Restaurants face a various amount of risks, both inside and out. Liability is a huge issue when it comes to restaurants, as slips, falls and burns are not only likely, but common. Some of the most dangerous threats facing restaurants may come from the outside, however.
One of the most important assets of a restaurant is the physical building. Disasters such as tornadoes, floods and earthquakes can send a restaurant into incredible turmoil, not only by repairs but by making the restaurant inoperable. This is when it’s crucial to have a reliable property insurance policy.
What Does Property Insurance Cover?
Commercial property insurance typically covers damages due to fire, lightning, wind, hail, explosions, theft, vandalism and more. It helps with repair and rebuild expenses to the physical building after a disaster, as well as a limited number of items and equipment inside. Most property insurance policies are named perils coverage, meaning that only dangers listed explicitly on the policy will be covered. Accidents that are not listed (such as flood damage) will not be covered. Some policies may be open perils policies, which means any dangers not explicitly listed will be covered. For example, the policy may exclude floods and earthquakes only, meaning it will cover everything else.
Additional Property Insurance
Restaurants have a lot of expensive equipment that can be expensive to replace last minute.
Additional property coverages for such items include:
• Equipment Breakdown: Equipment breakdown insurance steps in if equipment suddenly quits working due to an accident, electrical damage or mechanical damage. This is important for expensive restaurant equipment such as refrigerators, freezers, ovens, steamers and more.
• Business Interruption Insurance: Business interruption insurance compensates for income lost while the business is inoperable after a disaster.
• Spoilage Coverage: Spoilage coverage closely relates to equipment breakdown insurance, but this coverage compensates for the contents of the equipment rather than the equipment itself. If your restaurant’s food spoils due to a refrigerator breaking down or the power going out, spoilage coverage can help replace the spoiled food.
• Extra Expense Coverage: Extra expense coverage can help you move operations or rent new equipment after a disaster in order to continue business operations while repairs are being made.
• Employee Theft Coverage: Although no employer wants to believe that their staff would steal from them, it’s an unfortunate possibility that should be considered. Normal property coverage won’t cover theft by employees or business partners. Employee theft coverage will help compensate the business for money or property stolen by employees.
• Flood Insurance: Property insurance also excludes flood damage. You can purchase a separate flood insurance policy in order to receive compensation for loss and damage due to floods. Earthquakes are also excluded and can be covered under a separate policy.
• Commercial Auto Insurance: Commercial auto insurance covers vehicles owned or used by a business. You may need this coverage if your restaurant caters or delivers. This insurance can cover vehicles owned by the business in case of collision, fire, hail, wind, theft, vandalism, uninsured drivers and other dangers.
How Much is Property Insurance for Restaurants?
The price of commercial property insurance varies. Premiums for this coverage depend on your location, credit score, industry, size and claims history. On average, you may pay around $742 a year for a million dollars of basic property coverage. You may be able to save money by bundling insurance. Restaurants may be able to purchase a business owners policy (BOP), which combines commercial property insurance and general liability insurance into one comprehensive policy. A BOP is tailored for small businesses in low-risk industries, but you can still add some coverages to the policy.