Restaurant Insurance

Restaurant Insurance

Protect your restaurant from property damage, equipment breakdown, client injuries and liquor liability claims with restaurant insurance.

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Trusted by over 300,000 Canadian small business owners!
Save up to 35% on your insurance
Get the best insurance quote in a few clicks!
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Zensurance - Restaurant Owner

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restaurant owner

Insurance for restaurants

Providing good food and world-class customer service is your passion and raison d’être. You always endeavour to give your guests a memorable dining and culinary experience.

But the stakes are high when working with food and serving the public, and challenges and mishaps can occur at anytime. Whether third-party personal injury claims alleging food poisoning, damages to your restaurant because of fire or food spoilage from kitchen appliances breaking down, you need a customized restaurant insurance policy to protect your assets and reputation.

Restaurant insurance is a customized policy designed to protect restaurant owners against specific risks associated with serving food and drinks, including third-party bodily injuries and property damages, unforeseen accidents, and equipment breakdowns.

Even if you take every precaution, an accident could happen beyond your control. For example, an allegation of a food poisoning incident or allergic reaction can result in a costly lawsuit. Beyond food, restaurants contain dangerous equipment, such as commercial gas stoves and sharp utensils, that could injure an employee or a wandering customer. Whether your customers are visiting your restaurant for a dine-in meal, picking up food to take home, or you deliver their order, it’s essential to make sure they have a safe and enjoyable meal and experience.

Restaurant insurance typically includes the following coverages:

  • Commercial General Liability (CGL) Insurance:  CGL, or “slip-and-fall insurance”, protects you against the day-to-day risks that can happen while running a restaurant. It protects your business against claims of third-party bodily injury or property damage that occur at your restaurant location. CGL will typically cover legal expenses and medical fees, regardless of the lawsuit’s outcome.
  • Commercial Property Insurance:  Commercial property insurance protects the building housing your restaurant and the contents within it from insured risks that occur beyond your control, such as a fire, flood, theft, or vandalism. It often includes business interruption coverage to reimburse you for net income lost following an insured event. If you serve alcohol at your restaurant, you also need to purchase liquor liability insurance for protection from losses or damages due to alcohol-related injuries or accidents. For example, if a customer becomes intoxicated in your establishment, drives home and gets into a car accident, you and your employees can be held liable. Please note that general liability insurance does not cover alcohol-related incidents and damages.
  • Equipment Breakdown Insurance:  Equipment breakdown insurance covers the costs to repair or replace professional equipment (e.g., a commercial kitchen appliance) that is broken or damaged because of a mechanical or electrical issue.
  • Product Liability Insurance:  Product liability coverage protects against claims alleging third-party property damage or bodily injury caused by a product you manufacture, distribute, or sell – including the food you prepare and serve. For example, if a customer alleges they suffered food poisoning or an allergic reaction after eating at your establishment, product liability insurance may cover any costs you incur to pay their medical expenses.
  • Cyber Liability Insurance:  You likely take reservations online or accept take-out orders through your website. Both examples require customers to provide their data online (e.g., addresses and financial information). Cyber insurance covers legal fees associated with electronic incidents, such as data breaches or cyber-attacks involving your technology systems and data.

Many factors influence the cost of your restaurant insurance policy. For a small- to medium-sized business that doesn’t serve alcohol, you can anticipate an annual premium of approximately $2,000 for general liability coverage.

Insurance providers determine the cost of an insurance policy based on your business’s specific details, including:

  • The location of your restaurant
  • Years of experience as a business owner
  • The equipment you have on the premises
  • Whether or not you serve alcohol
  • Annual and projected gross revenue
  • Number of employees
  • Previous insurance claims

A comprehensive restaurant insurance policy is essential for all food service companies. Some specific types of food-service establishments we cover are:

Whether you own a dine-in restaurant or a take-out-only restaurant, here’s some specific advice to help you choose the insurance policies that are right for you:

Dine-In Restaurant Owners

Whether you rent or own your restaurant location, you’re typically required to have general liability and commercial property insurance.

General liability insurance may cover your restaurant’s full- and part-time employees in the event of a claim due to third-party bodily injury or property damage. Please note your policy has a coverage limit that applies to all employees rather than each individual. You have the option to increase your limit.

