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3 Insurance Policies to Take Out When Opening a Restaurant

Tyler Vogelsberg • Nov 20, 2019

You might think opening a high-quality restaurant is a pretty risk-free business model—after all, eating tasty food isn't something that goes out of style. However, a wide range of accidents and mishaps can befall even the most well-run restaurant.

If you’ve decided to open your own restaurant, either as a hands-off owner or a hands-on operator, you will almost certainly need to take out several insurance policies to guard against worst case scenarios. Here are three you should consider.

1. Public and product liability insurance

Hugely important to any restaurant or hospitality business, public and product liability insurance insures your restaurant against compensation claims by customers. In an industry where a small mistake by a single employee can lead to contaminated or undercooked food and a nasty case of food poisoning, insuring yourself against potential lawsuits by sick customers is vital.

Public liability insurance also protects you against other kinds of trouble your customers may experience whilst on your premises. If a customer slips on a discarded piece of cutlery, has hot soup spilled on them by a waiter or even accidentally burns themselves on a plate straight from your plate warmer, your public and product liability insurance will protect you against any claims made.

Some public liability insurance policies also protect your business if an accident at your restaurant causes financial difficulties for a third-party business.

For example, if your restaurant has drink vending machines operated by a separate vending machine business, a comprehensive public and product liability policy will protect you if a vending machine is accidentally damaged and the vending machine business sues for costs.

2. Property insurance

Opening a restaurant involves some serious investment, from buying or renting a building, to purchasing professional-grade cooking equipment and appliances, so you should definitely consider taking out a comprehensive property insurance policy to protect against a wide array of potential damages to both your building and its contents.

With a restaurant, your main concern will likely be insuring against losses and damages caused by kitchen fires, but a good property insurance policy will also protect your restaurant against theft of valuable equipment or stock, loss of income caused by equipment breakdowns and building damage caused by heavy thunderstorms and cyclones.

The modern hospitality industry is also heavily digitised, so you should ensure your property insurance policy (or policies) cover you against damage to expensive electronic equipment. Digital cash registers, touchscreen ordering booths and other electronic equipment will all need to be insured.

If your restaurant handles its finances or orders stock with online or cloud based services, you may also wish to take out a separate cyber security policy.

3. Workers Compensation insurance

Taking out a Workers Compensation insurance policy on your restaurant isn't just a good idea—it's also the law. Western Australia's WorkCover laws require all businesses with employees to take out a Workers Compensation policy.

Your Workers Compensation insurance policy will cover a wide range of costs related to employee accidents and injuries. If an employee decides to sue your restaurant for damages, insurance will help your business pay compensation fees.

Workers Compensation insurance will also provide important financial aid for your stricken employees, helping them pay for medical and rehabilitation costs and providing reasonable travel expenses if they need to seek specialised medical attention out of town.

These are the three most important insurance policies any new restaurant owner or operator should invest in. You may be interested in taking out other useful policies, such as business interruption insurance. If you require more information, the friendly and professional team at Westralian Insurance will be happy to assist. Contact us today.

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