What Insurance Does A Restaurant Need? Best Coverage Area

By Rajib Hasan -- Wednesday, 04 Oct, 2023
what insurance does a restaurant need

Indeed, insurance refers to the protection of a business from financial losses. A business platform can collapse for different reasons, such as loss of property, damage to something, employee injury, business robbery, and others. However, there are several types of insurance. But what insurance does a restaurant need? The restaurant requires general liability insurance. That covers almost all the things of a restaurant business. Most restaurant owners look for general liability insurance policies. 

What Do You Mean By Insurance?

Insurance is a contract between two persons. Where one person pays money to compensate for anything. Basically, a business owner deposits money to any insurer and contracts that if the business owner loses any property or something else, the insurer will compensate. This commitment happens by maintaining a paper or document which is called an insurance document.

What Is General Liability Insurance?

General liability insurance is an insurance type that is extremely required for restaurants. It is also called restaurant liability insurance. It is the best insurance for restaurants. Liability insurance covers physical injury, property damage, restaurant reputational issues, and others.

You may know that a mid and big size restaurant may have many restaurant staff and many things are involved with them. That’s why liability insurance is required. It means that you have to pay something to any insurer and if you lose something in your restaurant then your insurer will compensate.

What Insurance Does A Restaurant Need?

Have you ever thought about why restaurant business insurance is needed? We have been told above that insurance is a protection. You know that insurance is applicable for any type of business. Insurance is a package of business owner policy (BOP). 

It includes several essential things, such as commercial property, general liability, and business interruption. But what kind of specific insurance does a restaurant need? In this case, general liability insurance is the best consideration.

There are many types of restaurant insurance policies, liability insurance is the best one. It covers almost everything. But if the owner wants they can adopt different types of insurance for specific needs, such as

  • Workers’ compensation coverage.
  • Commercial auto coverage.
  • Food liability insurance.
  • Inventory insurance.
  • Alcohol liability insurance.

Restaurant Insurance Coverage Details

Are seeking to open a restaurant business, catering business, cafeteria business, or food and beverage restaurant? If you are in a deciding stage, be sure you will require restaurant insurance coverage. There are some stages that can give the best ideas to open a restaurant business.

If you have a home-based catering business, then you should also require restaurant insurance. However, there are many insurance coverage areas but we have discussed a few of them. The following insurance coverage can play a crucial part for restaurant business owners.

Commercial General Liability (CGL) Insurance

Commercial general liability policy covers a business for personal injury, bodily injury, and restaurant business property damage. Commercial general liabilities insurance shields your business from out-of-court expenses. This restaurant insurance policy can sufficiently secure a business owner to get rid of any unpleasant financial condition.   

The average premium charge is about $500 to $600 per year. It is for any injured person in your restaurant. It also covers property damage, reputation spoiling, foodborne, and illness.   

Business Property Insurance

Business property insurance is another insurance coverage. It covers the company's physical assets, such as warehouse, or business space, business inventory, and some other assets. This insurance also helps to compensate for other unexpected situations, like fire explosions, stealing of any property, and other perils.   

The average restaurant insurance cost (premium) ranges from $1000 to $2500 each year. It also covers some essential areas, such as kitchen equipment (furniture, cooking equipment, food serving equipment, etc.).

Equipment Breakdown Insurance

It covers mechanical or electrical equipment like ovens, stoves, rakes, computers, photocopiers, etc. Basically, equipment breakdown insurance is not boldly needed for restaurant insurance. This insurance may be eligible for some other electronics companies.

Though restaurants have some electronics and mechanical equipment, this insurance is not necessary. This insurance protects against property damage caused by equipment malfunction. It is noted that the equipment breakdown coverage cost ranges from $25 to $50 each year.    

Food Spoiling Insurance

Food spoiling coverage protects your restaurant from restaurant financial losses that can happen due to pollution or spoilage of perishable goods. It may happen due to different reasons, such as restaurant equipment male function, power outages, and others.

If the restaurant owner wants they can get this insurance coverage against food spoiling. It is noted that the business owner policy (BOP) for restaurants is about $1100 to $10500 per year. These cost ranges can be different depending on coverage area, location, and some other essential factors.  

What Does Restaurant Insurance Cover?

What Does Restaurant Insurance Cover

Most restaurant owners decide on a general liability insurance policy. Most owners believe liability insurance covers almost all the coverage areas. If you have a home-based catering business, you may do the insurance according to the insurance policy.But what does a restaurant insurance cover? Which area is important for consideration as insurance coverage?

  • Business interruption insurance.
  • Food spoilage coverage.
  • Commercial crime insurance.
  • Liquor liability coverage.
  • Mechanical breakdown.
  • Workers compensation insurance.
  • Extra expense insurance.
  • Food contamination endorsement.

It is noted that a restaurant does not have many electronics or mechanical devices but it involves employee injury, food, property damage, service, and operation. Basically, the general insurance policy covers most of the things of a restaurant. That’s why restaurant owners accept general liability insurance policies.

When Does A Restaurant Require Insurance?

Whenever you start a restaurant business, from then a restaurant owner should do insurance. It is a safety license and it covers many areas, such as employee injury, accident, property loss, robbery, financial loss, and others. 

If any undesired situation occurs against your insurance coverage area, the insurance will reimburse depending on their insurance policy. So, you may think how important it is for your business.   

