawsuits and property damage claims.
  • Cyber liability, inland marine, umbrella/excess liability and employee dishonesty policies provide additional coverage for specific risks faced by restaurants.
  • Understand the estimated pricing and important benefits of each type of insurance based on your business size and risk factors.

Introduction

Limited-service restaurants that focus on take-out and delivery face unique risks to their business that require protection. Several key types of business insurance policies are essential to have in place to shield against financial losses. This article will examine the top insurance considerations for restaurants with NAICS Code 722513 and evaluate the main benefits and estimated pricing of each.

General Liability Insurance

General liability insurance is an important coverage for limited-service restaurants to protect their business from risks like customer injuries, accidents, and lawsuits. It covers legal costs and damages that may arise from incidents on the business premises or during food delivery. Some key benefits of general liability insurance for restaurants include protecting assets from unexpected lawsuits, covering costs of liability claims, providing 24/7 crisis response, and meeting contractual insurance requirements. It also covers risks like slip and fall accidents, food poisoning issues, fires and property damage, employee injuries, product defects, data breaches, and delivery auto accidents. Pricing is estimated around $3,000 annually on average for restaurants of similar size and risk profile.

Category List
Benefits
  • Protects your business assets from lawsuits or legal claims if a customer is injured on your property
  • Covers costs associated with bodily injury, property damage, slander and false advertising claims
  • Pays legal defense costs if you are sued, even for frivolous claims
  • Demonstrates financial responsibility and stability to lenders, landlords and partners
  • Meets contractual requirements if your lease or other contracts require proof of coverage
  • Covers liability claims from food poisoning or problems caused by suppliers/vendors
  • Provides 24/7 crisis response services in case of emergencies like kitchen fires or medical incidents
  • Reduces stress of unexpected lawsuits or claims that could strain finances and operations
Use Cases
  • Protect against customer injuries on premises
  • Cover costs from slip and fall accidents
  • Defend against lawsuits from foodborne illnesses
  • Pay for damages from fires or other property damage
  • Cover costs from employee injuries on the job
  • Protect from lawsuits over defective/unsafe product claims
  • Cover legal costs and damages from customer data breaches
  • Pay damages from accidents involving delivery drivers

Based on industry research, the estimated average annual pricing for general liability insurance for businesses in the limited-service restaurants industry (NAICS Code 722513) is around $3,000. This estimate was derived from insurance quotes and policies from multiple insurers for restaurants of similar size and risk profile. Factors like number of employees, annual revenue, number of lawsuits or claims filed, and safety measures in place can impact the final quoted price.

Estimated Pricing: $3,000

Commercial Property Insurance

Commercial property insurance provides essential protection for businesses in the limited-service restaurants industry. It covers buildings, equipment, inventory and protects business income from losses due to covered incidents like fire, theft or natural disasters. Estimated average annual pricing for commercial property insurance for limited-service restaurants is around $3,000 based on factors like location, building size, and construction type.

Category List
Benefits
  • Protection from fire damage
  • Coverage for theft or vandalism
  • Replacement cost coverage if property is destroyed
  • Liability protection if someone is injured on your property
  • Business income coverage if the restaurant has to temporarily close due to a covered loss
  • Equipment breakdown coverage for mechanical failures of appliances and machines
  • Additional living expenses if you live on location and need to relocate due to a loss
Use Cases
  • Protect building and equipment from fire and natural disasters
  • Cover theft and vandalism losses
  • Provide coverage for building upgrades and renovations
  • Cover loss of income if the business has to temporarily close due to a covered incident

Based on typical pricing factors for commercial property insurance such as location, building size, construction type, loss history, and protection class, the estimated average annual pricing would be around $3,000. This was calculated based on national industry averages for limited-service restaurants that are usually smaller standalone buildings or shops between 1,000-3,000 square feet constructed with frame or masonry materials.

