When purchasing Business Insurance for your restaurant, one of the most important coverages is General Liability Insurance. Here are some key things to know about purchasing General Liability Insurance for Restaurants.

Why do you need General Liability insurance in a restaurant?

This coverage protects you from many types of claims from customers.  The most common general liability claim in restaurants is when a customer slips and falls and claims that they have suffered an injury.  Your General Liability policy will provide defense costs as well as pay for damages if it is determined that you are liable for the injury.

Another claim that occurs in restaurants that is covered by your General Liability policy is a Food Contamination claim.  If a customer claims salmonella to an unexpected bone in a chicken finger. Famously, a customer fraudulently claimed that she found a human finger in her chili at Wendy’s.  After investigation, it was discovered that she made the whole thing up.  General Liability policies pay to help investigate these kinds of accusations and pays for defense costs if you need to go to court to protect your business.

General Liability is usually required by your landlord if you lease your space so it commonly one of the first coverages that a restaurant owner will purchase.

How much does General Liability Insurance for restaurants cost?

The cost of a General Liability policy can be determined in several ways.  The insurance company needs to take some kind of measurement in order to determine the amount of risk involved at your particular location. This is commonly done in one of two ways:

Gross Sales: Many insurance companies will use your restaurant sales as method for measuring how many people are coming in and out every day which they use to estimate your risk.  More customers = Higher risk. In addition to the gross sales, they may ask for a breakdown between Food Sales vs Alcohol Sales or Dine-in orders vs Take-out.

With a sales rate, the insurance company will ask you for a sales estimate at the beginning of your policy term to figure out an estimated premium.  At the end of the policy term, they may conduct an Audit of your sales and could charge you additional premium if you went over your estimate.

Square Footage: Another way that some insurance companies measure General Liability risk for your Restaurant is by analyzing the size of your restaurant.  They will ask for the square footage of your restaurant that customers have access to and assign a premium based on the size.  This “customer area” estimate should typically include the dining room, bar area, patios, and even restrooms. 

General Liability policies for restaurants that are rated on square footage aren’t subject to audits at the end of the policy so many owners like this method since it locks in their expense up front and is simpler to manage.

So, which method is right for you? Gross Sales or Square Footage? If you have a smaller restaurant with high sales, a square footage rated General Liability policy can be advantageous.  One good thing about a Gross Sales rated policy is that, if sales slow down for some reason, you will pay less for your insurance. The only way to know for sure is to request a quote from each of the insurers so you can compare rates. 

Here’s 3 more important things to know about purchasing General Liability for your Restaurant:

1. Usually, General Liability for Restaurants is purchased as a part of Business Owners Policy or Commercial Package policy. IT will combined with property insurance and other important coverages for your restaurant.
2. If you have multiple locations, you can insure them on one policy or on separate policies. If you decide to insure multiple restaurant units on one policy, make sure that your policy includes a “Per Location Aggregate”. This means that the policy will provide a separate aggregate limit at each location so that a large claim at one location doesn’t exhaust the coverage at all of your other locations.
3. Make sure that your policy includes the ability to add other companies as “Additional Insured” to your General Liability policy.  It’s common for restaurants to need to add their landlord or a lender as Additional Insured.  You may also get the request if you are participating in a local event or providing catering to another business. 

At Statement Insurance Agency, we specialize in getting restaurants the right General Liability policy for their business. We quote policies for restaurants everyday.  We make it easy for you to know you have a great policy that will be affordable and provide peace of mind.  You make a Statement with your food. We’ll make a statement with your coverage.