BUSINESS INSURANCE for Restaurants
OR call us: (214) 667-2729
Running a restaurant means juggling countless responsibilities, from managing staff to ensuring food quality. Yet, one critical area often overlooked is business insurance. Surprisingly, recent data shows that nearly 40% of U.S. restaurant owners did not have business insurance in 2025, a sharp rise from 29% in 2024
according to a recent report. This gap leaves many vulnerable to financial setbacks from claims and unforeseen events. Understanding what insurance covers and why it matters can protect your investment and keep your doors open.
Why Business Insurance Matters for Restaurants
Restaurants face unique risks daily. From slip-and-fall accidents to food contamination, the potential for costly claims is high. Insurance acts as a safety net, covering expenses that could otherwise cripple your business. The food service industry saw a 2.3% increase in insurance claims in 2023 compared to the previous year, with average payouts around $4,632 according to industry data. Without coverage, these costs come directly out of pocket.
Profit margins in restaurants are notoriously tight. John Parkhurst, a hospitality practice leader, points out that rising insurance costs and slim profits often push operators to seek new insurance partners who can offer better value as noted in an industry interview. However, some smaller restaurants choose to go without certain coverages simply to save money, which can backfire if a claim arises. This short-sighted approach can lead to significant financial strain, especially when a sudden incident occurs, leaving the restaurant vulnerable to lawsuits and hefty repair bills.
Risks Specific to Restaurants
The restaurant environment is full of hazards. Kitchens are busy, equipment is hot, and customers are constantly moving. Common risks include:
- Property damage from fires or equipment failure
- Liability claims from customer injuries or foodborne illnesses
- Employee-related claims such as workers compensation for injuries
- Business interruption losses due to unforeseen closures or disasters
Ignoring these risks can lead to devastating financial consequences. Insurance coverage tailored to restaurants helps mitigate these threats and supports recovery. For instance, a fire in the kitchen can not only damage equipment but also lead to a temporary closure, impacting revenue. In such cases, business interruption insurance can cover lost income during the downtime, allowing the restaurant to reopen without facing crippling financial losses. Additionally, with the rise of food delivery services, restaurants must also consider the risks associated with third-party delivery drivers, including accidents or mishaps that can occur during the delivery process.
Moreover, the importance of employee training cannot be overstated. Ensuring that staff are well-versed in safety protocols and food handling procedures can significantly reduce the likelihood of accidents and claims. Comprehensive insurance policies often include coverage for training programs, which can help restaurants invest in their workforce while simultaneously protecting their bottom line. As the industry evolves, staying informed about emerging risks and adapting insurance coverage accordingly is crucial for long-term success in the competitive restaurant landscape.
By: Dustin Hulett
Founder & CEO of Cuisine Coverage
Types of Insurance Every Restaurant Should Consider
Not all insurance policies are created equal. For restaurant owners, certain coverages are essential, while others depend on the size and nature of the operation.
General Liability Insurance
This is the backbone of restaurant insurance. It protects against third-party claims for bodily injury or property damage. For example, if a customer slips on a wet floor and sues, general liability covers legal fees and settlements. Additionally, it can also cover incidents that occur off-premises, such as catering events, ensuring that your restaurant is protected no matter where your food and service are enjoyed.
Property Insurance
Restaurants rely heavily on their physical space and equipment. Property insurance covers damage from fire, storms, or vandalism. Given the increasing frequency of extreme weather events, this coverage is more important than ever. Furthermore, property insurance can also extend to cover loss of income due to the inability to operate after a covered event, allowing restaurant owners to recover financially while repairs are made.
Workers Compensation
With a workforce projected to grow to 15.7 million by the end of 2024 according to industry forecasts, employee injuries are a real concern. Workers compensation insurance covers medical expenses and lost wages for staff hurt on the job, protecting both employees and employers. Additionally, many states require this coverage by law, making it not only a wise investment but also a legal necessity for restaurant operations.
