What insurance does a new restaurant need?

Opening a new restaurant is an exciting time. There’s so much to think about – setting it up, branding and finding staff, for instance.

Aside from these basics, insurance is one of the most important considerations you will need to make.

Let’s say you you’re opening a new Thai restaurant, for the purpose of this story let’s call it Thai 123. You’re going to be offering eat-in and take-away dining options and the shop is located on a busy suburban high street.

Now, we can take a look at the different insurances the proprietors may require so they are comfortable their risks are managed through insurance and other mitigation strategies, to be able to focus on building their business.

“Most businesses take between $5 million and $10 million in public liability cover”

Public liability insurance
Public liability insurance is essential for all businesses that engage with the public. It provides cover should someone suffer an accident on the premises or as a result of the activities of the policyholder. It can also provide cover if someone gets food poisoning from consuming food or drink purchased from the business.
“Most businesses take between $5 million and $10 million in public liability cover,” says Steadfast Broker Technical Manager Michael White.

Property insurance
Property insurance covers restaurants such as Thai 123 for accidental and other damage to things like stock and equipment such as ovens and fridges.
When pricing your premium and at renewal time, your insurer may need to explore how you maintain the business and its property. With restaurants, the way grease traps are cleaned is important because they can be seen as a fire hazard and your insurer may ask about the process for cleaning out this equipment. The insurer may also inquire about cooking process used at the restaurant, in particular whether deep fryers are used and the process for cleaning this and other equipment such as extraction fans.
“Insurers will also want to know about how much expanded polystyrene (EPS) is on the property. While it will not self-ignite, it’s hard to extinguish once alight,” says White. EPS is often a feature of cool rooms in hospitality businesses. Insurers may also investigate the sprinkler system to make sure it will deploy in the event of a fire.

Business interruption insurance

This type of insurance would cover Thai 123 for loss of income, profit or turnover should the business be disrupted by unforeseen events such as a fire.

Although this can be trickier for a new business as it can be hard to estimate protected turnover, the insurer may require the proprietors to complete a business plan with reasonable estimates so the right level of cover can be put in place.

Workers’ compensation insurance
This is compulsory cover all businesses that employ staff and contractors must have. It provides protection should any employees suffer an accident or contract an illness at work.
Check with your state’s relevant body to find out more.

Theft

Restaurants should also explore whether they should be covered for theft. This cover can provide protection for any damage incurred as a result of a break in, as well as the cost of stolen goods, subject to the limits of the policy.

So, there’s a lot to think about if you’re taking out insurance for your restaurant business for the first time. Talk to your Steadfast broker to make sure you’ve got everything covered.

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