Does Your Maritimes Restaurant Have Enough Liability Insurance?
What if a customer sues you for food poisoning. Or what if a customer slips and falls at your restaurant and gets injured? Does your restaurant have enough liability insurance to protect it from lawsuits?
Liability insurance financially protects you as a restaurant owner in New Brunswick, Nova Scotia, or Prince Edward Island if you get sued.
How does restaurant insurance protect you?
Restaurant insurance protects you as the owner against specific risks associated with serving food and drinks, including third-party bodily injuries and property damages involving customers or suppliers that could lead to lawsuits.
Business liability insurance is a key part of your Maritimes restaurant insurance package
Commercial general liability (CGL) insurance
Without commercial general liability insurance, you will pay costs related to third-party (customer/supplier) injuries or damage to their property out of your own pocket.
For example, if a customer were to sue you after slipping on a wet floor at your restaurant, commercial general liability insurance would cover the legal costs to defend the claim as well as the costs to compensate the third party whether you win or lose your case.
What kind of risks does commercial general liability insurance cover?
- Injury to a third party who is not your employee
- Damage to someone’s property
- Damage to rented property
- Medical bills if someone is injured
- Legal costs and settlement costs of liability lawsuits filed against you
- Liability lawsuits related to slander and libel
How much CGL insurance do Maritimes restaurants need?
It’s not uncommon that a restaurant would carry at least $2 million in CGL coverage, but that depends on its size.
Cyber liability insurance
Do you accept credit and debit cards for payment? Your restaurant could be hacked by cyberthieves. Cyber liability insurance will help protect you financially should it experience a cyber-attack.
Depending on the size of the data breach and the information that was taken, the customers who are affected can hold you liable and sue you for damages. Cyber liability insurance helps cover these costs.
Product liability insurance
If a customer gets sick after eating your food, product liability insurance can help cover the cost of the customer’s medical expenses and your legal and court-related costs.
For example, a customer claims that food served at your restaurant gave her a serious case of food poisoning, causing her to miss work for an extended period. The customer successfully sues you for bodily injury. Product liability insurance would help cover the legal expenses.
Liquor liability
For restaurants that serve alcohol, liquor liability insurance protects your establishment from losses, damages, or other expenses arising from the injury or death caused by an intoxicated customer.
What other insurance coverages do restaurants need?
Commercial property insurance
Commercial property insurance provides financial support to replace or cover repairs to your restaurant if it’s damaged by a flood, fire, or severe weather. It also covers vandalism and theft.
Commercial property insurance also covers contents such as computers, furniture, tools, equipment, and inventory. Commercial property coverage also extends to protect others’ property that is under your care.
Business interruption insurance
This type of insurance helps support you financially when your restaurant can’t operate due to a covered loss.
There are a number of losses that could force your restaurant to shut down. Some examples are:
- Damage to your equipment from fire or vandalism
- A major reduction in revenue due to a supplier facing losses of their own
- A disruption in your supply chain
Business interruption insurance can help with these expenses:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your business
Equipment breakdown insurance
Your restaurant in New Brunswick, Nova Scotia, or Prince Edward Island likely has expensive equipment to keep your products either frozen or refrigerated.
Equipment breakdown insurance provides coverage for property damage from the sudden and accidental breakdown of insured equipment not automatically covered by a standard commercial property policy.
Crime insurance
Crime insurance can protect you against theft, credit card fraud, forgery, counterfeit, and other types of fraud that employees sometimes commit.
Commercial auto insurance
If you have a business car, van, or truck that you use for business, it won’t be covered by your personal car insurance policy. You will need commercial coverage as part of your restaurant insurance package.
Sewer backup insurance and overland flood insurance
Heavy rainfall, melting snow, and storms can overwhelm drainage systems, leading to sewer backups and overland flooding.
Consider sewer backup insurance and overland flood insurance for your restaurant because these coverages are not automatically part of your business insurance package for your restaurant.
To sum it all up
Protect your restaurant with enough business liability insurance to keep your doors open if you should face a lawsuit.
5 FAQs
Why do restaurants need product liability insurance?
Product liability insurance protects against claims arising from food poisoning, allergic reactions, or illness caused by food served at your restaurant.
How much does restaurant insurance cost?
Most Canadian restaurants can expect to pay between $1,000 and $5,000 per year for insurance.
How does the size and location of a restaurant impact its insurance premium?
Larger restaurants have more square footage to insure, which increases the replacement or repair costs for insurance. Restaurants in urban or high-crime areas tend to pay more due to greater risks of theft, vandalism, and property damage.
What if I don't get restaurant insurance?
Operating a restaurant without proper insurance exposes you, your business, and your finances to serious risks. You would be responsible for all costs out of your own pocket, such as repairs after a kitchen fire or a lawsuit.
What if I lie to my insurer about a past restaurant insurance claim?
Misrepresenting, omitting, or lying about a previous restaurant insurance claim is considered insurance fraud and can have legal and financial repercussions. If your insurer discovers that you lied about a previous claim, they can deny your current and future claims, even if your new claim is legitimate.