Business Interruption Insurance
Unexpected closures can devastate revenue streams. Business interruption insurance helps cover lost income during events like natural disasters or pandemics. The COVID-19 pandemic highlighted this need, as many small restaurants saw a surge in delivery orders through platforms like Uber Eats, helping them stay afloat despite dine-in closures according to a recent study. This type of insurance can also cover ongoing expenses, such as rent and utilities, ensuring that a restaurant can maintain its financial obligations even when it is unable to serve customers directly.
Food Contamination and Product Liability
Food safety is paramount. Claims related to foodborne illnesses can be costly and damage reputations. Specialized coverage protects against lawsuits stemming from contaminated or spoiled food. This type of insurance not only covers legal fees but can also assist in the costs associated with product recalls, which can be a significant financial burden for any restaurant. In an industry where trust is key, having this coverage can help maintain customer confidence in your establishment.
Employment Practices Liability
With labor costs rising and workforce pressures increasing, claims related to employment practices such as discrimination or wrongful termination are becoming more common. This coverage shields your restaurant from such legal battles. Furthermore, it can also extend to cover claims related to harassment or retaliation, which are critical issues in today's workplace environment. By having this insurance, restaurant owners can foster a safer and more equitable workplace while protecting themselves from potentially damaging lawsuits.
Balancing Coverage and Costs
Insurance premiums can be a significant expense, especially when margins are tight. Paul P. DiBenedetto from HUB International highlights that many restaurants, particularly smaller ones, are tempted to drop certain coverages to save money according to his expert insight. This practice, known as going 'bare,' can leave businesses exposed. Without adequate coverage, a single incident—such as a kitchen fire or a slip-and-fall accident—can lead to devastating financial consequences that could threaten the very existence of a restaurant.
Finding the right balance means assessing your restaurant’s specific risks and financial capacity. Working with an insurance partner who understands the hospitality industry can help tailor policies that provide essential protection without breaking the bank. This partnership allows restaurant owners to navigate the complexities of insurance jargon and find solutions that fit their unique operational needs. Additionally, engaging in proactive risk management strategies, such as employee training and safety audits, can not only reduce the likelihood of claims but also potentially lower insurance premiums over time.
Factors Influencing Insurance Costs
Several elements affect premiums, including:
- Location and exposure to natural disasters
- Size of the restaurant and number of employees
- Type of cuisine and kitchen equipment used
- Claims history and risk management practices
Regularly reviewing your coverage and comparing quotes can uncover savings or coverage gaps. Some operators switch insurance providers to find better rates or more comprehensive policies as market conditions evolve. Furthermore, understanding the nuances of different types of coverage—such as general liability, property insurance, and workers' compensation—can empower restaurant owners to make informed decisions about their insurance needs. By staying informed about industry trends and potential risks, operators can adapt their insurance strategies accordingly, ensuring they remain protected against unforeseen events while managing costs effectively.
Industry Outlook and Its Impact on Insurance Needs
The restaurant industry is showing signs of resilience and growth. The National Restaurant Association projects $1.5 trillion in sales with employment growth adding more than 200,000 jobs in 2025 according to their latest market report. This growth means more opportunities but also more complexity in managing risks. As the industry rebounds from the challenges posed by the pandemic, restaurant owners are not only focusing on increasing their customer base but also on enhancing their operational efficiency to adapt to the new normal.
As restaurants expand or open new locations, insurance needs become more complex. Larger operations might require additional coverages such as cyber liability, especially as digital ordering and payment systems become standard. The pandemic accelerated digital adoption, with many small restaurants increasing their activity on delivery platforms to survive as documented in a recent study. Moreover, the integration of technology in restaurant management—from inventory systems to customer relationship management—also introduces new vulnerabilities that need to be addressed through specialized insurance policies. As restaurants embrace innovations like contactless payments and online reservations, they must remain vigilant about the potential risks that accompany these advancements.