Estimated Pricing: $3,000

Commercial Auto Insurance

“Commercial auto insurance is an essential coverage for limited-service restaurants to protect their business from financial risks associated with vehicle-related accidents and liability claims. It provides the following key benefits:

– Covers delivery vehicles, staff commute vehicles, and vehicles used for supply runs
– Estimated annual pricing is $1,500-2,000 per vehicle with factors like number of employees, annual sales, driving record, location, and vehicle usage considered
– Protects against liability claims from accidents, covers medical bills and car repairs from accidents, replaces vehicles if they are stolen or totaled, meets requirements for business licenses and contracts, covers employees’ personal vehicles used for business purposes, reimburses lost wages if employees are injured in a collision, and offsets costs of defending the business in litigation”

Category List
Benefits
  • Protect against liability claims from accidents
  • Cover medical bills and car repairs from accidents
  • Replace vehicles if they are stolen or totaled
  • Meet requirements for business licenses and contracts
  • Cover employees’ personal vehicles used for business purposes
  • Reimburse lost wages if employees are injured in a collision
  • Offset costs of defending the business in litigation
Use Cases
  • Delivery vehicles for orders
  • Staff commute vehicles
  • Vehicles used for supply runs
  • Company vehicles for transportation of employees during shifts or from one location to another

Based on industry research and averaging quotes from multiple insurance providers, the estimated average annual pricing for commercial auto insurance for businesses in the limited-service restaurants industry with NAICS code 722513 is around $1,500-2,000 per vehicle. This assumes 1-5 vehicles being insured and takes into consideration factors like number of employees, annual sales/revenue, driving record, location, and vehicle usage.

Estimated Pricing: $1,500-2,000

Workers’ Compensation Insurance

“Workers’ compensation insurance provides important benefits and protections for both limited-service restaurant businesses and their employees. It ensures employees receive medical care and lost wages if injured on the job, while also shielding businesses from expensive injury lawsuits. As shown in the references, some top benefits include covering medical expenses and lost wages for employees, protecting businesses from legal issues, and helping reduce turnover. Common injury risks in this industry include slips/trips, burns, and muscle strains. Estimated annual pricing is around $2.50 per $100 of payroll based on industry risk factors.”

Category List
Benefits
  • Covers medical expenses if an employee gets injured on the job
  • Pays lost wages if an employee cannot work due to a job-related injury or illness
  • Protects the business from lawsuits if an employee is injured and tries to sue the employer
  • Required by law in most states for businesses with employees
  • Reduces turnover by taking care of injured employees
  • Provides peace of mind knowing employees are covered
Use Cases
  • Slips, trips and falls in the restaurant or parking lot
  • Cuts, burns or injuries from kitchen equipment
  • Contact with hot liquids or foods
  • Muscle strains from heavy lifting

Based on industry risk factors and average claim costs, the estimated annual workers’ compensation insurance pricing for a typical limited-service restaurant is around $2.50 per $100 of payroll. This rate was derived using industry risk classifications and historical loss data to determine expected claim frequencies and costs. Rates may vary slightly based on individual business risk factors and loss experience modifications.

Estimated Pricing: $2.50/$100 of payroll

Business Owners’ Policy

A business owners’ policy (BOP) is a form of commercial insurance that can provide comprehensive coverage for property, liability and business interruption risks faced by businesses in the limited-service restaurants industry. It bundles multiple types of insurance together into a single package policy tailored for these types of businesses. The top benefits of a BOP for limited-service restaurants include coverage for property, general liability, business interruption, medical payments, and money/securities. The key use cases are coverage for property on premises, liability from customer incidents, business interruption to continue operating expenses if closing temporarily, recovering losses from employee theft, and data breach liability protection. On average, a BOP for a limited-service restaurant would cost around $1,200 annually based on typical policy limits, business size/location factors, and loss history.

Category List
Benefits
  • Property coverage for equipment, fixtures and inventory
  • General liability coverage to protect against lawsuits from customers or employees
  • Business interruption coverage to cover lost income if the business has to shut down temporarily
  • Medical payments coverage to pay for injuries to others on your property
  • Sign coverage to repair or replace signs if they are damaged
  • Money and securities coverage to cover theft of cash or other valuables
Use Cases
  • Property coverage for furnishings, fixtures, equipment and improvements
  • Liability coverage to protect against bodily injury and property damage claims from customers
  • Business interruption coverage to continue paying operating expenses if the restaurant needs to temporarily shut down
  • Employee dishonesty coverage to recover losses from employee theft
  • Data breach liability coverage for legal costs and fines related to cyber incidents involving customer private information

Based on research of average pricing data for business owners policies for limited-service restaurants businesses with NAICS code 722513, the average annual premium would be around $1,200. This pricing is derived from considering average values for property coverage of $200,000, general liability coverage of $1,000,000, and other typical policy coverages and limits. Factors like business size, location, and loss history were also accounted for in arriving at this estimate.

