Restaurant owners worry about many things. Insurance should not be one of them. Insurance For Texans understands the needs of restaurant owners from both a functional and risk mitigation stand point. There is a delicate balance to protecting your livelihood and keeping costs down. We covered some basic property information in our blog entry about business insurance basics, but in this article we jump head long into the deep fryer of restaurant specific coverage.
Sign Coverage- Many standard business owner policies designed for restaurants only provide a limited amount of coverage for signs, typically between $5,000 and $10,000. Even more important is to consider how the coverage applies, as many policies only extend coverage to signs within a certain distance of the restaurant. Also you need to understand what perils are covered, did you know that some policies do not include coverage for wind in regards to sign damage?
Business Income- This is a big one! It is very important that you purchase coverage with a carrier that will offer actual loss sustained coverage for your business income. Some policies only offer set limits up to a certain figure and then you are on your own for the rest! So why is business income so important? Take this example, a fire erupts in your kitchen causing a total loss to your space forcing you to shut down and rebuild. Well what happens to your expenses? You can't just hit the pause button until you have the restaurant rebuilt. You have employees to pay, utilities, loans, and many more expenses that have to be taken care of. Most important you have to keep your head chef on the payroll, he’s the reason people come to your restaurant. If you can’t keep him your doomed before you even reopen!
Employee Dishonesty- Unfortunately your dishwashers aren't the only ones with sticky fingers. Let’s face it the restaurant industry is plagued by a high employee turnover ratio. So finding the right employee can be hard to come by. Many agents will overlook this important coverage but it is something you need to consider. Who’s to say one of your employees isn't taking a little more than they should out of the “cookie jar” at the end of the night. If you are not onsite 24/7 you may not be aware of the theft until long after that employee has left with your money in hand.
Cyber Liability- What about your customers private information? Do you process credit cards? It’s 2018, so it shouldn’t even be a question. A lot of clients make the argument that they accept credit card payments but it's all handled by a third party so they would be responsible for the customers information being jeopardized. Plus the processor provides me with “X” amount of data protection is something goes wrong…Let’s talk about some of the reasons why this can all go wrong in a hurry.
First, remember those sticky fingered employees we were just talking about, yeah well they used their phone to snap a picture of your patrons credit card to buy some shoes on Amazon later, what now? The card never made it to the third party processor so they aren't going to cover that. Now take that example and multiply it by 20 or 30 now you really have a problem.
Second, what if the card processor really was the negligent party, can you prove it? They promised you “x” amount of coverage but did you read the fine print? Do you think they are just going to roll over and claim responsibility? Chances are they are not going to just come out and say we were negligent, we will pay for everything. So you need to consider the cost of what an attorney and IT forensic analyst will cost you out of pocket to prove their negligence. It could end up costing you thousands of dollar before you see the first dollar of coverage from that promised coverage from the processing company.
Time Element Coverages- In the majority of business owners policies for restaurants the policies include coverage for spoilage and utility services. Many times these limits like the sign coverage are limited to a very small amount of coverage. What's more important than the amount of coverage in some instances is the time element of how long you have to be affected before coverage will be available.
- Utility Interruption- You have a large upcoming event and you are also booked solid with reservations. The day comes for the big event and as you pull in the parking lot you notice there is no power. After you contact the power company, you find out the power may not be back on until tomorrow or the next day. If your coverage does not have a time element provision for utilities, you could be out of pocket for all of the lost revenue for the planned event. Will your current policy protect for this?
- Spoilage- The power goes out and you have a walk-in cooler full of produce and meat. How long does the power have to be out before a spoilage claim will be covered by your insurance?
Having an agent that knows your business and the policy coverage can help save you thousands of dollars in costs from uncovered claims. No two policies are the same, just as no two restaurants are operated the same. Make sure you review your restaurant's insurance with an experienced independent insurance agent who understands the industry.
To schedule a review of your policy, contact Insurance For Texans today.