Preparing for Future Challenges
With climate change increasing the risk of extreme weather, insurance claims related to property damage are expected to rise. Staying ahead means investing in coverage that can handle these evolving threats. The rise in food business insurance claims reflects this trend, underscoring the importance of comprehensive protection. Additionally, restaurants are increasingly recognizing the need for business interruption insurance, which can safeguard them against unexpected closures due to natural disasters or other unforeseen events. This type of coverage can be critical in maintaining financial stability during turbulent times, allowing businesses to recover more swiftly and effectively.
Furthermore, as consumer preferences shift towards sustainability and ethical sourcing, restaurants are also facing new liabilities related to food safety and environmental regulations. Compliance with these regulations not only protects the business from legal repercussions but also enhances its reputation among environmentally conscious consumers. Insurance products that address these specific risks are becoming more essential, as they provide a safety net for businesses striving to meet both regulatory standards and customer expectations. This evolving landscape highlights the importance of a proactive approach to risk management, ensuring that restaurants are not only prepared for current challenges but also equipped to thrive in the future.
How to Choose the Right Insurance Partner
Choosing an insurance provider is as important as selecting the right coverage. A good partner understands the restaurant business and can offer tailored advice. Look for providers who specialize in hospitality and can help navigate the complexities of claims and risk management.
Ask about:
- Experience with restaurant insurance
- Claims support and responsiveness
- Flexibility in coverage options
- Competitive pricing and discounts
Switching providers can be a strategic move, especially if your current insurer does not meet your evolving needs or if costs become prohibitive. Industry leaders note that tighter profit margins are driving operators to seek new insurance partners who can offer better value
according to hospitality experts.
Coverage Comparison: What to Expect
| Coverage Type | What It Covers | Why It Matters | Typical Cost Impact |
|---|---|---|---|
| General Liability | Customer injuries, property damage, legal fees | Protects against lawsuits and settlements | Moderate |
| Property Insurance | Damage to building, equipment, inventory | Essential for recovery after disasters | Varies by location and risk |
| Workers Compensation | Employee injury medical costs and wages | Required by law in most states | Depends on payroll and claims history |
| Business Interruption | Lost income during closures | Helps maintain cash flow during downtime | Additional premium on top of property |
| Food Contamination | Claims from foodborne illness lawsuits | Protects reputation and finances | Specialized coverage, can be costly |
| Employment Practices Liability | Claims related to employee disputes | Mitigates legal risks in workforce management | Moderate, varies by size |
Frequently Asked Questions
Do I need business insurance if my restaurant is small?
Yes. Even small restaurants face risks like customer injuries or property damage that can lead to costly claims.
What happens if I do not have insurance and a claim is filed?
You may be personally responsible for all legal fees, settlements, and damages, which can jeopardize your business.
Can I customize my insurance coverage?
Absolutely. Policies can be tailored to fit your restaurant’s size, location, and specific risks.
How often should I review my insurance policy?
It’s wise to review your coverage annually or whenever you make significant changes to your business.
Is workers compensation insurance mandatory?
Most states require it if you have employees. It protects both your staff and your business in case of workplace injuries.
How can I reduce my insurance premiums?
Implementing strong safety protocols, maintaining a good claims history, and comparing quotes from multiple insurers can help lower costs.
Does business interruption insurance cover pandemics?
Coverage varies. Some policies now include pandemic-related losses, but it’s important to confirm details with your insurer.
Before You Go
Business insurance is not just a legal formality; it is a vital tool to protect your restaurant’s future. With nearly 40% of restaurant owners uninsured in 2025, the risks of going without coverage are clear according to recent statistics. Take the time to evaluate your risks, understand your options, and partner with an insurer who knows your industry. Doing so can save you from unexpected financial hardship and help your restaurant thrive in a competitive market.
