Some Thoughts On The Insurance Needs Of Small Restaurants and Bakeries

Building a business requires a lot of determination, hard work, and some luck as you take steps in the right direction. When planning to open a new food business, be it a restaurant or a bakery, you probably think about several things like the location, interiors, menu, proper equipment, customer service, and much more. But one vital, albeit boring, thing to factor into your small business planning is insurance.

Insurance may not be the most captivating variable. But it’s a necessary one. A business that deals with food service can be risky. In fact, there are some risks associated with the business of serving food to paying customers that apply to virtually no other business. Insurance for your restaurant is that Plan B that no one wants to have to activate ever, but that everyone is glad for in time of need. When luck runs out, insurance kicks in!

Dwelling on the worst-case scenario, while a bit distressing, is helpful, as it helps you to evaluate what the potential dangers are. And it’s essential to understand the risks so you can purchase the right insurance policies to secure your bakery or restaurant.

Insurance protects you and your business against a range of problems from broken equipment to liability lawsuits. Apart from the insurance cover that you buy at your discretion, the laws of your location may also require you to carry specific kinds of insurance for your food establishment, depending on where you live.

Here are a few of insurance covers you ought to consider for your business:

  1. Commercial General Liability Insurance: It is a policy that shields the business from various scenarios. Think if somebody falls and hurts themselves at the restaurant or if they become ill after eating there, regardless of whether it was your fault or not. This is why restaurant owners need commercial general liability insurance to protect the business.
  • Commercial Property Insurance: Property Insurance secures your premises in case of a fire, vandalism, water damage or other potential dangers that lurk when you own commercial property. If the restaurant has to be shut for business because of these damages, the cash flow could come to a grinding halt so how will you pay for the necessary repairs? With commercial property insurance, you can secure your property and business resources.
  • Worker’s Compensation Insurance: As a restaurant owner, you are responsible for prioritizing the health and safety of your employees. Burns, bumps, cuts, and other work-related injuries are common in a bakery or kitchen setting. Worker’s compensation insurance is legally necessary in almost every state. It provides protection for employees who are harmed at work and is valuable for both you and your workers. If one of your employees has a mishap at work and suffers a loss of income, the situation is covered under the insurance.
  • Commercial Vehicle Insurance: Many pastry kitchens and restaurants offer catering and delivery services. If the business utilizes a company-owned vehicle, it is important to insure it properly with a commercial vehicle insurance policy that meets your state’s minimum liability coverage amounts. This protects your vehicle and your business from common risks while on the road.
  • Bakery Insurance: This is a sweet package of insurance policies that are specifically intended to address coverage needs unique to bakery owners. It gives all the coverage offered by a small business insurance plan while including choices that are designed specifically for the requirements of bakery owners. You can say that it’s a unique recipe.
  • Liquor Liability: General liability policies often exclude claims for bodily injury or property damage for which you might be held liable if you caused or contributed to someone’s intoxication through the sale or service of liquor. If your restaurant sells or serves alcoholic beverages, it is important to purchase liquor liability insurance to protect yourself in such situations.
  • Utility Interruption: Most restaurants require electricity, gas, water, and communications services to operate. Interruption of any of these can cause damage to your property. It may also cause damage to stored or in-process raw materials, some of which could cost a pretty penny. Such interruptions could also compel you to shut down the restaurant. You can protect your business from such situations by purchasing utility interruption coverage.
  • Spoilage: Food stored in refrigerators or freezers may spoil if the cooling equipment breaks down or stops because of a power blackout. You can protect your restaurant against potentially costly spoilage losses by purchasing spoilage coverage.
  • Equipment Breakdown: Many restaurants rely upon machinery like steamers, boilers, ovens, refrigerators, freezers and ice makers. An electrical or mechanical breakdown can damage the equipment. To cover the damage, you require equipment breakdown insurance. A variation of this, known as Boiler Insurance for historical reasons, provides protection for specialized equipment. 

We agree that this is complex. You could say that the buffet has too many items for you to make the right bundle of choices. So, when buying insurance for a new restaurant, it is useful to contact a trusted insurance agency. Such an agent will know the local and state laws about how much insurance you’re required to carry. They can also help you decide how much more cover you should consider.

Buying insurance might seem like putting up cash for an uncertain return. But, the folks in the food business, more than any other business, know that each great dish has a complex mix of ingredients. Not all of them are visible. But they know that even the ingredients that aren’t are absolutely vital to the recipe. And that’s the secret sauce that drives successful businesses.