Running a restaurant means managing countless risks every day—from customers walking through your doors to vendors making deliveries. Restaurant insurance exists to protect you from the financial fallout when things go wrong. But what exactly does a restaurant insurance policy cover?
Restaurant insurance isn't a single policy—it's typically a combination of coverages bundled together to address the unique risks food service businesses face. Most restaurant owners need general liability, property insurance, workers' compensation, and often additional coverages like spoilage protection or liquor liability.
Understanding what's covered (and what isn't) helps you avoid costly gaps in protection. Here's a breakdown of the core coverages included in most restaurant insurance policies.
Customer Injuries
General liability insurance covers injuries that happen to customers on your premises. This is often the most frequently used coverage for restaurants, where spills, uneven flooring, and crowded dining rooms create constant slip-and-fall risks.
Your policy pays for medical expenses, legal defense costs, and settlements or judgments if you're found liable. Coverage applies whether the injury happens in your dining room, parking lot, or outdoor patio.
- Slip-and-fall accidents from wet floors or spilled food
- Burns from hot plates, coffee, or food served at high temperatures
- Cuts from broken glass or dishware
- Allergic reactions when customers aren't properly warned about ingredients
- Injuries from falling objects like shelving or décor
Example: A customer slips on a freshly mopped floor near the restroom and breaks her wrist. General liability covers her $12,000 in medical bills plus your $8,000 in legal fees when she threatens to sue.
Food-Related Claims
Food contamination and foodborne illness claims fall under a specialized coverage called products-completed operations liability, which is typically included in your general liability policy. This protects you when customers get sick from food you prepared and served.
These claims can be expensive—a single foodborne illness outbreak can generate dozens of lawsuits and cost hundreds of thousands of dollars in medical bills, legal fees, and settlements.
- Foodborne illnesses like salmonella, E. coli, or norovirus
- Allergic reactions from undisclosed allergens
- Foreign objects found in food (glass, metal, plastic)
- Spoiled or contaminated ingredients
- Cross-contamination incidents
Example: Several customers report food poisoning symptoms after eating at your restaurant. Lab tests trace the illness to contaminated lettuce. Your insurance covers medical expenses for affected customers, lab testing costs, legal defense, and a settlement totaling $85,000.
Property and Equipment Damage
Commercial property insurance protects your building (if you own it), equipment, furniture, inventory, and other business property. Restaurants rely on expensive specialized equipment—commercial ovens, refrigeration units, POS systems—that would be costly to replace out of pocket.
Most policies cover damage from fire, theft, vandalism, storms, and other named perils. You can also add equipment breakdown coverage for mechanical failures and spoilage coverage for food that goes bad due to power outages or refrigeration failures.
- Kitchen equipment: ovens, fryers, grills, refrigerators, freezers
- Dining room furniture, fixtures, and décor
- POS systems, computers, and electronics
- Food inventory and supplies
- Signs, awnings, and outdoor structures
- Building damage (if you own the property)
Example: A grease fire starts in your kitchen and causes $150,000 in damage to your cooking equipment, ventilation system, and dining room. Property insurance covers the repairs and equipment replacement, minus your deductible.
Employee Injuries
Workers' compensation insurance is required in almost every state if you have employees. It covers medical expenses and lost wages when employees are injured on the job—and restaurant workers face higher injury rates than most industries.
Burns, cuts, slips, and repetitive strain injuries are common in restaurant kitchens. Workers' comp pays regardless of fault, meaning employees receive benefits even if they caused their own injury. In exchange, employees generally can't sue you for workplace injuries.
- Burns from hot surfaces, oil, steam, or open flames
- Cuts and lacerations from knives and kitchen equipment
- Slip-and-fall injuries in wet or greasy conditions
- Repetitive strain injuries from lifting, chopping, or standing
- Back injuries from moving heavy supplies or equipment
Example: Your line cook suffers second-degree burns when a pot of boiling water spills. Workers' compensation covers her emergency room visit ($4,500), follow-up treatment ($2,000), and six weeks of lost wages ($5,400) while she recovers.
Business Interruption
Business interruption insurance (also called business income coverage) replaces lost income when a covered event forces you to close temporarily. For restaurants operating on thin margins, even a few weeks without revenue can be financially devastating.
This coverage kicks in after a covered property loss—like a fire or major storm damage—prevents you from operating. It typically covers lost profits, ongoing expenses like rent and loan payments, and sometimes the cost of operating from a temporary location.
- Lost revenue during the closure period
- Continuing fixed expenses: rent, utilities, loan payments
- Employee wages to retain key staff
- Temporary relocation costs
- Extra expenses to reopen faster
Example: A kitchen fire forces your restaurant to close for three months during repairs. Business interruption coverage pays $90,000 in lost profits plus $45,000 in ongoing rent, utilities, and loan payments you're still obligated to pay.
What Restaurant Insurance Doesn't Cover
Every insurance policy has exclusions—situations where coverage doesn't apply. Understanding these gaps helps you avoid unpleasant surprises when you file a claim. Some exclusions can be addressed with additional coverage; others simply aren't insurable.
Common exclusions vary by policy, but most restaurant insurance won't cover the following situations without additional or specialized coverage.
- Liquor liability claims (requires separate liquor liability coverage if you serve alcohol)
- Flood and earthquake damage (requires separate policies)
- Intentional acts or criminal behavior by owners
- Employee dishonesty and theft (requires crime coverage)
- Cyber attacks and data breaches (requires cyber liability coverage)
- Delivery accidents involving employee vehicles (requires commercial auto coverage)
- Normal wear and tear on equipment
- Health code violations and resulting fines
- Losses that occur before coverage starts
Example: A bartender over-serves a customer who then causes a car accident. Without liquor liability coverage, your general liability policy won't cover the resulting lawsuit—leaving you personally responsible for damages that can easily exceed $500,000.
Make Sure You're Covered
Restaurant insurance costs less than most owners expect—often between $2,000 and $10,000 annually depending on your size, location, and coverage needs. Get a customized quote from Anchor Insurance to see exactly what coverage your restaurant needs and what it will cost. We'll help you build a policy that protects your business without paying for coverage you don't need.