Managing risk and having the appropriate insurance coverage is crucial for any restaurant business. A kitchen is a veritable jackpot of hazardous possibilities. Outside of a steel foundry, it may have the most hazards of any occupation. There’s fire, a lot of it, and knives all over the place. Ovens and burners crank out obscene levels of suffocating heat. Fryers and steamers sit with building heat and pressure, just primed to explode. And God help you if you’re standing in front of a fryer when water is accidently dropped in there. Then there’s the dining room, where customers slip and fall, waiters drop scalding hot soup on someone, and bar glasses break and cut someone. It all sounds far fetched, and it’s true. Much of what was said was exaggeration. It isn’t the case that cooks are daily being taken to the hospital for on-the-job injuries. But that doesn’t mean it doesn’t happen.

Restaurants accounted for 93,800 work-related injuries and illnesses in 2019, the most recent information available. In the four years between 2010 and 2014, there were an estimated 7,410 fires in eating and drinking establishments, according to the National Fire Protection Association. And while customer lawsuit numbers are hard to come by, I don’t think you need them to know that restaurants are sued for food poisoning and accidents fairly often. So, you can see that while not occurring in scary-high numbers, restaurants account for enough issues and have enough risk areas to warrant mitigation through risk management.

Below is some information that you can use to help with that mitigation process.

1. Types of Insurance Coverage:

  • General Liability Insurance: This covers injuries or property damage that occurs on your restaurant premises. It’s essential for protecting against customer accidents.
  • Property Insurance: Protects your restaurant’s physical assets, such as the building, equipment, and inventory, from risks like fire, theft, or natural disasters.
  • Workers’ Compensation: Required in most states, it covers medical expenses and lost wages for employees who are injured on the job.
  • Liquor Liability Insurance: If your restaurant serves alcohol, this insurance protects you from liability claims related to the actions of intoxicated customers.
  • Business Interruption Insurance: This provides coverage if your restaurant is forced to close temporarily due to unforeseen events like a fire. It helps cover lost income and ongoing expenses.
  • Product Liability Insurance: Important if your restaurant produces its own food products or sauces. It protects against claims related to foodborne illnesses or allergic reactions.

2. Risk Assessment and Mitigation:

  • Conduct a thorough risk assessment of your restaurant, identifying potential hazards. This can include assessing kitchen safety, food handling practices, and fire safety.
  • Implement safety protocols and employee training programs to reduce risks. Regular inspections and maintenance of equipment can also mitigate potential issues.
  • Create an emergency response plan that outlines what to do in case of fires, accidents, or other emergencies. Ensure all staff members are trained in these procedures.

3. Claims Management:

  • Have a clear process in place for handling incidents or accidents. This includes documenting the event, gathering witness statements, and notifying your insurance provider promptly.
  • Keep meticulous records of incidents and any related communication with insurance companies. This will be crucial if you need to file a claim.

4. Review and Update Policies:

  • Regularly review your insurance policies to ensure they still meet the needs of your restaurant. As your business grows or changes, your insurance requirements may evolve.
  • Stay informed about any regulatory changes or new insurance options in the restaurant industry that could impact your coverage.

5. Consult with an Insurance Professional:

  • It’s advisable to work with an insurance agent or broker who specializes in the restaurant industry. They can help you understand your specific risks and tailor coverage to your needs.
  • Seek legal and insurance advice when drafting contracts, such as those with suppliers, to ensure they contain appropriate indemnity and insurance clauses.

Here are some companies that might be able to help you:

6. Cost Management:

  • While insurance is essential, it’s also important to manage costs. Consider factors like deductibles, coverage limits, and bundling policies to find cost-effective solutions.

Effective risk management and insurance coverage not only protect your restaurant’s assets but also provide peace of mind, allowing you to focus on delivering exceptional dining experiences to your customers.