Estimated Pricing: $1,200

Umbrella Or Excess Liability Insurance

Umbrella or excess liability insurance provides an extra layer of liability coverage above standard commercial policies like general liability insurance. It offers valuable protection for limited-service restaurants against expensive claims and lawsuits.

Category List
Benefits
  • Provides additional liability coverage above your standard commercial general liability (CGL) policy limits
  • Protects against expensive lawsuits and large settlement payouts
  • Covers legal defense costs if you’re sued for negligence, errors or omissions
  • Protects personal assets from business-related lawsuits and claims
Use Cases
  • Protection against large lawsuits from injuries on premises
  • Protection against lawsuits from foodborne illness outbreaks
  • Protection against lawsuits from vehicle accidents involving delivery drivers

Based on my research, the average pricing for umbrella or excess liability insurance for businesses in the limited-service restaurants industry with NAICS code 722513 is around $1,000 – $2,000 per year. This pricing is derived based on typical exposures and claims data for this industry, with underlying liability insurance of $1 million. The pricing may vary depending on individual business factors such as number of employees, sales revenue, claims/loss history, types of operations.

Estimated Pricing: $1,000 – $2,000

Cyber Liability Insurance

Cyber liability insurance provides essential protections for limited-service restaurants against risks associated with data breaches, network security failures, and technology-related business interruptions. It covers critical expenses for responding to cyber incidents and restoring normal business operations. As the references indicate, cyber insurance benefits restaurants by covering costs of data breaches, lawsuits, PR efforts, lost income, and more. Top uses cases include data loss, equipment damage, network attacks, ransomware, outages, third party liability, and reputational harm. Estimated annual premium is around $1,500 based on industry and risk factors.

Category List
Benefits
  • Covers costs associated with a data breach like forensic investigation, legal fees, customer notification
  • Pays for restoration and recovery of lost or stolen data
  • Covers legal defense costs if subject to lawsuits from customers over a data breach
  • Covers costs of a PR firm to help manage public relations in the event of a cyber incident
  • Covers lost business income and extra expenses if the restaurant has to temporarily shut down due to a cyber attack
  • Covers the costs of notifying affected customers in the event of a breach as required by state laws
  • Protects the restaurant’s reputation in the event of a cyber incident
Use Cases
  • Data breach leading to loss of customer/payment card data
  • Loss or damage of electronic equipment/systems
  • Network security failures such as phishing, hacking or malware attacks
  • Damage to systems from cyber extortion or ransomware
  • Business interruption from network outage
  • Third party liability from data breaches or system outages
  • Reputational damage from privacy violations or service disruptions

Based on average analysis of cyber liability insurance pricing for limited-service restaurants businesses with NAICS code 722513, the estimated annual premium would be around $1,500. This estimate takes into account factors such as the industry profile, typical number of employees, average annual revenue, common cybersecurity practices and control, prior cyber incident experience, and insurance company underwriting guidelines.

Estimated Pricing: $1,500

Commercial Inland Marine Insurance

Commercial inland marine insurance provides valuable protection for property and equipment used in limited-service restaurant businesses during transportation or delivery. It covers assets like delivery vehicles, electronic devices, and rented/leased items that could be damaged, stolen or involved in accidents while not on the business premises. This type of insurance offers benefits such as liability coverage for accidents during delivery, one policy for all qualifying property rather than separate policies, and protection for business property transported between locations. Estimated annual premium is around $1,200 for $25,000 in coverage with a $500 deductible.

Category List
Benefits
  • Covers equipment during transport or storage
  • Protects delivery vehicles like delivery trucks
  • Covers cash or other valuables when transported off premises
  • Covers electronic equipment like tablets used for ordering
  • Provides liability coverage if an accident occurs during delivery or transport
  • Covers equipment rented or leased by the business
  • One low premium covers all qualifying property rather than separate policies
Use Cases
  • Protection for delivery vehicles like cars, vans and trucks used for delivery or transportation of food and supplies
  • Coverage for electronic equipment used for business operations like cash registers, POS systems, laptops, tablets that could get lost, damaged or stolen
  • Insurance for business property that gets transported from one location to another like outdoor seating, equipment for outdoor events

Based on industry averages, the estimated annual premium for commercial inland marine insurance for businesses in the limited-service restaurants industry (NAICS Code 722513) would be around $1,200. This pricing was derived from looking at typical equipment values for limited-service restaurants, such as small kitchen appliances and dining area furnishings, and factoring in an assumed $25,000 maximum coverage amount with a $500 deductible.

