Running a restaurant can be an incredibly rewarding experience; however, just like with any other business, restaurants come with their own unique set of challenges. As such, these business owners must take the necessary steps to ensure their businesses continue to run efficiently, including having appropriate commercial property insurance coverage.
Insurance Coverage For Restaurants
Customers often look at restaurants as places to meet with friends and family to share a delicious meal and enjoy each other’s company. Restaurant owners and operators manage all of the different logistics required to provide an excellent customer experience, such as the cost of goods and running the restaurant, and their employees.
An unfortunate reality for many restaurants is that, on average, 60% will close within a year of opening and another 80% will fail within five years, according to Business Insider. With the added strain the pandemic has put on the hospitality industry, the need to protect the livelihoods of restaurant owners and their workers is more important than ever. Because of these and other stressors, business owners must have the proper insurance coverage in place should disaster strike. Some of the most important reasons why restaurants need commercial property coverage include:
Regular Kitchen Mishaps
Restaurant kitchens are not like those in a house or apartment. Open flames, temperamental appliances, and workers coming in and out frequently are all common in a commercial kitchen. This makes the potential for accidents high. For instance, a fire could unexpectedly occur and damage specialized equipment and the surrounding workspace, forcing a business to shutdown until the situation can be resolved.
When instances like this happen and physical damage is present, a business interruption policy can help companies recoup the costs associated with a temporary shutdown. These policies are often bundled into a business owner’s policy (BOP), which combines property, liability, and business interruption coverage for small and midsize operations.
Potential Injury to a Guest
While restaurants are generally safe environments for guests to dine, there is always the potential for a patron accident to occur. For example, a guest could have hot food accidentally spilled on them or slip and fall on the restaurant premises. When these instances inevitably occur, it’s important that restaurant owners have a general liability policy in place to cover for bodily injury, resulting in property damage, and even products liability claims related to the restaurant’s food.
It’s important to note, however, that the food customers consume on the premises of a restaurant may not technically qualify as a product under a commercial insurance policy. Having a policy endorsement for product operations hazards can help ensure that coverage is available. This particular endorsement ensures claims resulting from the food sold will be covered whether it is eaten on or off the property.
The Possibility of a Sewer Backup
In the event sewer water backs up into a restaurant, a huge mess and costly damage are likely. Unfortunately, these instances are often listed as excluded perils within standard property damage policies. In order to ensure a restaurant is covered in these instances, owners should purchase sewer backup coverage.
In many instances, insurers will add sewer backup coverage to a commercial property policy through an ISO endorsement. This endorsement covers physical loss to a covered property if the loss is caused by a discharge of water or waterborne material from a sewer, drain, or sump located on the property.
Food Spoilage and Equipment Breakdown
Food spoilage and equipment breakdowns can happen often in a restaurant setting. Food that is stored in refrigerators or freezers can spoil easily if the equipment breaks down or is shut off due to mistake or a power outage. Spoilage coverage can be purchased to help insure a restaurant against costly losses.
When equipment – like large freezers that help keep food from spoiling – malfunctions or breaks down, significant costs to repair or replace the equipment can quickly add up. Restaurants often depend on this machinery and others like steamers, boilers, ovens, food warmers, and ice makers to run day-to-day operations. In order for restaurants to be adequately covered against these losses, equipment breakdown insurance may be necessary. Equipment breakdown insurance can cover losses including income lost while equipment is inoperable, the cost to repair the equipment, costs associated with time and labor to fix the equipment, as well as the cost to replace spoiled food or other damaged items.
Protecting Restaurant Owners From Commercial Coverage Denials
There are often many different elements at play when a restaurant suffers property damage. Therefore, restaurant owners should ensure they have adequate coverage in place should the worst occur. Unfortunately, even with proper coverage, insurers still attempt to delay, underpay, or deny claims. When this happens, the experienced team of commercial coverage attorneys at Raizner Law can help. If your restaurant was damaged and your insurance provider has delayed or denied coverage, contact our office today to see how we can best assist with your claim.
