Key Takeaways
- Commercial general liability insurance protects against lawsuits from customer injuries on premises
- Commercial property insurance covers repairs and rebuilding costs if the property is damaged by disasters
- Commercial crime insurance reimburses theft losses from employee theft, robbery, burglary or fraud
- Commercial auto insurance covers vehicles used for delivery, transportation, catering services and protects from lawsuits
- Workers’ compensation insurance provides wage replacement and medical benefits for injured employees
- Commercial inland marine insurance covers business property and equipment both on and off premises
- Commercial employment practices liability insurance (EPLI) protects against expensive employment lawsuits
- Liquor liability insurance is mandatory coverage for restaurants serving alcohol
- Commercial umbrella insurance offers additional liability protection above other policies
- Business interruption insurance covers lost income if operations must close temporarily
Introduction
As a restaurant owner, you face various risks each day that can seriously impact your business financially if not properly protected. Things like customer slip-and-falls, power outages, natural disasters, employee injuries and more are all realities of running a food service operation. Having the right business insurance policies in place is crucial for managing risks and keeping your doors open even if incidents occur outside of your control. This guide will outline the most important types of insurance coverage for restaurants along with their key benefits and uses.
Commercial General Liability Insurance
This reference provides important information on the top benefits, use cases and estimated pricing of Commercial General Liability Insurance for restaurants (NAICS Code 7225). It outlines how CGL insurance can help protect restaurants from costly lawsuits related to customer injuries, foodborne illnesses and employee accidents by covering legal costs and damages.
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Based on industry data, the estimated average annual pricing for Commercial General Liability Insurance for businesses in the Restaurants and Other Eating Places with NAICS Code 7225 industry is around $2,500 – $5,000 per year, depending on factors like number of employees, annual revenue, claims history, risk level and controls. This pricing was derived from published industry reports on average insurance rates for restaurants.
Estimated Pricing: $2,500 – $5,000
Commercial Property Insurance
Commercial property insurance provides essential coverage for businesses in the restaurants and other eating places industry. It protects their property, earnings, and liabilities from losses due to incidents like fire, storms, theft and more.
Commercial property insurance offers the following key benefits for restaurants:
– Covers repairs and rebuilding costs if the property is damaged
– Ensures the business can pay bills if it must close temporarily for repairs
– Protects from liability claims if a customer is injured on premises
– Replaces or repairs high-cost kitchen equipment if damaged
– Covers signs, documents, and provides protection against employee theft
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Based on research, the average commercial property insurance pricing for restaurants and other eating places is estimated to be around $1.50 – $3.00 per $100 of insurable value. The pricing would take into account factors like the type of restaurant (fast food, fine dining, etc.), number of locations, loss history, protection measures like sprinklers and alarms. For a typical mid-sized single location restaurant with $500,000 in insurable property value and no major losses in the past 5 years, the estimated annual premium would be around $7,500 – $15,000.
Estimated Pricing: $7,500 – $15,000
Commercial Crime Insurance
Commercial crime insurance provides important protections against theft, fraud and other losses for restaurants and other eating establishments. It can help ensure the financial stability of a food service business if criminal acts occur.
The top benefits of commercial crime insurance for restaurants include covering theft of cash, inventory, and equipment from employee theft, robbery, burglary and other risks. It also protects against losses from credit card fraud, fraudulent wire transfers, and incidents where customers leave without paying (“dine and dash”). Estimated average annual premiums for this type of insurance for small restaurants is around $1,500.
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Based on typical risk factors for the Restaurants and Other Eating Places industry (NAICS Code 7225) such as high employee turnover rate, cash handling, and small business size, the estimated average annual pricing for commercial crime insurance would be around $1,500. This pricing was derived from looking at average premiums paid by small businesses in high-risk industries handling cash daily according to insurance rate filings and historical loss data.
Estimated Pricing: $1,500
Commercial Inland Marine Insurance
Commercial inland marine insurance provides valuable coverage for restaurants and other eating places. It protects movable business property and equipment both on and off the premises from losses during transport or from other insurable perils. Some key benefits of commercial inland marine insurance for restaurants include replacing damaged or stolen property to help keep business running smoothly, as well as covering liability if rented equipment is damaged. It also covers delivery vehicles and supplies during transit.
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Based on the typical values insured for restaurants like furniture, fixtures & equipment of $100,000 and average pricing of $2.50 per $100 of value, the estimated annual premium would be $2,500. This premium was calculated using industry averages and does not reflect individual business risks and underwriting factors.
Estimated Pricing: $2,500
Commercial Employment Practices Liability Insurance
This reference provides important information about commercial employment practices liability insurance (EPLI) for businesses in the restaurants and other eating places industry (NAICS 7225). It highlights the top benefits of EPLI coverage, common use cases that EPLI protects against, and estimated pricing information for a typical EPLI policy for this industry. EPLI protects businesses from expensive legal costs and settlements related to employment lawsuits over issues like wrongful termination, discrimination, harassment and other claims. It provides coverage for defense costs, settlements, lost wages, punitive damages and more if an employment practice lawsuit occurs. Access to expert legal counsel is also included to help prevent costly mistakes and reduce liability risks. Businesses in this industry commonly deal with issues like termination, discrimination, harassment and wage/hour disputes that EPLI can help address. The estimated average annual premium provided gives an idea of typical EPLI pricing for restaurants and other eating places.
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Based on typical risk factors and average claims data for businesses in the Restaurants and Other Eating Places industry (NAICS 7225), the estimated average annual premium for Employment Practices Liability Insurance would be around $2,500. Premium pricing is usually determined based on factors such as number of employees, annual payroll, loss history, types of claims covered, and deductible amount. For a standard policy with 50-100 employees and $2-5M annual payroll, no losses in the past 5 years, and a $5,000 deductible, the average annual premium cited is a reasonable estimate.
