Restaurant Insurance Guide: Top 3 Things You Need To Know

#1. What is restaurant insurance?

 

Restaurant insurance is a type of F&B insurance designed for the unique risks that restaurants face. As a restaurant owner, you need to make sure you’re protected against major risks like food/drinks poisoning, public liability, fire, employee injuries or Covid-19 infections, and more.

Provide offers online restaurant insurance quotes, which covers all the major risks restaurant operators need to protect against.

#2. What types of insurance do restaurants need?

Here’s a brief summary of the types of insurance your average restaurant will require:

Coverage	Importance for restaurants	Brief explanation	Typical restaurant insurance cost (package deal)	Typical restaurant insurance cost (individual cover)
Public liability with food poisoning	Critical	Pays for legal liability from food poisoning and customer injuries	$200-$500/year, as part of a package deal.	From $150/year
Commercial property insurance	Critical	Pays for property damage from fire, water damage, etc.		From $100/year
Work injury compensation	Critical	Pays for staff injuries/sickness, including Covid-19 infections		From $100/year
Business interruption	Good to have	Pays for periods when your business cannot operate – e.g. if NEA shuts your restaurant down		From $100/year
Fidelity guarantee	Good to have	Pays for money stolen by employees		From $100/year

 

Here’s an in-depth explanation of the details for restaurant insurance:

1. Public liability insurance, with food poisoning liability extension

 

Public liability insurance will cover two major liability risks for restaurants:

1. Food/drinks poisoning
2. Customer injuries (e.g. slips and falls)

This type of insurance will pay for medical expenses if people get sick or injured while patronising your restaurant. It also pays for legal fees, and damages awarded, if customers sue you for injuries or sickness that your business caused them.

Example: A group of customers order drinks and snacks at your restaurant. A day later, you get a call from a member of the group, claiming that they suffered severe diarrhoea and vomiting after patronising your restaurant. If they file legal claims against you, this insurance will pay for your lawyer’s fees and any damages awarded by the court.

2. Commercial property insurance

 

Commercial property insurance protects your restaurant from common and major risks like:

1. Fire and explosions
2. Water damage
3. Furniture damage
4. Inventory damage
5. Burglary
6. Vandalism

This type of cover is also known as “Property All Risks Insurance”, or “Industrial All Risks Insurance”. Because you serve cooked food, there is a real risk of kitchen fires breaking out and destroying your premises. Fire risks are even higher if you use wok burners (these burners produce tremendous heat), or do lots of heavy frying.

Example: One of your ovens/stoves catches fire. The fire spreads to the rest of your restaurant and destroys the premises. All the renovations are destroyed, the equipment is destroyed, and your food/drink inventory is completely unusable. This type of insurance will pay for the property damage caused, equipment replacement, and will replace the destroyed inventory.

3. Work injury compensation insurance (with Covid-19 coverage)

 

Now that previous Circuit Breakers are over and the economy has opened up, restaurants can now entertain dine-in clients. This means that restaurant employees will be coming into close and extended contact with large numbers of the public. Given the highly infectious nature of Covid-19, this presents a serious infection risk to restaurant employees.

Under the Work Injury Compensation Act (WICA), business owners must pay for:

1. Medical expenses of employees for work-related injuries/sickness
2. Lost wages of employees while hospitalised/on medical leave

For patients infected with Covid-19, the government has already declared that hospitalisation charges will be waived for Singaporeans/PRs. However, business owners are still legally liable to pay the lost wages of employees while they’re hospitalised or in quarantine! Remember that hospitalised Covid-19 patients can be warded for up to 2 months (or more!). As a restaurant owner, can you imagine how costly it would be to pay 2 months’ worth of salary for a worker in the hospital?

This is where Work Injury Compensation Insurance (WICA insurance) steps in. Work injury insurance will protect your employees from work-related injuries/sickness, including Covid-19 infections.

This pays for:

1. Medical expenses like hospitalisation and surgery charges
2. Lost wages while on medical leave
3. Lawyer’s fees if your employees sue you for injuries/sickness

Work injury insurance also happens to be highly affordable:

Worker Category	Typical Premium	Typical Coverage
Cashier	From $7/month, per worker	$10-15 million annual limit per company
Waiter	From $7/month, per worker
Chef / Kitchen Assistant	From $10-15/month, per worker

 

Example 1: One of your staff gets infected with Covid-19, and spreads it to all your other employees. Your restaurant manager ends up being hospitalised for one month. The manager’s monthly wage is $5,000. Because this is a work-related infection, you are now legally responsible for paying your manager’s lost salary. If you have Work Injury insurance, it will cover your managers’ lost wages.

Example 2: While mopping the floor, one of your staff slips and falls, breaking their arm. They require surgery to fix a steel plate in their arm. The hospital bill is $10,000. Because this is a work-related injury, you as the restaurant owner are now liable for this $10,000 medical expense for your employee. Work injury insurance will pay for the medical bills, as well as lost wages while your staff is on medical leave.

4. Business interruption insurance

 

Business interruption insurance compensates you if your restaurant has to shut down due to unforeseen circumstances. It pays you a daily cash benefit for every day that your business cannot operate.

