How Much is Insurance for Restaurants?

Insurance for Restaurants — Romance Versus Reality

Depending on the size of the restaurant or restaurant group, restaurateurs can wear a variety of hats. From the day-to-day management of the back office and front of the house, to recruiting and retaining employees, serving as a chef, head of marketing, head buyer and, at times, waitstaff or busser, there’s not a lot they can’t or won’t do.

If you’re a restaurateur and you’re reading this, we know you’re talented at juggling. But we also know that, sometimes, there are circumstances that impact a small or large business that is beyond your control. For example, few could have foretold the impact of COVID. According to data released by the National Restaurant Association, some 90,000 restaurant locations closed either temporarily or permanently because of the pandemic.

While the pandemic appears to be slowing, according to the World Health Organization, record high-inflation is providing new hurdles to the restaurant business. However, as you try to find solutions to protect your business from these new economic challenges, one of the best methods of protection is definitely insurance. 

While insurance is not one of the most romantic topics to discuss, neither is financial ruin. If you believe insurance is a protection racket, you won’t hear any argument from us. So at Hopewell, we’ve made it our goal to be the insurance agency that helps you get the coverage you need for the best possible price without a bunch of expensive extras. 

If in your mind’s eye, you visualize happy customers, perfect staff, great food and smooth sailing, that’s great. However, there are a lot of risky situations that can and will occur. Patrons can slip and fall, staff can cut or burn themselves, stoves catch fire, food can spoil, weather events hit and the list goes on. So let’s set aside the idea of romance and take a look at the realities of policies, coverage, and accompanying costs to protect you and your restaurant. 

This blog will discuss all the factors affecting the cost of restaurant insurance, the type of insurance Oklahoma restaurants need, and tips for maximizing coverage. If you still have questions, drop our team a line. We are happy to hear from you.

The Pitfalls of Cheap Insurance

How can I possibly afford the best insurance coverage? In reality, how can you not? We understand that with inflation, things have gotten extremely expensive. If you’re just starting out, you may be operating under very tight margins. However, please don’t fall for any of the discount “too good to be true” type of insurance offers. 

Two key things to keep in mind. First, if you base your insurance purchases solely on price, you will likely end up losing valuable, needed coverage. Second, if something happens and you need to file a claim, if you don’t have the right coverage, you’ll probably have to deal with the problem on your own. That’s going to be extremely expensive. 

So here’s our advice: never shop coverage based solely on price. That applies not only to your restaurant business insurance but any type of policy you have to buy, whether commercial or personal. You’ll be paying for cheaper insurance in the long run. 

What coverage do I need, and what can I expect to pay?

Some insurance will be required by law. As an employer in Oklahoma, liability insurance is required, as is workers' compensation insurance. Additional insurance needs vary depending on the risks associated with your business. If you are operating food trucks, your insurance needs are obviously going to vary from someone operating a full-scale brick-and-mortar establishment. 

Similar to most small businesses, there are two popular types of insurance for restaurants — general liability and commercial property.

General Liability Insurance

One of the most important policies you can buy to protect your restaurant is general liability insurance. This type of insurance covers damages caused by various accidents on the premises or food-related illnesses. It will also provide liability coverage if someone is injured in your restaurant or there is property damage for which your business is held responsible.

While premiums will vary among insurance companies, most are based on things like your business’ revenues, size, number and type of employees, hours of operation, the proportion of alcohol sales, loss history, years in business and amount of sales. The average general liability insurance costs tend to be about $900 a year but can vary anywhere from $300 to $5,000 or more, depending on the establishment.

Commercial Property Insurance

Just like a homeowners policy insures your home, a commercial policy helps protect your restaurant against physical damages and/or loss resulting from occurrences such as theft, vandalism, storms, fires or electrical issues.

Here again, premiums will vary based on various factors, but average costs tend to range between $500 and $2,500 annually.

Business Owner’s Policy or BOP

Many restaurateurs choose to bundle their general liability and commercial property insurance into a business owners policy (BOP). By bundling, the owner can expect overall discounted rates. 

With a BOP, rates are determined by factors such as the business location, equipment being used, the property’s value and other such factors. Also, BOPs aren’t limited to just these two types of coverage. Policies can be customized to include coverage such as liquor liability insurance if your restaurant serves alcohol, equipment breakdown or business interruption insurance, which helps recover lost income in the event you are unable to open your restaurant due to a covered problem such as a storm or fire.

A typical business owner's policy with $1 million in liability insurance will run about $175 a month, according to Insureon.

Additional coverages

In addition to the coverages discussed already, depending on how your restaurant is funded, its location and whether delivery or catering services are provided, you may need to consider additional coverages such as commercial auto insurance, life insurance, unemployment insurance, and food contamination insurance.

Bundle work and personal policies for more savings

If insurance premiums seem to be daunting, don’t despair just yet. One of the easiest ways to save on your insurance cost without cutting corners on coverage is bundling. Hopewell and most other insurance agents allow you to bundle your restaurant policies for additional savings. You can include your personal policies (homeowners, renters, auto, health, life) for even greater savings.

We’re here to help

At Hopewell, we work hard to simplify every part of the insurance process. We want to make this part of running your restaurant easy and understandable. We can give you insight into all things insurance and guide you toward the best savings possible. We measure our success by our client’s success. 

Getting a no-obligation insurance estimate is quick, simple and (most importantly) free. It’s easy to get started working with the Hopewell team. Contact us today.