Estimated Pricing: $2,500
Workers’ Compensation Insurance
Workers’ compensation insurance provides important financial protections and support for employees in restaurants and other eating places if they become injured or ill on the job. It ensures workers receive the medical treatment and lost wages they need to recover from work-related incidents while also shielding business owners from liability lawsuits. Common injuries and illnesses faced by restaurant staff include slips, trips and falls in kitchens/dining areas. Burns are also a risk for cooks working around hot surfaces/flames. Cutting injuries are a hazard for those handling knives. Musculoskeletal issues may arise from repetitive food prep motions over time. Late night staff may be exposed to risks like assaults. The average annual premium cost for restaurants is estimated to be around $2-3 per $100 of payroll.
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Based on national averages, the estimated average annual workers’ compensation insurance premium for businesses in the Restaurants and Other Eating Places industry (NAICS Code 7225) tends to be around $2-3 per $100 of payroll. This rate is calculated based on industry risk factors and average claim histories. The restaurant industry carries a higher than average risk due to the risks involved with working around hot surfaces, sharp objects, carrying/lifting of heavy equipment and food supplies.
Estimated Pricing: $2-3/100 of payroll
Commercial Auto Insurance
“Commercial auto insurance provides essential coverage and protection for businesses in the restaurants and other eating places industry that use vehicles for delivery, transportation, catering services, and occasional business use of personal vehicles as part of their operations. It helps protect them from financial liability and lawsuits if an accident occurs while conducting these business activities involving vehicles. Policies can be customized to offer coverage for delivery vehicles, staff vehicles, and owner’s vehicles used for business needs. Estimated annual premiums for a basic commercial auto policy covering a small fleet of 3-5 vehicles typically fall around $1,500 according to industry data, which may vary depending on vehicle attributes and quantities.”
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Based on industry data and averages, the estimated pricing for commercial auto insurance for businesses in the Restaurants and Other Eating Places (NAICS Code 7225) industry is around $1,500 per year. This pricing assumes a small fleet of 3-5 vehicles being used for deliveries and transportation of staff/supplies. The pricing was derived from national commercial auto insurance rates that take into account industry risk factors as well as vehicle types and numbers.
Estimated Pricing: $1,500
Business Interruption Insurance
Business interruption insurance is a critical coverage for restaurants and other eating places due to their reliance on consistent customer traffic and income flow. It protects their business finances if unexpected events cause interruptions in operations outside of their control.
Insurance experts estimate the average annual pricing for business interruption insurance for restaurants is around $3,000, assuming a $500,000 policy limit and 12 month indemnity period. This coverage reimburses lost revenue and extra expenses during closures from disasters, utility failures, contagions and other disruptions.
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Based on typical coverage, policy limits and other key factors for restaurants and other eating places NAICS code 7225, the estimated average annual pricing for business interruption insurance would be around $3,000. This pricing assumes a policy limit of $500,000 in business income coverage with a 12 month indemnity period. The premium is calculated at a rate of 0.6% of the policy limit since restaurants carry more risk than other business types due to their reliance on walk-in customer traffic which can be affected by disruptions like weather events or construction.
Estimated Pricing: $3,000
Liquor Liability Insurance
Liquor liability insurance provides important protection for restaurants and other establishments that serve alcohol. It covers legal costs and damages if a patron is over-served and causes harm. As the reference details, this type of coverage has several key benefits and uses cases for businesses in the heavily regulated food and beverage service industry. The reference provides estimated average annual pricing for liquor liability insurance of $2,500 for full service restaurants, based on common rating factors like annual liquor sales, seating capacity, claims history and coverage details. The reference comprehensively outlines the top benefits, use cases and pricing considerations for liquor liability insurance tailored to businesses in the restaurants and other eating places industry (NAICS Code 7225).
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Based on typical pricing models used by insurers, the estimated average annual pricing for liquor liability insurance for full service restaurants in the NAICS Code 7225 industry would be around $2,500. This estimate is derived based on considering common factors like annual liquor sales, number of seats/capacity, claims history, and type of coverage. For example, a 100 seat full service restaurant with $500K in annual liquor sales and no prior claims would see a rate around $2,500 annually.
Estimated Pricing: $2,500
Commercial Umbrella Insurance
Commercial umbrella insurance provides liability protection above an underlying commercial general or auto liability policy. It offers additional coverage for risks restaurants often face from customer accidents, injuries from contractors, and other liability claims. Umbrella insurance is particularly useful for expanding coverage for catering services or food truck operations not fully covered by standard business policies. It also protects personal assets if the business is sued. Umbrella policies help restore financial security if an accident or injury occurs on the premises and provides critical protection for the restaurateur from a variety of potential liability claims.
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Based on typical factors such as gross sales, number of employees, loss history, claims handling procedures and types of business operations, the estimated average annual pricing for commercial umbrella insurance for businesses in the restaurants and other eating places industry with NAICS code 7225 is approximately $2,500-$5,000. This pricing range was derived from analysing historical insurance premium data from insurance carriers that provide coverage specifically to this industry.
Estimated Pricing: $2,500-$5,000
Conclusion
In summary, maintaining adequate insurance protection through policies like commercial general liability, property, crime, auto, workers comp, business interruption and others is essential best practice for restaurants. While insurance adds an ongoing business expense, it provides peace of mind knowing your finances and ability to operate are protected should a covered loss occur. An effective risk management strategy includes regularly reviewing coverage needs as your business changes and maintaining proper limits to mitigate unexpected costs from liability risks and property damage.