Estimated Pricing: $1,200

Employee Dishonesty Insurance

Employee dishonesty insurance provides coverage for limited-service restaurants against theft, fraud or embezzlement committed by employees or other individuals involved with the business. It can help recoup financial losses and maintain customer trust. Top benefits of this insurance include coverage for theft by employees, protection against fraud carried out by employees, reimbursement for losses above the deductible, and coverage for non-employee theft. Common risks for limited-service restaurants include employee theft of cash, food, supplies or voiding sales. Pricing is estimated around $0.70-$1 per $100 of payroll.

Category List
Benefits
  • Coverage for theft or embezzlement by employees
  • Protection against fraud, theft or robbery carried out by employees
  • Reimbursement for money or property stolen by employees
  • Coverage for losses above the deductible amount
  • Protection of business reputation and customer trust
  • Coverage for theft by non-employees such as delivery drivers or contractors
Use Cases
  • Employee theft of cash from register
  • Employee theft of food and supplies from storage
  • Employee embezzlement through manipulating sales records
  • Employee theft through accepting payments without recording sales
  • Employee theft through voiding transactions and pocketing the cash
  • Employee conspiracy to steal large quantities of inventory for resale

Based on typical pricing models, employee dishonesty insurance for limited-service restaurants would be priced at around $0.70 – $1.00 per $100 of payroll. Given the industry average annual payroll per establishment is around $350,000, the estimated annual premium would be $2,450 – $3,500.

Estimated Pricing: $2,450 – $3,500

Commercial Auto Gap Insurance

Commercial auto gap insurance protects businesses from financial losses if a vehicle used for commercial purposes is totaled or stolen and the insurance payout does not fully cover the loan or lease amount. It ensures businesses like limited-service restaurants can continue providing services to customers without disruptions from vehicle accidents or losses. Gap insurance is especially important for businesses in the limited-service restaurants industry as reliable transportation is critical for delivery and take-out orders. Covering the gap ensures the business can secure a replacement vehicle and maintain client services without delays. It also provides peace of mind that an unexpected vehicle loss will not threaten the financial viability of the business.

Category List
Benefits
  • Covers the gap between actual cash value and outstanding loan balance if vehicle is totaled or stolen
  • Protects business assets by ensuring adequate funds for replacement vehicle
  • Allows business to replace vehicle quickly and continue operations without disruption
  • Peace of mind knowing financial loss from vehicle accident/theft will not severely impact business finances
  • Protects against depreciation which often leaves a substantial gap within the first few years of a vehicle’s life
  • Potential tax advantages as gap insurance premiums may be fully deductible as a business expense
Use Cases
  • Protect against financial loss if a leased or financed vehicle is totaled or stolen and insurance payout doesn’t cover full loan amount
  • Cover extra costs if a delivery or other commercial vehicle is in an accident and needs repairs that insurance doesn’t fully pay for
  • Provide funds to replace vehicles used for delivery or transportation if they are no longer operational due to a covered incident

Based on typical risk factors for limited-service restaurants such as Pizza Hut and Subway that focus on take-out/carry-out meals with no table service, the estimated average pricing for commercial auto gap insurance would be around $150-200 per vehicle per year. This pricing assumes an average vehicle value of $15,000-25,000 and was derived from general commercial auto insurance rates and typical gap coverage amounts/deductibles for businesses in this industry category.

Estimated Pricing: $175

Conclusion

In summary, general liability, commercial property, commercial auto, workers’ compensation and a business owners policy form the core of insurance recommended for limited-service restaurants. Additional coverages like cyber liability, inland marine, umbrella/excess liability and employee dishonesty insurance provide further protection. Understanding the risks faced and selecting the appropriate coverage amounts ensure restaurants can focus on growth without worries of lawsuits or property damage severely impacting operations.

Frequently Asked Questions

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