How Much Does Insurance Cost For a Restaurant in the USA?

Restaurant insurance cost per month depends on a few factors, such as restaurant shape, number of employees, property ranges, and others. However, the restaurant insurance cost is considered as $25 per month. However, the insurance cost will depend on the specific circumstance.

And insurance costs can be different insurance categories. It is noted that how much reimbursement insurers will pay, it will depend on how much you are paying to the insurer. Let’s see a list of where restaurant owners and insurers will pay for general liability insurance.

  • If the restaurant owner pays $22 then the insurer will pay 3% compensation.
  • If the owners pay $22 to $32 then the compensation may be 17%.
  • The reimbursement can be 56% if the owner pays $74 per month.

On the other hand, different businessmen may have different policies. In that case, on average, most business owners expect to pay between $52 to $280 per month.   

How Much Does Insurance Cost For a Restaurant In California?

Restaurant owner follows general liability insurance. Because it is the most popular insurance coverage policy. Restaurant insurance costs can be different in various countries. It also relies on different factors. However, how much does restaurant insurance cost in California? Let’s see some insurance policy.

American Express business license

  • Insurer name: American Express business license of credit.
  • Loan amount: $2,000 to $250,000 per year.
  • Minimum credit limit: At least 660 FICO at the application time. (660 Fair. It means if an owner has a 660 credit score, then the business owner will be considered as a subprime consumer of American Express business license of credit).


  • Insurer name: OnDeck
  • Loan amount: Ranges from $5,000 to $250,000 every year.
  • Minimum credit score: 625 FICO. It is noted that in the United States, the average FICO credit score is considered 714. But fair credit is considered 580 to 669.

National Funding

  • Insurer name: national Funding.
  • Loan amount: $10,000 to $500,000 per year.
  • Annual Percentage Rate (APR): APR starts at 1.11%
  • Minimum credit score: 600 FICO (Fair Isaac Corporation).

Average Cost of Insurance for a Restaurant

Indeed, in California, small businesses do not require general liability insurance. For medium and large restaurant insurance average cost ranges from $500 to $950 per year. But how much is restaurant insurance per month? It depends on a few factors. However, in General Liability Insurance the average monthly cost is around $80 in the USA.

This amount depends on how many coverage areas you have, such as type of facility, restaurant location, amount of business property, and others. Let’s see some average annual insurance costs according to the annual cost range.  

General Liability Insurance

  • Average annual cost: $900
  • Annual cost ranges: $500 to $2500

Commercial Property Liability Insurance

  • Average annual cost: $740
  • Annual cost ranges: $500 to $2500

Worker Compensation Insurance

  • Average annual cost: $1500
  • Annual cost ranges: $600 to $10000

Liquor Liability Insurance

  • Average annual cost: $600
  • Annual cost ranges: $300 to $3000

Restaurant Insurance Requirements in the USA

Restaurant Insurance Requirements in the USA

Restaurant insurance requirements in the USA can vary by specific area. But there are common types of insurance policy that most restaurants are required to have. It is necessary to check with your local authorities and consult an insurance professional to ensure that you comply with specific regulations in your area. Let’s see the primary types of restaurant insurance that are commonly recommended.

  • General liability insurance.
  • Commercial property insurance.
  • Workers' compensation insurance.
  • Liquor liability insurance.
  • Commercial auto insurance.
  • Employment practices liability insurance.
  • Food contamination and spoilage insurance.
  • Business interruption insurance.
  • Cyber liability insurance.
  • Health insurance.
  • Commercial umbrella insurance.

Keep in mind that insurance requirements can vary based on your restaurant's location, size, and specific operations. In this case, you should consult with an insurance agent or broker who specializes in restaurant insurance to ensure that you have the appropriate coverage to protect your business.

Crucial Tips for Buying Restaurant Insurance Coverage

Buying restaurant insurance coverage is an important step in protecting your business from various risks and liabilities. In this case, you should know about what type of insurance you want to select for your business. For this reason, we have given some crucial tips to consider when purchasing restaurant insurance.

  • Assess your needs.
  • Work with an experienced agent.
  • Understand different types of coverage.
  • Understand Restaurant insurance types of coverage, such as general liability insurance, property insurance, workers' compensation insurance, liquor liability insurance, and business interruption insurance.
  •  Decide on appropriate coverage limits for each type of insurance.
  • Keep focus on bundle package policies that combine multiple types of coverage into one.
  • Check the reputation of the insurance company.
  • Carefully read and understand the policy exclusions to ensure you're aware of any situations or events that may not be covered.
  • Work on risk management and keep your policy updated.
  • Implement risk management practices within your restaurant, such as safety protocols and employee training.

Final Thought

There are many types of insurance. All the insurance is not suitable for the restaurant business. But what insurance does a restaurant need? Most restaurants take a compelling package that includes a general liability insurance policy. We have referred to different types of insurance policies with monthly and annual costs in different areas. So, choose your best one and make your business secure.


This pricing information has been taken from several authentic sources. Though insurance policy depends on the different organizations. That’s why RestoraPOS is not responsible for the exact pricing limit. RestoraPOS is not related to any other insurance organization we have referred to above. So, the best way is to contact any insurance company before obtaining insurance packages.