If you serve alcohol at your restaurant, provincial regulations require you to have liquor liability insurance. It covers losses or damages due to alcohol-related injuries or accidents.

As a restaurant kitchen is full of expensive equipment, it’s important to protect your appliances in case of a mechanical or electrical fault. Equipment breakdown insurance covers the costs to repair or replace your equipment. For example, equipment breakdown insurance is designed to pay those expenses if your commercial oven breaks down and needs a costly part to fix it or your restaurant’s HVAC system stops working.

Product liability insurance covers injuries or property damage caused by the food and beverages you serve. For example, if a customer falls ill after eating at your establishment and decides to take legal action against you, product liability insurance may cover your legal expenses and court or out-of-court settlements.

Finally, if you use a booking system to store customers’ data (e.g., financial information or their address), it’s your legal obligation to protect their data. Cyber liability insurance covers costs like legal fees associated with data breaches or cyber-attacks that involve your technology systems and confidential data.

Suggested Coverage:

  • Commercial General Liability Insurance
  • Commercial Property Insurance
  • Business Interruption Insurance
  • Liquor Liability Insurance
  • Product Liability Insurance
  • Equipment Breakdown Insurance
  • Cyber Liability Insurance

Take-Out or Delivery-Only Restaurant Owners

Many food service establishments offer take-out only, such as pizza joints or fast food locations. 

Nevertheless, you need commercial property insurance and other policies to protect your business from claims and lawsuits.

Commercial general liability insurance may cover employees and delivery drivers that work for you in the event of a claim due to third-party bodily injury or property damage. 

Product liability insurance covers injuries or property damage caused by the food you prepare and sell. For example, you deliver a vegan pizza, and the customer discovers it has dairy-based cheese even though the ingredients don’t list it. In this case, your customer could sue, and product liability insurance should cover you for legal costs.

Lastly, you have a legal obligation to protect the personal data you hold about your customers when they place an order on your website. Cyber liability insurance is designed to cover costs if you fall prey to a cyber-attack or data breach.

Suggested Coverages:

  • Commercial General Liability Insurance
  • Commercial Property Insurance
  • Commercial Auto Insurance
  • Business Interruption Insurance
  • Product Liability Insurance
  • Equipment Breakdown Insurance
  • Cyber Liability Insurance

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Common claims scenarios

bartender working at restaurant

Problem: An employee over-serves alcohol to a customer. When the customer gets up from the bar, they fall and injure their wrist.

Outcome: The customer successfully sues you for bodily injury due to an alcohol-related incident. Commercial general liability and liquor liability insurance may cover your legal fees and the customer’s medical expenses.

restaurant closed sign

Problem: Your only commercial freezer unexpectedly breaks down, and you lose all of your stock for food orders. You have no option but to close your business until the freezer is repaired or replaced.

Outcome: Your business interruption insurance may cover the income lost when you were closed and your staff’s wages. Your equipment breakdown insurance may cover repairing or replacing the broken freezer.

Pizza Restaurant Delivery Driver

Problem: While delivering a pizza, one of your delivery drivers accidentally knocks over an ornate vase by your customer’s front door. The customer sues for property damage.

Outcome: Your general liability insurance may cover replacing the ornate vase up to your policy’s limit.

Frequently asked questions

Do I need equipment breakdown coverage?

Yes. Equipment breakdown insurance covers your restaurant’s cost of repairing or replacing equipment and appliances due to mechanical and electrical breakdowns, including boilers, coolers, refrigerators, and HVAC systems.

Does commercial crime insurance cover employee and common theft?

Commercial crime insurance protects your business from employee theft including stolen cash and credit card forgery as well as loss of money and securities inside and outside of the premises. Regular theft, however, is covered by commercial property insurance.

Is liquor liability an important coverage for my restaurant?

Yes. If you serve alcohol at your restaurant, liquor liability coverage is essential and likely a legal requirement in your province. You can be held liable for the actions of an intoxicated customer who causes an accident, and alcohol is deemed a contributing factor.

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Getting a customized, low-cost restaurant insurance policy is quick and easy through Zensurance.

Take a few minutes to complete our online application for a free quote. With over 50 insurance providers in our partner network, our friendly broker team can find and tailor the policy your establishment requires, so you can concentrate on delighting your customers.

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