What Does Restaraunt Insurance Cover

April 26, 2023

If you own a restaurant, you know that it can be a chaotic environment where there is a certain amount of risk everyday. Because of this you’ve probably thought about what restaurant insurance costs and what exactly you need in terms of insurance for your location.

Restaurants can have a lot going on at once, from the steady flow of customers to the frenetic pace of cooks and chefs on the line. Protecting your restaurant from risk is not only important, it's necessary.

In Canada, all restaurants must have business insurance. Depending on your circumstances and the amount of risk your restaurant or restaurants are exposed to, restaurant insurance can be made up of different components that make up the overall policy

Restaurant insurance is the combination of worker’s compensation, business interruption insurance, general and liquor liability insurance, food contamination insurance, and property insurance amongst others.

In Canada, legally you are required to have at least worker’s compensation, employment insurance, and automobile liability insurance to operate, but many times this is not enough.

This is why a customized policy is best because each restaurant is unique in their location, layout, structure, and their workforce, and are thus exposed to a different degree of risk.

Restaurant Insurance Costs

To first determine what type of restaurant insurance to look into and the associated cost, its key to look at your existing equipment in your location, the age of the building and the emergency systems inside including fire and carbon monoxide detectors, the value of your inventory and equipment, and how many employees you have.

General liability can fluctuate between $500 - $6000 dollars a year and can cover property damage, lawsuits, and illness caused by food.

Liquor liability has annual premiums of between $400 and $3000 and is in place just incase an intoxicated person or group does damage to your restaurant for any reason. Workers’ compensation is a must-have if you are a business owner and comes down to a certain percentage, usually around $2.25 per $100 dollars of payroll, and helps protect employees from anything that could happen to them in the workplace like accidents or illnesses.

Business interruption insurance is one of the main costs associated with restaurant insurance and can cost upwards of $750 - $10 000 dollars.

This will protect your restaurant from closure costs due to environmental or safety reasons. Food contamination insurance is another vital type of insurance and with premiums of around $2000 this will protect you from food that goes bad in the event of a power outage. Because restaurants typically have a fair amount of frozen food, this can help alleviate the large costs that can incur here. If you are using vehicles for your restaurant for deliveries or catering, then auto liability insurance should also be top of mind. For $1200 - $2500 a year, this will protect you against the costs of accidents should one occur.

Protect Yourself & Your Restaraunt

As you can see, restaurant insurance has a variety of different variations depending on which of the above add-ons your location requires. What is the right policy for one restaurant owner, may not be the best policy for another.

A proper customized plan will have all your flanks covered, ensuring that you are not only in compliance with Canadian law, but are protected as best as possible.

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Carlos Diaz
I believe in making the impossible possible because there’s no fun in giving up. Travel, design, fashion and current trends in the field of industrial construction are topics that I enjoy writing about.

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