About The Author:
Dustin Hulett
As Owner of Cuisine Coverage powered by Hulett Insurance, I specialize in protecting restaurants, bars, and hospitality businesses with smart, reliable insurance solutions. With years of experience serving the food and beverage industry, my goal is to make coverage simple, transparent, and built around the unique risks that owners face every day.
Contact Us
Business Coverage
Protection for Every Part of Your Food Business
Cuisine Coverage provides specialized insurance for restaurants, food trucks, catering services, and other hospitality businesses. We help owners protect their property, staff, and reputation with policies built around the most common industry risks.
General Liability Insurance
Protects your business from claims related to injury, property damage, or accidents that happen during operations.
General Liability
Liquor Liability Insurance
Covers alcohol-related incidents for restaurants, bars, or venues that serve or sell alcohol.
Liquor Liability
Workers Compensation Insurance
Provides wage replacement and medical benefits to employees injured on the job.
Workers Compensation
Business Interruption Insurance
Helps replace lost income and cover ongoing expenses if your business operations are temporarily halted.
Business Interruption
Product Liability Insurance
Protects against claims related to foodborne illness, contamination, or product defects.
Product Liability
Cyber Liability Insurance
Covers data breaches, online payment issues, and digital risks that can affect modern food businesses.
Cyber Liability
Serving the Food and Hospitality Industry
Insurance Solutions for Every Type of Food Business
Cuisine Coverage provides specialized insurance for restaurants, cafés, and food service professionals across the country. Whether you run a casual kitchen or a mobile food truck, we offer coverage that fits your operations and risk level.
How It Works
Insurance Made Easy for Food Business Owners
We know you don’t have time to deal with complicated insurance forms. That’s why our process is built for speed and simplicity — so you can get back to running your kitchen.
Your Insurance Questions Answered
What Restaurant and Food Business Owners Ask Most
What types of insurance do restaurants and food businesses need?
Most food businesses need general liability, property, and workers’ compensation coverage. These protect against injuries, equipment damage, and employee-related incidents. Businesses serving alcohol should also include liquor liability insurance for extra protection.
Having the right mix of policies helps reduce financial risks. We’ll help you identify the specific coverages your business needs based on your setup, size, and operations.
Do you provide insurance for food trucks and mobile kitchens?
Yes. We specialize in insurance for food trucks, trailers, and mobile vendors. Our coverage includes vehicle protection, cooking equipment, and liability for events or customer interactions.
We can also help you meet licensing and vendor requirements by issuing certificates of insurance quickly — often the same day.
How fast can I get a quote or start coverage?
In most cases, quotes are ready within 24 hours once we have your business details. After approval, coverage and certificates can be issued immediately.
Our process is fully digital but supported by real agents who review each policy for accuracy. You’ll always know exactly what you’re getting before coverage starts.
Do you offer liquor liability insurance for bars or restaurants?
Yes. We provide liquor liability insurance for bars, taverns, and restaurants that sell or serve alcohol. This coverage protects against claims involving intoxicated patrons or alcohol-related incidents.
It’s essential for maintaining compliance with local laws and protecting your business from costly lawsuits. We’ll ensure your policy meets all licensing requirements.
How can I reduce my insurance costs?
You can often lower premiums by bundling multiple coverages, maintaining clean safety records, and conducting regular policy reviews. Many insurers also offer discounts for installing safety systems and training employees.
At Cuisine Coverage, we proactively review your policy before renewal to help you keep costs down without reducing protection.
Do you help with certificates of insurance (COIs)?
Yes. We provide same-day certificates for vendors, landlords, and event partners. You can request them by phone or email anytime.
Having your COI ready keeps your business compliant and avoids delays in operations. Our team handles these requests quickly so you can stay focused on running your business.
From the Kitchen to Coverage
Real Advice for the Food and Hospitality Industry
We share tips, updates, and real-world stories from the food and insurance industries. Whether you’re managing a restaurant or rolling out a food truck, our articles give you useful guidance to protect your business and grow with confidence.
Contact Us
Phone
Location
