How to Insure Your Restaurant Equipment

How to Insure Your Restaurant Equipment

Restaurants have a lot of important physical assets from the location itself to decorations and equipment. Equipment in a restaurant may include refrigerators, freezers, fryers, ovens and more. Losing any piece of important equipment can have a hard impact on your business, even if it’s just for a day.

Does Property Insurance Cover Restaurant Equipment?

A basic commercial property insurance policy can provide compensation if your restaurant’s equipment is lost or damaged due to certain risks. Covered risks often include:

Fire
Wind
Hail
Lightning
Smoke

Explosions
Theft
Vandalism

However, you may need additional coverage in order to cover equipment that breaks down for reasons within those covered under property insurance policies as well as additional compensation in other areas. This is where Equipment Breakdown Coverage comes in.

What is Equipment Breakdown Coverage?

Equipment breakdown coverage is an additional coverage you can add to your business insurance policy to cover expenses related to your restaurant’s equipment breaking down. This can include:

Repairs for the broken equipment

If your equipment suddenly breaks down due to a fire or other incident, equipment breakdown coverage can provide compensation to repair or replace such equipment. There are two options when it comes to this type of compensation: actual cash value and replacement cost value. An actual cash value policy provides compensation to repair or replace the equipment after accounting for depreciation. In other words, as the cash value of your equipment drops, so does the amount of compensation you can receive. On the other hand, a replacement cost value policy allows you to replace or repair your broken equipment without accounting for depreciation.

Rush repairs or temporary repairs

In many cases, your restaurant will need quick fixes fast. A weekend or dinner service can run faster than the blink of an eye, and you can’t afford to waste a single moment with a broken fridge or freezer. If you need to call in emergency rush or temporary repairs, equipment breakdown coverage can help cover the costs.

Loss of business income

A loss of business income allows you to receive compensation for income you may have lost while your equipment was out of commission. For example, if it takes a month to repair your restaurant’s ovens, this insurance can not only cover the cost of repairs but also compensate you from the income you lost while you were unable to use the ovens.

Mandatory inspections

Restaurants must meet a variety of high standards in order to operate and serve customers. In many cases, you may receive mandatory inspections from various health organizations to make sure that your practices and equipment are up to code. If you have to face a mandatory inspection after a disaster, this insurance can help pay for the related expenses.

Property damage liability

Property damage liability is different than a normal property insurance, as it typically comes as part of a business’ general liability policy. However, equipment breakdown coverage can also offer some property damage liability in case your business’ equipment causes damage to another’s. For example, if you are renting or have a loan on your restaurant space and a broken stove causes a fire that damages the physical restaurant’s walls, this insurance can help pay for the damages as well as legal fees that may arise with your landlord or loaner.

Not only does equipment breakdown coverage cover repairs to the actual equipment, but it can also cover the products within, such as if food spoils due to the restaurant or freezer breaking down. This may be known as Food Spoilage Coverage. If you plan on starting or owning a restaurant, be sure to look at all of your insurance options to get the best protection possible. Not all restaurant insurance policies are created equal and you will want one tailored for your business’ specific needs.

Additional Coverage for Restaurants

If you are looking to protecting more of your restaurant’s assets, also consider adding these coverages to your business owners policy:

Commercial Auto Insurance covers vehicles owned and used by the business for work purposes.

Liquor Liability Insurance covers bodily injury and property damage a patron of your restaurant may cause while purchasing or ingesting alcohol at your establishment.
Crime Insurance covers theft, fraud and other crimes committed by employees.
Directors and Officers Insurance covers key employees such as managers in case of lawsuits due to their activity while working for the restaurant, including HR issues such as discrimination and sexual harassment.
Umbrella Liability Insurance fills in the gaps left by your other liability policies.
Workers Compensation protects your employees and your restaurant in case of workplace injuries.

How to Insure Your Restaurant Equipment

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