Food Service Insurance

One way to tell if you need business insurance for your food service is to ask yourself the following two questions.

1. Would your business be unable to pay out-of-pocket expenses if faced with a lawsuit for a substantial amount of money?
2. Does your business have property you can’t afford to replace if it’s broken or damaged?

If your answer to either of these questions is yes, then you should consider protecting yourself and your food service business with insurance.

The exact type of food service insurance coverage you purchase will vary based on your business’s particular needs. For example, some vital coverages unique to grocery stores and supermarkets include:

• Druggist Liability—This coverage protects a pharmacy and its employees against lawsuits arising from filled prescriptions, misdelivery of drugs, and other operations.
• Liquor Liability—Even though grocery stores don’t sell liquor for immediate drinking (think bartenders), they may still be liable for bodily injury or property damage that occurs because of the alcohol they sold.
• Food Spoilage—This coverage protects your store against the cost of spoiled food resulting from an accepted event, such as a prolonged power outage or the failure of food storage equipment.
• Product Liability—If one of the foods or beverages your store sells causes a customer to fall ill, your store may be held accountable. In this case, product liability coverage offers your grocery store financial protection if a lawsuit arises.

These insurance coverages are not the only risks you should be aware of. There are other, more general coverages that any business owner, including grocery stores, supermarkets, and restaurants, should consider.

• Workers Compensation—provides coverage for medical expenses, rehabilitation costs, and lost wages for employees who are injured or become ill at work. This coverage is required if you have any employees.
• Commercial Auto—insures vehicles your business owns, leases, hires, or borrows. Not all food service businesses need this coverage, but it is important if your food service business delivers or caters.
• Property Insurance—offers financial protection against covered incidents, such as fire or theft, for your building, its contents, and any equipment on the premises.
• General Liability—covers the cost of property damage or bodily injury that occurs on your business property or as a result of your services or advertising.
• Employee Dishonesty—protects against direct physical loss to your business originating from employee theft of money, securities, or property.

Liquor liability insurance can help cover claims related to:

• Assault and battery—This includes situations where a customer you served alcohol to physically harms another person while under the influence.
• Drunk driving incidents—If an intoxicated person served alcohol by your business damages property or causes an accident that results in bodily injury to another driver, liquor liability insurance can provide coverage.
• Property damage—If a customer under the influence of alcohol causes damage to another person's belongings, liquor liability insurance can help cover the costs of the damage.

The cost of liquor liability insurance is generally influenced by the percentage of your sales that come from selling alcohol. As a result, bars usually pay higher premiums for liquor liability coverage compared to restaurants or grocery stores.

To determine the cost of liquor liability insurance for your specific business, obtaining a quote is the best course of action. Insurance companies take various factors into consideration when calculating the cost of coverage, including:

• Industry—Some industries face higher risks, leading to increased insurance rates.
• Location—The state in which your business operates can also impact insurance costs.
• Coverage limits—The higher the coverage limit of your policy, the more you can expect to pay for your insurance premium. Keep in mind that some states may require businesses to maintain a minimum amount of liquor liability coverage.
• Liquor sales—The volume of alcohol sales your business conducts annually can also influence the insurance rate.

If your business is involved in making, selling, distributing, or serving alcohol to customers, obtaining liquor liability insurance is highly advisable. Some of the types of businesses that may require liquor liability coverage include:

• Restaurants—Any establishment serving alcohol alongside meals should have liquor liability insurance in place.
• Caterers—Businesses providing alcoholic beverages at events or functions should also consider this coverage.
• Liquor stores—Shops selling alcoholic beverages directly to consumers should protect themselves with liquor liability insurance.
• Grocery stores—Retailers that sell alcohol along with other products may also need this coverage.