When it comes to insuring your restaurant, it is important to look beyond the price and examine the coverage details in your policy. Just as the price is not the only driving factor when customers choose to eat at your restaurant, the price should not be the only driving factor when looking for an insurance policy. Any agent can write insurance for your restaurant but not all agents can write a policy with the coverages and limits you need. Let’s take look at five insurance coverages your restaurant needs but might not currently have.
Business Income with NO WAITING PERIOD
Your policy may already have Business Income, but it is common to have a 72-hour or 24-hour waiting period. A waiting period is like a deductible but instead of a flat dollar amount as the deductible, the deductible is a period of time.
Imagine a storm knocks out the power to your restaurant on a Friday afternoon at 3 pm and the power is not restored until the following Monday morning forcing you to close for the entire weekend. With a 24-hour waiting period, coverage would not kick in until 3 pm on Saturday causing you to lose out on Friday night sales as well as most of your Saturday sales. Even worse, with a 72-hour waiting period, coverage would not begin until 3 pm on Monday!
A policy with no waiting period means coverage kicks in immediately when the power goes out on Friday at 3 pm. If your policy has a waiting period it could cost you thousands in the event of a claim. At Corporate Four we make an emphasis to provide policies to our customers with no waiting period.
Employment Practices Liability
Employment Practices Liability is one of the fastest growing claim areas in the insurance industry today and that is why it is another must have coverage.
About 1 in 10 small to medium-sized businesses face a chance that they will have an Employment Practices Liability Claim. Employment Practices Liability is designed to cover wrongful termination, sexual harassment, gender discrimination and a myriad of other employee-related claims and allegations.
With the average claim costing tens of thousands of dollars your business cannot avoid going without this coverage.
Spoilage and Food Contamination
Spoilage coverage is what the name implies, loss to food or other perishable stock that has spoiled due to equipment breakdown or power outage. Going back to our claim example of the power going out all weekend, it is likely that a large inventory of food would spoil and without this coverage added you may be on your own to cover the cost to replace the spoiled stock.
This is a must have coverage for every restaurant. Food Contamination coverage provides you the cost to replace contaminated food, the cost of cleaning and sanitizing equipment, as well as the lost business income and extra expense in the event of a food contamination incident.
This coverage is required by law in Minnesota if you serve alcohol. However, not all liquor liability policies are the same.
Some insurance companies offer liquor liability policies that have restrictive sub-limits.
If your liquor liability policy has sub-limits it could leave you owing thousands in the event of a claim.
We are going to flip it around on this last coverage and talk about why you may want to remove Medical Payments coverage from your policy. Medical payments coverage is meant for small claims that occur at your business regardless of fault like slips, trips, and falls or a customer chipping a tooth because of a piece of bone inside a sandwich. The medical payments limit is low, typically $2,000 to $10,000.
In theory, this coverage is a goodwill gesture to customers who may get injured on your premises. The main problem we run into is people abusing the fact that this coverage is paid regardless of fault. Medicare and Medicaid have started requesting payment from restaurants when an injury to a senior citizen occurs on your premise. A senior citizen may fall in your restaurant from no fault of your own and Medicare can come back and subrogate against your insurance policy.
If your policy pays out a couple medical payments losses over the course of a few years it will increase your loss ratio which can result in higher premiums even though you did nothing wrong. Excluding Medical Payments from your policy still provides you with coverage for claims in which you are liable but protects you from claims in which you are not. Excluding Medical Payments also lowers your annual premium.
Agents who do not specialize in restaurant insurance may not know the benefits of excluding Medical Payments from your policy. At Corporate Four, we understand the unique coverages needed or not needed for the restaurant industry. This is another reason to contact Matt at Corporate Four to discuss your insurance program today.