Does Your Ontario Restaurant Have Enough Liability Insurance?
Does your restaurant have enough liability insurance to protect it from lawsuits if a customer were to slip and fall on your premises or accuse you of food poisoning?
Having enough liability insurance financially protects you as a restaurant owner if you get sued.
Did you know? Western Financial Group’s partnership with Groupex helps members save 8-10% on their business insurance and their employee benefits plans. Are you a member?
How does restaurant insurance protect you in Ontario?
Restaurant insurance is a customized policy that protects you as the owner against specific risks associated with serving food and drinks, such as third-party bodily injuries and property damages involving customers or suppliers that could lead to lawsuits, equipment breakdowns, and fire or vandalism.
Business liability insurance should be a key part of your commercial insurance for your restaurant.
Commercial general liability (CGL) insurance
This is necessary liability insurance for restaurants. 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 third parties 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 I need for my Ontario restaurant?
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? 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 the costs for this.
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 to defend yourself.
For example, a customer claims that food served at your restaurant gave her a serious case of food poisoning and a trip to the hospital, causing her to miss work for an extended period. The customer successfully sues you for bodily injury. Your product liability insurance would help cover the legal expenses and costs to recall the product.
Liquor liability
For restaurants that serve alcohol, liquor liability coverage, liquor liability insurance protects your establishment from losses, damages, or other expenses arising from the injury or death caused by an intoxicated customer.
The costs to defend or settle a lawsuit can add up quickly. Does your restaurant have enough business liability insurance?
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 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
It should be part of your restaurant insurance package.
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 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. Businesses located in flood-prone areas or areas with aging infrastructure are at risk, and the risk is likely to increase over time.
Consider sewer backup insurance and overland flood insurance for your restaurant.
Did you know? In Canada, most standard commercial property insurance policies do not automatically cover sewer backup and overland flooding. Coverage is often offered as an optional add-on to your main business insurance policy. Are you sure your restaurant business is covered for these events?
Final thoughts
Your restaurant is your livelihood. Protect it with enough business insurance to keep your doors open and your customers coming back should you face a lawsuit, fire, vandalism, or flooding.
