Common Myths and Mistakes Restaurants Make With Insurance

Running a successful restaurant involves juggling numerous responsibilities, and ensuring the right insurance coverage is in place is a critical aspect often clouded by myths and misconceptions. In this blog, we’ll unravel the truth behind common myths and mistakes in restaurant insurance to help you make informed decisions that protect your business and assets. 

Myth: “General Liability Insurance Covers All Risks” 

It’s a common belief that general liability insurance provides a blanket coverage umbrella for all potential risks a restaurant might face. However, the reality is more nuanced. General liability insurance primarily covers bodily injury and property damage claims resulting from accidents on the premises. While crucial, it doesn’t address all potential risks. 

Example Scenario: Imagine a customer files a lawsuit claiming they slipped and injured themselves while eating at your restaurant. General liability insurance would be the policy to respond in that scenario.  

Myth: “Cyber Insurance Is Irrelevant for Restaurants” 

In an era dominated by technology, the misconception that restaurants don’t need cyber insurance is a dangerous oversight. Cyber threats pose a significant risk to businesses of all sizes, including restaurants. Point-of-sale systems, online reservations, and customer databases are potential targets for cybercriminals. 

Example Scenario: A cyber-attack on your restaurant’s payment system could lead to unauthorized access to customer data and financial information. Without cyber insurance, the costs associated with investigating the breach, notifying affected customers, and addressing legal repercussions could be overwhelming. 

Myth: “Our Employees are Family, They Would Never Sue Us” 

Another prevalent myth is that your employees love working for you so much they won’t sue you.  The food service industry is very high pressure at times. You must meet high bars for customer satisfaction. Poor employment practices can arise in any business, including restaurants. Therefore, restauranteurs should always do their best to prevent any employment-related problems. Should one arise, the employer might need financial help and protection to fight it. That’s where Employers Practices Liability (EPLI) comes in.  

Example Scenario: Consider a scenario where a kitchen staff member alleges sexual harassment. EPLI protection can help employers fight back against these allegations by helping cover legal costs, settlements and judgements. Neglecting this coverage can lead to legal complications and financial strain. 

Mistake: Underestimating Business Interruption Insurance 

Many restaurant owners underestimate the importance of business interruption insurance, thinking their primary focus should be on tangible assets. However, disruptions like fires, natural disasters can halt operations, resulting in significant financial losses. 

Example Scenario: A fire breaks out in the kitchen, forcing your restaurant to close for repairs. Without business interruption insurance, the lost revenue during the closure, ongoing expenses, and the cost of rebuilding could jeopardize the future of your business. 

Mistake: Neglecting Liquor Liability Coverage 

Restaurants serving alcoholic beverages often make the mistake of assuming general liability insurance is sufficient to cover any alcohol-related incidents. However, liquor liability coverage is essential to address risks specific to establishments serving alcohol. 

Example Scenario: A customer leaves your restaurant intoxicated and causes a car accident. Without liquor liability coverage, your restaurant could be held responsible for the damages. This mistake can lead to legal battles and substantial financial repercussions. 

Making Informed Choices for Robust Restaurant Insurance 

In the complex landscape of restaurant insurance, separating fact from fiction is vital for safeguarding your business. General liability insurance is essential but should not be seen as a one-size-fits-all solution. Understanding specific risks and tailoring your insurance coverage accordingly is key to comprehensive risk management. 

Ready to ensure your restaurant is adequately protected against unforeseen risks? Schedule a personalized consultation with our Founder & CEO, Ciara Gravier, by clicking here. Let’s work together to build a tailored insurance strategy that secures the future of your restaurant. 

Remember, an informed decision today can make all the difference in the face of uncertainties tomorrow. Don’t let myths and mistakes compromise the success of your restaurant. Welcome to The Bunker, a move from danger to a safe place!  

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