Owning and operating a restaurant can be an engaging and profitable business, with some restaurants becoming a vital part of a community’s collective social life. However, with some inherent risks – and some that crop up as a result of global catastrophes like the coronavirus pandemic – having insurance that covers you for most eventualities is incredibly important.
In this article, we’ll answer some of the most common questions we get asked about restaurant insurance and what it takes to get full peace of mind in an unpredictable industry.
What type of insurance is required for a restaurant?
In order to run a restaurant in the UK, you will need to have employers’ liability insurance, public liability insurance, and product liability insurance. You may also need other types of cover depending on your specific circumstances.
Employers’ liability insurance is a legal requirement if you have any employees working for you. This type of insurance covers you in the event that one of your employees is injured or becomes ill as a result of working for you. If you do not have this type of cover in place, you could be fined up to £2500 per day.
Public liability insurance covers you if members of the public are injured or their property is damaged as a result of your business activities. This type of insurance is not legally required, but it is strongly recommended.
Product liability insurance covers you if someone is injured or their property is damaged by a product that you have sold or supplied. This type of insurance is not legally required, but it is strongly recommended, particularly in situations where food is served.
Other types of insurance that you may need include:
- Professional indemnity insurance – covers you if you are sued for negligence or malpractice
- Buildings insurance – protects your building and its contents in the event of a fire, storm, flood, etc.
- Contents insurance – protects your possessions in the event of a fire, storm, flood, etc.
- Business interruption insurance – covers you for lost income in the event that your business is temporarily shut down due to a covered incident.
Do restaurants need public liability insurance?
Public liability insurance is not a legal requirement for restaurants, but it is strongly recommended. This type of insurance covers you if members of the public are injured or their property is damaged as a result of your business activities.
For example, a situation may occur whereby a customer is injured on your premises or made ill by the food you have served them; public liability insurance would cover you in this instance. Note that product liability cover will also cover food-related illnesses and issues. It is also important to note that public liability insurance will not cover you for any financial losses that you may incur as a result of these types of incidents – it only covers the costs associated with any legal proceedings that may take place.
The cost of public liability insurance for restaurants varies depending on a number of factors, including the size and type of restaurant, the level of cover required, and the insurer’s geographical location. However, as a general rule, you can expect to pay around £500 per year for £1 million worth of cover.
What insurance do I need for food delivery?
If you are delivering food to people’s homes, you will need product liability insurance and public liability insurance. You may also need transit insurance if you are shipping food across long distances. Bear in mind that if you are primarily a delivery service and do not have a sit-down premises, you will require different features from the standard restaurant insurance.
For example, you will need cover for your vehicles and for the food that you are transporting. This means having some form of motor trade cover as this type of business is generally classed as such.
What are the benefits of having hospitality insurance?
There are a number of benefits to having hospitality insurance, but the main reason is peace of mind. Without adequate cover, you will be unprepared for risks that are inherent to the day-to-day running of a restaurant. Not only do you need that reassurance, so do your customers and staff.
An insurance policy will give you the cover you need to protect your business from any unforeseen eventualities, while also providing reassurance to your customers that they are in safe hands. Furthermore, having a policy in place can also help you to attract new customers as it demonstrates that you are a responsible and professional business.
What is the difference between public liability insurance and product liability insurance?
Public liability insurance and product liability insurance both offer protection against legal proceedings, but they differ in terms of the risks that they cover. Public liability insurance covers you for any injuries or damage caused to members of the public by your business activities, whereas product liability insurance covers you for any injuries or damage caused by the products that you have sold or supplied.
For restauranteurs, product liability insurance is a particularly important type of cover, as the food that you serve can pose a serious health risk if it is not prepared correctly.
Should you take out business interruption cover for your restaurant?
Business interruption insurance, also known as business income insurance, covers you for lost income in the event that your business is temporarily shut down due to a covered incident. This type of insurance is particularly important for restaurants, as they are vulnerable to disruptions such as power outages and flood damage.
Business interruption insurance will usually cover you for a period of 12 months, and the amount of cover you require will depend on your turnover. As a general rule, you can expect to pay around £200 per year for £10,000 worth of cover.
This is another particularly useful policy to have as there are many things that could cause your restaurant to be closed – as the past few years have demonstrated with the pandemic.
Liability insurance and property insurance both offer protection against damage, but they cover different risks. Property insurance covers you for damage to your building and its contents, whereas liability insurance covers you for any injuries or damage caused to members of the public by your business activities.
Property insurance is a particularly important type of cover for restaurants, as they are vulnerable to damages such as fire and flooding. It is therefore essential to have a policy in place that will protect your premises and its contents.
If you are unsure about what type of insurance you need for your restaurant, it is best to speak to an insurance broker who will be able to assess your specific needs and find the right policy for you.
If you want to take the legwork out of searching for the right quote, choose QuoteSearcher to do it for you. With a simple form, you’ll be partnered with our panel of brokers who will use their specialist knowledge to create a bespoke policy at a competitive rate.
