The American local bar and restaurant market size was worth around $35.3 billion in 2022. According to a report, over 50,000 businesses occupied the market in 2023, driving the 5-year annual growth rate to around 5.9%. The industry has faced the odd downturn and there are many issues that bar and restaurant owners face including rising costs, talent shortages, vandalism, accidents, etc.

A report suggested that restaurants are facing a hard time now as ingredient costs have been increasing by an average of over 10% y-o-y. Amidst all this, small businesses are also facing issues with rising premiums when it comes to insurance. Ordering habits have changed post-COVID for example, 64% of customers prefer ordering directly from restaurants, and 18% prefer to order through a third-party service. This opens up different avenues where small businesses require insurance to stay protected.

Insurance policies required by restaurants

• General liability insurance

A neighborhood restaurant or bar may encounter a number of liability issues. This can involve, but is not limited to, incidents of food poisoning, physical harm to guests, claims stemming from wrong advertising, and more. It becomes crucial to safeguard the restaurant from harm to its finances and reputation in all such situations. This kind of unfavorable coverage has the potential to negatively affect company operations and result in losses. Businesses can purchase comprehensive general liability insurance, which can assist them pay for settlements, legal fees, and medical costs, to help prevent any severe consequences.

• Property insurance

The property could be damaged by a fire that breaks out or by operational mishaps that harm expensive kitchen appliances. Getting commercial property insurance can be a great way to safeguard the restaurant and address such situations. Any type of physical asset, including furniture and food inventory, can be covered by a property insurance policy designed for the restaurant or bar. In the event of an accident, this policy may assist with covering the cost of restaurant renovations or repairs.

• Liquor liability insurance

It’s not unknown for incidents of fights to occur in bars and clubs after patrons consume alcohol. This could cause damage to the property and fittings. Other mishaps may occur off-site, such as those resulting from patrons driving while intoxicated after they were served alcohol on the premises. This can also create issues for restaurant and bar owners. A significant amount of the cost of medical bills, repair costs, settlement money, and other expenses could be covered by the insurance company when an establishment has liquor liability insurance.

• Workers Compensation

This type of insurance coverage is necessary for high-risk businesses where employees may be in the firing line of intoxicated customers. Small companies that operate restaurants or bars must invest in worker compensation insurance in order to provide their employees with a range of medical benefits and compensation in the event that an accident at work impacts them. This policy can also be used to pay for legal expenses if an employee chooses to sue their employer.

• Business interruption insurance

A bar or restaurant may experience numerous disruptions due to local conditions, scheduled and/or unplanned maintenance, court cases, or enforced closures. This could be short-term or long-term, but the expenses never stop, so getting business interruption insurance is essential. Such a policy can assist business owners with support to manage their establishment and back-office operations after a temporary closure.

• Cyber insurance

Small businesses rarely think that con artists will target them, but it does happen. Any type of breach can have a serious effect on the company and when the payment gateways are compromised it could even cause a loss of revenue. Purchasing basic cyber insurance can be a great way for a business that relies even a little on online payments to guarantee extensive protection.

• Auto insurance

Businesses require commercial auto insurance if they are using a vehicle for their operations or logistics. Auto insurance is important because road accidents can happen to anyone, and if a business vehicle is involved, then the liability of paying for medical expenses will be fulfilled by auto insurance. Any restaurant or bar using a commercial vehicle must have this policy because it can cover all types of expenses, including worker compensation and legal fees.

• Umbrella Insurance

Umbrella insurance makes it easier to meet any type of insurance requirement that does not fit into any other type of policy. For instance, umbrella insurance can cover situations where the owner’s pet injures a patron inside the restaurant. These policies are applicable to all types of businesses, contingent on the circumstances.

The premiums for each of these policies vary depending on several factors, including the restaurants’ size, location, etc. For restaurants and similar businesses, there is no one-size-fits-all policy that can work for anyone and everyone, so it is critical to examine the requirements with an agent’s assistance. We at Gonzalez Insurance can understand the requirements of a small business very well. To get your customized quote or portfolio analysis done, get in touch with us.