When you run a restaurant, you have a lot on your plate.
With tight margins, you don’t always have wiggle room when dealing with the unexpected, and it can hurt your business and your reputation. One area of concern, in particular, is food spoilage. After all, it’s not just past-date or unused food you’re throwing away—it’s also inventory and money. Most restaurants know some portion of their food inventory is going to get discarded and plan for it.
However, there are times, such as an equipment breakdown or power outage, that can dramatically change the situation. Insurance for restaurants can include spoilage and food contamination coverage.
Here’s why it matters.
Does My Restaurant Need Insurance?
Ask anyone who operates a small business, from a restaurant owner to a farmer, and they’ll tell you there’s always the potential for the unexpected. In the restaurant business, much of that revolves around food and equipment. Food spoilage is a big issue, especially if you have older equipment.
For example, what happens if your walk-in dies on a Sunday night after you close and you have no idea until prep time Monday morning? If the temperatures in your walk-in have moved outside the safety zone, then you might have to throw away thousands of dollars worth of food. That’s on top of the costs you’ll need to pay to have your walk-in repaired or replaced.
Those costs can add up, and if you’re already operating with a tight margin, it means you might face additional struggles while getting everything up and running. To help protect yourself, consider equipment breakdown or power outage coverage, which can cover spoilage costs, even if the power loss happens outside your restaurant due to a utility problem.
Another concern for restaurants is food contamination which can cause foodborne illness outbreaks. In some cases, your local board of health or other government authority may order your restaurant closed. This can damage your reputation and disrupt your business. Insurance coverage can be used to help with losses due to business interruption and the expenses required to clean equipment, replace food, run required medical tests or vaccinations for employees (unless covered by workers’ comp insurance), and advertising expenses to help repair your reputation.
What Does Insurance for Restaurants Cover?
Insurance is there to help give you some peace of mind and protection just in case. While you might think you never need to worry about food spoilage, some of it is just simply out of your control.
Equipment breakdowns, power outages and mechanical failures can hit when you least expect it. Now, in addition to everything else, you have to worry about the costs to repair that equipment and get back to operation quickly. Insurance can help alleviate some of these concerns.
Tailored insurance coverage for restaurants can provide an additional security layer on top of your standard business liability insurance. These are common scenarios where this type of coverage can help:
- If you have an equipment breakdown or failure, such as your walk-in conks out unexpectedly.
- If you have a long-term power outage and no generator, leaving your food exposed to unsafe temperature levels.
- If there’s a mechanical failure to another system, such as your HVAC, that impacts your food storage.
- If you have been ordered closed by the board of health or other government authority and your business is disrupted.
Your coverage can help pay for replacement costs for necessary equipment, as well as lost perishables, plus the costs for cleaning your current equipment, lost revenue and/or health checks for employees. Without coverage, you may have to pay for these costs out of pocket, which can add up.
Having restaurant insurance is just another backup plan that’s there for you in case the unexpected happens. While you might never need to deal with these issues, knowing that you’ve got coverage can help you focus on continuing to grow your business.
Why Westfield? We’re an insurance company in the hospitality business, too. We know that there are particular needs restaurant owners have that traditional insurance won’t always cover.