Some scenarios where business interruption insurance covers restaurant shutdowns:

1. Fire and explosions damage your premises
2. NEA shuts your business down to customer hygiene complaints
3. Supplier is unable to deliver your goods, due to damage to their warehouse

Example: Several customers get sick after drinking and eating at your restaurant. They file a complaint to NEA (National Environmental Agency). NEA officers inspect your restaurant, and find that there were hygiene lapses. Your restaurant is ordered to shut for 1 week for a thorough cleaning and staff hygiene re-training. This insurance will pay a daily cash benefit for the 1 week that your restaurant cannot operate.

5. Fidelity guarantee insurance

 

If you allow employees to manage the cash register, or handle cash payments from customers, there is a real risk of employees stealing from you. Restaurant owners should consider having Fidelity Guarantee coverage to protect against dishonest staff members.

A Fidelity Guarantee policy pays for:

1. Cash/cheques that are stolen by employees. Fidelity Guarantee Insurance will reimburse you for the stolen amount.
2. Fraud committed against other parties – for instance, employees using fake invoices used to scam customers. Companies can certainly be held liable for their employees’ fraudulent actions. Fidelity Guarantee Insurance will cover the costs your company has to pay to others for fraud committed by your workers.

Example: You assign an employee, Robert, to man your cash register. For two days in a row, you come up short $500. After reviewing the CCTV footage, you discover that Robert has stolen the money. He refuses to return the stolen money. A Fidelity Guarantee policy will pay for the $500 that was stolen from you.

Note: Fidelity guarantee insurance is common not just for restaurants, but for F&B and retail businesses in general. If you’re not handling the cash yourself at all times, make sure you have Fidelity Guarantee coverage. Unless you’re running multiple restaurants, you won’t need a lot of coverage – even a policy with a small limit (e.g. a couple thousand dollars of coverage) will be good to protect you from employees out to cheat you. You may find this guide on proving employee theft useful.

#2. Restaurant insurance discounts – tips and tricks

Presence of CCTVs – Having CCTVs in your restaurant can attract lower prices from insurers.

Presence of fire extinguishers, smoke alarms, or sprinkler systems – Having fire-preventive equipment can result in lower prices for commercial property insurance.

“Regulatory authority” shutdown coverage –  This refers to coverage that activates if a regulatory authority shuts your business down. In the event of such a shutdown, you would receive a daily cash payout (typically around $200, depending on the plan you select) for every day that your business cannot operate. For restaurants, the regulatory authority most likely to step in to enforce a shutdown would be NEA (National Environmental Agency).

For most restaurant owners, this type of business interruption coverage is important. However, if you’re really focused on saving as much as possible, you can choose to forgo this coverage (though it’s not recommended to do so). Choosing a policy without this coverage will result in a premium that’s slightly cheaper.

#3. How much does restaurant insurance cost?

With Provide, restaurant owners can get a comprehensive package of insurance starting from just $200/year – i.e. a little over $15/month. That’s the same price as a Netflix subscription! Considering the significant amount of protection you get, that’s a really good deal.

Cover	Coverage Amount	Typical Premium (package deal)	Typical Premium (individual covers)
Public liability insurance, with food poisoning extension	$250,000	$200-$500/year, for all policies combined	$150/year
Commercial property insurance	$100,000		$100/year
Work injury insurance	$10 million per company		$80/year for front-of-house, per worker $200/year for back-of-house, per worker
Business interruption insurance	$20,000		$100/year
Fidelity guarantee insurance	$5,000		$100/year

 

Recommendation for new restaurants: If you’re starting a new restaurant, it’s highly recommended to get a restaurant insurance package. A package basically combines the most important types of restaurant insurance into a single deal. As you can imagine, package deals are always cheaper than buying each type of cover individually. You can think of it as a set meal versus a-la-carte; the former is always going to be cheaper than the latter.

Recommendation for restaurants with existing insurance policies: If you have an existing restaurant policy and are looking to save money, the best option is to switch insurers. A good insurance broker will be able to get you the same level of cover, but at a lower price.

Provide’s special renewal program guarantees you at least a 10% discount, with same or better coverage than your existing policy. Provide has helped countless restaurant owners in their insurance needs. Contact us today to save on your insurance immediately.

Restaurants with live entertainment need extra coverage

Live entertainment: Most restaurant owners don’t know this, but if you buy a policy that doesn’t specifically cover live entertainment, even having one “music night” with a band could void your entire policy. If you plan on staging live entertainment like having bands or comedians, you’ll need to select a policy that specifically covers these risks. Provide’s platform makes it easy for you to cover these risks online, quickly and affordably.

Where should I get restaurant insurance quotes?

With Provide, restaurant owners can get a comprehensive package of insurance starting from just $200/year – i.e. a little over $15/month. That’s the price of a Netflix subscription! Considering the significant amount of protection you get, that’s a really good deal.

When you use Provide, you’ll save up to 25% on your insurance premiums. Our online operating model creates lower overheads, so we pass every dollar saved back to you. At Provide, we take pride in understanding the unique risks that each industry and business faces, so we can recommend the best solutions to protect you from such risks.