Why is insurance a must for fast food restaurants?
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5 insurance policies every fast food restaurant should consider
Business owner's policy
Small, low-risk fast food restaurants are usually eligible for a business owner's policy (BOP). This policy bundles general liability coverage and commercial property insurance at a discount.
- Customer bodily injuries
- Business property damage
- Business interruption coverage
General liability insurance
A general liability policy covers legal costs related to third-party accidents, such as a customer who slips on a wet floor. It's often required by commercial leases and franchise agreements.
- Slip-and-fall injuries
- Accidental damage to customer property
- Copyright infringement
Workers' comp insurance
Most states require restaurants with employees to carry workers' compensation insurance. Health insurance can deny claims for on-the-job employee injuries, making this policy valuable for sole proprietors too.
- Medical expenses for injured workers
- Disability benefits
- Lawsuits from workplace accidents
Commercial auto insurance
Delivery trucks and other vehicles owned by a fast food restaurant must have this coverage to comply with state laws. It helps pay for financial losses in an accident, including legal fees and property repairs.
- Auto accident lawsuits
- Vehicle vandalism
- Theft of a food truck or other vehicle
Cyber insurance
Cyber liability insurance covers costs related to cyberattacks and data breaches. It's strongly recommended for restaurants that handle credit cards and other sensitive customer information.
- Data breach notifications
- Fraud monitoring services
- Ransomware attacks
Fast food restaurant insurance costs
Here's a quick look at the cost of food business insurance policies purchased by TechInsurance customers.
On average, fast food restaurants pay the following for coverage:
Business owner's policy: $188 per month
General liability: $108 per month
Workers' compensation: $110 per month
Factors that can influence your premiums include:
- Type of business, including fast food franchises, cafes, and bars
- Number of employees
- Types of insurance purchased
- Business income
- Deductibles and other coverage options
- Claims history
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Common questions about business insurance for fast food restaurants
Answers to frequently asked questions about fast food restaurant insurance.
Will insurance cover my fast food restaurant if it's forced to close temporarily?
If your fast food restaurant is forced to close temporarily due to weather, fire, technical failure, power outage, or other similar event, you'll likely have to front a costly series of expenses.
As most restaurant owners know, temporary closures are expensive and often require paying for things like:
- Lost wages and income
- Temporary relocation
- Daily expenses and utilities
- Rent and loan payments
A temporary and unexpected closure can make this difficult, especially in the fast food industry where daily income is often crucial for the business's survival.
Business interruption insurance is vital for fast food restaurants and franchises. It can help cover costly expenses should you need to temporarily close and keep you, your business, and your employees protected while operational hiccups are being resolved.
Are fast food restaurants required to have product liability insurance?
State and local laws determine whether product liability insurance is mandatory, as well as franchise agreements and other contracts. However, in the food service industry, it's highly recommended that you carry this policy even if it's not required.
You could be liable if a customer is injured by the food and drink you serve—regardless of whose fault it is.
Even if the error occurred in the warehouse or at other points in the supply chain, a customer will likely seek compensation for damages, medical bills, and other related expenses from the food establishment.
Product liability coverage will protect your business from expensive lawsuits should someone claim that they were injured or harmed at your establishment.
Even frivolous lawsuits can be costly and take a long time to resolve. Having the proper insurance in place is helpful for peace of mind. You can add product liability insurance as an endorsement to your general liability policy.
Is food poisoning covered by general liability insurance?
General liability insurance can help protect against customer injuries, including food poisoning, under specific circumstances. However, it will typically not provide coverage if the food is expired or contaminated.
For that, you would need a separate food contamination and spoilage coverage policy, which can be added as an endorsement to a commercial property insurance or business owner's policy (BOP).
Since fast food restaurants deal with high volumes and the kitchen can get chaotic, it's important to protect your business fully in the event that a customer is harmed by a food or beverage product that is served.
While you and your employees will certainly do your best to avoid expired or contaminated food, accidents happen. Having the right coverage can protect your business in the worst-case scenario.
What other insurance coverage do fast food restaurants need?
Fast food and beverage businesses take on significant risks due to working closely with the public and should protect themselves accordingly. Consider the following types of coverage policies to ensure you're not hit with an expensive repair cost, medical bill, or lawsuit.
- Liquor liability insurance is necessary if your fast food restaurant serves alcoholic beverages. This policy protects your business if there are incidents or injuries related to alcohol served at your establishment.
- If one of your fast food employees sues your business claiming discrimination or harassment, you'll need employment practices liability insurance (EPLI) to protect your business and assist with legal costs.
- A hired and non-owned auto (HNOA) policy is essential if you or your employees intend to use personal vehicles for work purposes, such as food delivery. Commercial and personal auto insurance won't cover expenses for personal vehicles used for work errands.
- Unfortunately, employee theft is not uncommon. To protect your business if an employee is caught stealing, consider employee dishonesty coverage, which can be added to a business owner's policy or a commercial property insurance policy. This policy can also be purchased in the form of a fidelity bond to protect against employees stealing from clients, customers, or other third-parties.
- Fast food restaurants rely on grills, deep fryers, industrial refrigerators, and plenty of other commercial kitchen equipment. Protect your expensive business property with an equipment breakdown coverage policy, which is often added as an endorsement to a BOP, a commercial property policy, or a commercial package policy (CPP).
- Electronic data processing (EDP) insurance can be added as an endorsement to a BOP. This policy covers your computer systems if they become damaged, corrupted, or destroyed.
Consider the best policies from the nation's top insurance companies to save money while protecting your business. Contact our agents today for the best fast food restaurant insurance quotes and to discuss your unique insurance needs.
