Business risk takes on a new meaning in the restaurant industry. Staff must work with knives, fire, overheated frying oil, grease fires - and that's just the cooks. In the dining room, slick floors present the potential for slips and falls, while food allergies, piping-hot liquids and theft pose even more dangers.

Good insurance coverage is an absolute must for anyone operating a dining establishment. Though the policy menu is vast, a qualified agent can outline what plan best accommodates a business owner's situation.

  • Employment Practices Liability Insurance (EPLI): This policy - which is carried by many restaurants - covers liabilities inherent in the employer/employee relationship. EPLI tends to protect the business, its directors, managers and officers against claims brought by staff members.

    Still, many policies can be expanded to safeguard against claims brought by third parties, such as patrons and vendors. Most policies even have optional coverage for employees, including temps, seasonal staff and part-time personnel. Acts that might be covered under EPLI include:

    • Sexual harassment
    • Discrimination
    • Workplace harassment
    • Failure to hire
    • Wrongful discharge, evaluation, promotion, discipline
    • Negligent hiring
    • Employment related personal injury (libel or slander)
    • Workplace tort

    EPLI usually covers:

    • Defense cost for covered claims
    • Punitive or exemplary damages
    • Liquidated damages pursuant to the Age Discrimination in Employment Act or the Equal Pay Act
  • Commercial General Liability Insurance Geared Toward Restaurants: General liability policies cover third-party claims of bodily injury and property damage that occur on the insured's premises, as a result of operation, products or completed operations. The policy provider typically will pay for legal defense cost and/or settlement. Many insurers have tailored restaurant specific policies to be added on to a general liability plan. These include:
    • Assault & Battery: This option covers third party liability claims that stem from any assault or battery on the restaurant grounds. Coverage includes violent acts between patron to patron or employee to patron.
    • Liquor Liability: This option covers lawsuits/claims of bodily injury or property damage resulting from patrons who consumed alcohol at the insured's restaurant. These policies cover related instances that take place on and off the eatery's property.
    • Hired/Non-Owned Vehicle Liability: This option provides excess liability coverage for hired - a.k.a. rented - vehicles and those that are not owned by the restaurant, but used for business purposes. For example, an employee using their truck to pick up ingredients on the way to work.
    • Errors and Omissions: This coverage really applies to eateries that cater or provide planned menus for special events. Errors and Omissions policies protect the restaurateur in claims that the establishment failed to perform according to contract or expectation.
  • Commercial Property Insurance: Most restaurants already have some type of property insurance. These plans pay for losses to the establishment, associated structures and contents. Risk covered generally include fire, storm, and theft (other factors may be named on the policy). Again, insurance companies have looked beyond the obvious and now offer extended coverages.
    • Equipment Breakdown: The kitchen of a restaurant serves as the heart of the business. If one of the intricate pieces of machinery stops working, profits can quickly flat line. Therefore, insurers offer coverage for just this scenario. Usually an Equipment Breakdown policy covers losses caused by a malfunctioning piece of machinery. This might include a loss of food supplies do to a refrigerator not containing the proper temperature.
    • Food Spoilage: This option covers losses related to food spoilage caused by a power outage, often including brownouts and blackouts.
    • Money & Securities: This option covers money and securities lost through theft or holdup. The coverage applies to cash stolen on and off the restaurant's property.

Many insurance providers bundle selected policies and market them as "Restaurant Insurance." The key to creating the right coverage is considering all factors before purchasing a plan. Is the restaurant located in a safe place? Will delivery services be offered? What demographic will the restaurant target? What type of cuisine will be sold? The answers to these and other questions can shed light on what insurance package is best suited for the purpose.