Most Common Restaurant Insurance Claims

Opening a restaurant is an exciting endeavor.  There are a million things you need to consider when opening a restaurant, and people often forget the importance of restaurant insurance. 

However, having adequate restaurant insurance can help you cover the cost of the many restaurant insurance claims. 

You may assume it is unlikely you’ll need insurance for your restaurant, but every year millions are paid out in restaurant insurance claims.   

Still not convinced?  Here are the most common restaurant insurance claims you need to be aware of.

1. Slip and Fall Accidents

Slip and fall accidents occur when a customer or employee slips on a hazard in your restaurant and injures themselves. 

The risk of this happening in a restaurant is fairly high since the floors are often wet, and food can fall on the floor. 

The average settlement amount for a slip and fall accident is between $10,000 and $40,000 but can be much more depending on how seriously injured the person is.   

If you don’t have insurance, you’re on the hook for paying the full settlement amount, but if you have commercial general liability insurance (CGL), your insurer may cover the cost of settlement.

2. Burglary and Theft

Burglary and theft is the most common restaurant insurance claim made.  As a restaurant owner, you’re not only at risk of having an outsider steal from you, but your employees can steal from you as well. 

In fact, one study found that 75% of all restaurant employees steal from their employers in one way or another. 

CGL insurance may help you recover the cost of the items stolen.  On average, $9,779 worth of goods are stolen in a non-residential burglary, and you don’t want to be stuck paying to replace everything if you don’t have insurance coverage. 

3. Kitchen Fire

Even though restaurant fires are easily preventable, yet there is still $165 million of fire damage caused to restaurants each year.    

The average damage after a restaurant fire is $11,900, but it can be significantly more expensive.

Fire damage is covered by commercial property insurance (CPI), and most states require you to have CPI as a restaurant owner.

With CPI coverage, your insurance provider will likely cover a portion of the cost to repair your restaurant after a fire.

4. Water and Freezing Damage

The winter months are cold in New York, and pipes are susceptible to freezing.  Your restaurant pipes freezing and bursting is a legitimate risk you need to consider.

Summer months also pose a risk to your restaurant.  Floods happen nearly every year in New York.  To assess your risk level for flooding, consult the New York flood map

Water damage is one of the expensive and difficult issues to fix in your restaurant.  A single burst pipe costs between $5,000 and $7,000 to fix. 

In most cases, CGL insurance covers water damage, and, your insurance provider will likely help pay for the cost of repairs due to water damage.

5. Liquor Liability

If you sell alcohol at your restaurant, you’re at risk of being sued if someone is injured or assaulted as a result of the alcohol served.   

Liquor liability insurance may protect you if you’re sued for bodily injuries or property damage because someone was overserved alcohol at your restaurant and behaved poorly. 

It is difficult to estimate how much a settlement in a liquor liability case may be.  It depends on the injuries and contributory negligence, but a settlement could be in the same range as a personal injury claim. 

Without insurance, you’d have to pay the entire settlement amount, which would deeply impact your business. 

6. Workers’ Compensation

Workers’ Compensation insurance is a government-mandated insurance you need as a business owner in New York State.

It helps you cover the cost of wages when one of your employees is injured on the job and has to take time away from work. 

In the restaurant industry, the most common workers’ compensation claims are cuts, burns, and slip and falls. 

If you fail to have workers’ compensation insurance, you have to pay the injured employee’s full wages rather than have your insurer likely step in and cover the cost of some of the wages.

7. Food Contamination

Food contamination is almost inevitable in the restaurant industry.  You can experience food contamination from an accident like your fridge malfunctioning and spoiling your food or malicious product tampering by an employee. 

If food contamination occurs, you have to pay for the cost of replacement food, replacement equipment, and the lost revenue due to being closed.  The right insurance policy may cover some of the cost for food contamination claims.

Some CGI insurance policies include food contamination, but many don’t.  If food contamination claims aren’t included, you may need to purchase additional recall and food tampering insurance. 

8. Equiptment Breakdown

The last of the common restaurant insurance claims to be aware of is equipment breakdown. 

If your equipment has a mechanical, electric, or computer breakdown, that has a serious impact on your business. 

You need to replace or repair the equipment before your restaurant can operate again properly.  It is difficult to know how much an equipment breakdown claim will be since there are so many different pieces of equipment that can break down.

For example, if your oven breaks down and you have to purchase a new one, it could cost you between $1,000 and $10,000.

Equipment breakdown insurance will likely help you cover the cost of any replacements and repairs you need. 

Final Thoughts on Restaurant Insurance Claims

There are many different insurance claims you may need to make as a restaurant owner.  In many instances, you need multiple different types of insurance coverage.

It can be overwhelming for a first-time restaurant owner to say the least. 

At Lincoln Brokerage, we want to make restaurant insurance as easy as possible.  We offer comprehensive restaurant insurance for a single, low price, so you can focus on everything else that goes into running a successful restaurant. 

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