I own a restaurant — what insurance do I need?
Most restaurants need five things: liability coverage for when a customer is hurt or gets sick, property coverage for the kitchen and build-out, workers' comp for your staff, liquor liability if you serve alcohol, and coverage for the income you lose while closed after a fire. An umbrella and coverage for lawsuits from your own employees come next, as you grow.
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- Five coverages carry most restaurants: customer liability, kitchen property, workers' comp, liquor liability if you pour, and income while you're closed.
- The standard liability policy does not cover alcohol claims for a business that sells drinks. That takes a separate policy.
- Catering, delivery and a second brand are part of the same business and belong on the same insurance program.
What happens when a customer gets hurt or sick?
Your liability coverage is designed to pay for your defense and for a covered claim when a customer is hurt at your restaurant or gets sick from your food. Every restaurant needs it from the day it opens, and it is the first policy a landlord asks to see. Check your own policy wording and ask your agent.
Think of the everyday claims: a guest slips on a wet floor, or a table of eight gets food poisoning. Coverage for injuries and damage your business causes to other people is what insurers call general liabilityGeneral Liability (GL) Coverage for injuries and property damage your business causes to other people, plus certain advertising claims. Insurers call it general liability.. Illness from food you served is generally handled by the same policy, under the part that covers the products you sell.
Food illness is common. About 48 million people in the US get sick from a foodborne illness each year, and 128,000 of them are hospitalized. (Source: CDC)
You probably need this if you have a dining room, a counter or a lease. Here is how liability coverage works.
What does the kitchen need?
Property coverage for everything you would replace after a fire: ranges, fryers, walk-in, hood, the build-out you paid for in a leased space, furniture and stock. Insure it at what it would cost to replace new today.
Cooking starts most restaurant fires. Of an estimated 5,600 restaurant fires reported to fire departments each year, 64% were caused by cooking. (Source: U.S. Fire Administration)
The hood system over your cook line matters twice. It is your main defense against a grease fire, and on many policies it is also a condition of coverage: you must keep the fire-suppression system serviced and the ducts cleaned on schedule, or the insurer can refuse a fire claim. Insurers call that clause a protective safeguard endorsementProtective Safeguard Endorsement A policy add-on requiring you to keep named safety systems, such as sprinklers or a monitored alarm, working, or the insurer may deny a related claim. Insurers call it a protective safeguard endorsement.. Keep every service tag and cleaning certificate.
Smaller restaurants often buy property and liability together in one package policy, which insurers call a business owner's policy. Larger kitchens, or ones with a big bar, usually need a separate property policy.
You probably need this if you own any equipment, paid for improvements to a leased space, or keep food and drink in stock.
Do I need workers' comp?
Almost certainly, if you have employees. Most states require it, and for a restaurant with a full staff it is often the largest line on the insurance bill, because it is priced on payroll and restaurants run on labor.
Insurance that pays an employee's medical bills and lost wages after a work injury, such as a fryer burn, a knife cut or a fall on a greasy floor, is workers' compensationWorkers' Compensation Insurance that pays medical bills and lost wages when an employee is hurt or sick because of work. Insurers call it workers' compensation., and everyone calls it workers' comp. Restaurant work is riskier than average: food services and drinking places recorded 2.4 injury and illness cases per 100 full-time workers in 2024 (Source: Bureau of Labor Statistics), against 2.3 across all private industry. (Source: Bureau of Labor Statistics)
Each state sets who must carry it; workers' comp for restaurants walks through the rules and the price, and here is what workers' comp covers.
You probably need this if you have anyone on payroll besides yourself.
Do I need liquor liability?
Yes, if you sell or serve alcohol. The standard liability policy leaves out claims from serving drinks when selling them is part of your business, so a restaurant with a bar or a beer-and-wine list needs a separate policy.
The claim it exists for: a guest drinks too much at your bar, drives away and hits someone. Many states let the injured person sue the business that served the drinks. Coverage for that is liquor liabilityLiquor Liability Coverage if your business is sued after serving or selling alcohol to someone who then injures another person or causes damage. Insurers call it liquor liability.. The standard liability form excludes it for any business that makes, sells or serves alcohol as part of its trade, while still covering a business that pours only at an occasional event. (Source: International Risk Management Institute)
The stakes are real. In 2023, 12,429 people died in crashes involving an alcohol-impaired driver, 30% of all US traffic deaths. (Source: National Highway Traffic Safety Administration)
You probably need this if alcohol is on your menu, even as a small share of sales. The price of liquor liability coverage depends mostly on that share and how late you stay open.
What if I have to close?
Coverage for lost income pays the profit you would have made and the bills that keep coming, such as rent, payroll and loan payments, while you are closed to repair damage your property policy covers. It is usually added to the property policy rather than bought on its own.
State insurance regulators describe it as coverage that replaces income lost when a covered physical loss, like a fire, disrupts the business; it can also pay rent on a temporary location. (Source: NAIC) Insurers call it business interruption, or business income.
In federal data on restaurant fires, about 32% spread beyond the object where they started, into the room, the floor or the building. (Source: U.S. Fire Administration) Check how many months your income coverage pays, how long it waits before it starts, and whether food spoilage is included or is a separate add-on.
You probably need this if a month without sales would strain your rent or payroll.
What else might I need?
Two coverages come next as you grow: an umbrella that adds liability limits on top of your other policies, and coverage for lawsuits from your own employees.
An umbrella. Extra liability coverage that sits on top of your liability, liquor and employer policies and pays when a serious claim runs past their limits; insurers call it an umbrella. You probably need this if a lease, lender or franchise agreement asks for higher limits than your base policy carries. How to tell if you need an umbrella.
Employee claims. Coverage for when a current or former employee sues over harassment, discrimination or a firing; insurers call it employment practices liabilityEmployment Practices Liability (EPLI) Coverage if an employee sues you over how you hired, treated, or fired them, such as discrimination or wrongful termination. Insurers call it employment practices liability. more →. Restaurants fit the risk profile: a federal task force on workplace harassment named workplaces that depend on customer satisfaction and tips, and decentralized workplaces such as chain restaurants, among its risk factors. (Source: EEOC) You probably need this if you have more than a handful of employees, or any turnover at all.
Your other operations. Catering and off-premise events, ghost and virtual kitchens and franchise restaurants each have their own guide. They are insured as part of the same business, not as side projects; here is why the whole business is insured together. If you deliver with your own drivers, add auto coverage that fits it.
To check your limits, see is this enough coverage? To price it, start with what to prepare for a restaurant quote and what restaurant insurance costs.
Common questions about what insurance a restaurant needs
Only part of it. Workers' comp is required by state law for most employers, and some states and licensing boards ask for proof of liquor liability before issuing a liquor license. Most of the rest is required by contract, through your lease, your lender or your franchise agreement, rather than by law.
Often only if you add it. Spoilage from a power outage or a failed walk-in is usually an add-on to the property policy with its own limit, and an outage that starts away from your premises may need a further extension. Ask your agent to show you where it is written.
You should look at it. An employee's personal auto policy may not cover delivery driving, and if they cause a crash on your errand the injured person can sue the restaurant. Coverage for vehicles your business does not own can usually be added to your liability program.
Find out which of these your restaurant actually needs
Tell us about your menu, your staff and your locations, or send us your current policies, and we will show you which coverages fit and where the gaps are.