Buying Restaurant Insurance

By Author: Michelle Ferris
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If your own a restaurant, buying insurance for your business can be a bit more complex than selecting the comparatively more basic kinds of protection offered by home or auto insurance. A good policy should protect not only the physical assets of your restaurant but also your own liability, as well as your investment in the business.

Breakdown and Interruption Insurance

An equipment malfunction or breakdown in your restaurant can cost you a lot more than the price of a replacement. For example, say an electrical malfunction results in the breakdown of your refrigeration unit. Now you're not only out the cost of the refrigeration unit but also the potentially higher cost of any food inventory that was spoiled as a result.

In addition to losing those assets, the breakdown also means you won't be able to properly refrigerate foods until the unit can be repaired or replaced. Whether this takes several hours or several days, it results in the same thing--interruption of your business and loss of income.

Breakdown insurance is a necessity for restaurant owners. As noted above, even a simple technical ...
... malfunction can rapidly initiate a chain of increasingly harmful events, and a good restaurant insurance policy will feature breakdown insurance to protect your business at every step. This includes not only the repair or replacement costs of the equipment but also any related loss of inventory, as well as the potential profits lost in the event of business interruption.

It's important to note that the basic level of commercial property insurance offered with most restaurant insurance plans is not as comprehensive at you might think. In most cases, commercial property insurance will only cover the basic aspects of the building and land, and does not extend to things like equipment and technical difficulties. Even more significantly, a basic commercial property insurance will never provide protection when it comes to losing income from business interruption. This is why it's crucial to make sure the plan you select features additional coverage for equipment breakdown.

Many providers will work with you to devise a level of breakdown insurance that best meets the needs of your restaurant. This can even include things like paying for temporary equipment rentals while you wait for damaged equipment to be replaced. You can even buy a breakdown insurance plan that extends beyond the kitchen and protects any other equipment that's essential to the operation of your establishment. This might include things a dining room air conditioner, as a broken air conditioner is likely to keep the customers from returning during the hottest months of the year.

Computer-related equipment can also be included in a breakdown insurance plan. This would protect things like networked cash registers and inventory scanners. If your restaurant includes a gift shop, you'll probably want to add any electronic point-of-sale equipment to the plan. Even employee timeclocks are eligible. And if the malfunction of any these items hampers your ability to conduct business, a good breakdown insurance plan will help you recover any profits that were lost, in addition to covering the costs of getting your restaurant operational once more.

While some providers offer a comprehensive form of breakdown insurance, others might divide the level of protection between several separate plans. This would include insurance for food spoilage, or a separate business interruption policy.

Once you've secured good breakdown protection, you'll want to make sure your plan includes coverage in other important areas as well.

General Liability
General liability insurance protects you from losing everything to a lawsuit. Whether a customer slips and falls in your restroom, somebody gets sick from your food, or one of your employees mistreats another, liability insurance protects you financially in the event that you are sued as the owner.

Liquor Liability
If your restaurant serves spirits, liquor liability insurance protects you from being financially liable if a customer is involved in an accident after drinking at your establishment. Most states require you to purchase liability insurance in order to hold a liquor license.

Workers Compensation Insurance
Like liquor liability coverage, workers comp insurance is legally required by most states. A workers comp plan pays the costs related to any injuries suffered on your property by a person in your employ.

Depending on the individual priorities of your restaurant, your insurance provider can help you assemble all of these options to create the most effective kind of plan for your needs.
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