From general liability insurance to workers’ compensation, learn how to understand and purchase the right insurance for your food and hospitality business. Check out our comprehensive articles and resources to discover how you can protect and grow your business.
Food and Hospitality Business Insurance Basics
Types of Food and Hospitality Business Insurance
Who needs food and hospitality business insurance?
It’s safe to assume that every food and hospitality business will need some form of business insurance. Whether you operate a restaurant, bar, or hotel, there are numerous liabilities that you may face, and accidents or mistakes can happen to just about anyone. Business insurance comes in many forms and can protect your business form a myriad of risks, from a slip-and-fall incident that occurs on your business premises to a fire that damages your building.
If your food and hospitality business meets any of the following criteria, you should consider investing in business insurance coverage:
- You own or lease commercial property
- You service customers on your business property
- You sell products to customers
- Your business owns valuable property, such as computers or cooking equipment
- You store sensitive data on employees or customers
- Your business owns or leases vehicles
- You employ others
Food and Hospitality Business Insurance by Profession
Why is food and hospitality business insurance important?
Accidents and injuries can happen, especially when interacting with customers.
Benefits: Business insurance can provide financial protection in the face of unfortunate accidents or injuries. If a customer is injured on your business property, general liability can provide coverage. If an employee is injured in the course of their work, workers’ compensation insurance can provide financial and medical benefits for them. On some level, the more successful your business, the more customers and employees you’ll have, which in turn increases the risk for an accident to occur.
Risks: Without insurance, a single accident or injury could put your entire business at risk. If your business is unable to come up with the funds to pay for damages or pay the legal fees necessary to defend your business, you may need to sell your business assets or declare bankruptcy.
Owning or leasing a commercial space opens your business up to a number of risks.
Benefits: Business insurance can protect your business in case anything happens to your business property. If you own or lease commercial property for your restaurant, bar, or hotel, commercial property insurance can provide funds to repair or replace business property that is damaged by a covered peril, including fire, theft, vandalism, and more. If your business needs to shut down temporarily due to property damage, business interruption insurance can provide funds to cover lost income and operational expenses.
Risks: Food and hospitality businesses rely heavily on property and equipment, creating severe risk if you are without adequate insurance coverage. If a natural disaster occurs or if your commercial space is burglarized, you may have difficulty recovering financially on your own. Without insurance, you will be picking up the entire cost of repairing or replacing damaged or lost property, and if your business is forced to shut down temporarily, you will need to pay out of pocket to keep your business going.
Certain types of business insurance may be required in your state.
Benefits: In many states, liability insurance is required for certain types of food and hospitality businesses. In addition, in almost every state, businesses are required by law to carry workers’ compensation insurance. Even in the safest conditions, accidents can happen, which is why insurance is a necessary solution. If an employee is injured while working for you or if a customer is injured while at your business, insurance will cover you financially as well as make your business compliant with the law.
Risks: Without liability insurance, your business could be on the hook for defending against a lawsuit and paying any judgements or settlements. And without workers’ compensation, your organization is wide open to financial loss should a worker get injured or sick as a direct cause of working for you. Moreover, multiple injuries could lead to financial losses that ruin your business. As many places make workers’ compensation part of the law, avoiding the coverage can land you in legal trouble resulting in penalties, fines, and in some cases, imprisonment.