How Property Insurance Can Protect Your Restaurant

Posted on August 15, 2024 | by | Posted in Uncategorized

Running a restaurant is an enterprise fraught with risks, which every successful owner must mitigate in order to survive. Some of these risks can be managed through prudent management, whilst others cannot. It is to these other risks – risks that cannot be mitigated through prudent management – that we turn to today as we discuss the role of property insurance in safeguarding your restaurant. With the right cover, it is possible to eliminate or significantly reduce nearly all of the otherwise unmanageable risks inherent in running a restaurant in Australia, as we discover below.

Understanding Property Insurance

A standard property insurance policy for a commercial building in Australia will normally include the following coverage:

• Building – Damage or destruction of the buildings your business occupies should be included in all good property insurance policies in Australia.
• Contents – The contents of your building should also be covered by a standard property insurance policy. Content refers to items not part of the building, such as tables and chairs, lighting and catering equipment.
• Public Liability – The main purpose of public liability insurance is to protect policyholders from compensation claims for damages relating to personal injury and death arising from negligence (on the part of the policyholder). If someone has an accident on your premises and it is found to be due to the condition of the property, this type of cover will prove to be essential.

Additional coverage designed specifically for restaurant owners may be included if you choose a specialised hospitality industry policy.

Key Coverage in Property Insurance for Restaurants

Property insurance normally includes several areas of coverage that are key for restaurant owners, including the following:

• Building Coverage – If your building is damaged structurally and needs to be repaired, building coverage will pay the costs that you incur. If the property is destroyed, the same coverage should pay for a replacement building. However, it is important to know that not all policies have provisions to pay for the cost of a replacement building: some only cover the current value of a building, which will not be enough in the event of destruction. Without a building, you have no restaurant, so this coverage is, of course, foundational.

• Equipment and Inventory Coverage – After the property itself, the next most important physical assets that your business owns are probably the kitchen equipment and your inventory. It is imperative you protect these assets with adequate insurance coverage, as food spoilage, breakages, and theft can quickly turn a profitable business into an unprofitable one.

• Business Interruption Insurance – If your property is severely damaged or destroyed, necessitating the closure of your restaurant, business interruption insurance will cover your ongoing running costs until you reopen.

Comprehensive hospitality industry insurance policies for restaurants and cafes in Australia should also include separate cover for glass breakages and money stolen on the premises by employees.

Tailoring Property Insurance to Your Restaurant’s Needs

The best property insurance policies for restaurants in Australia are written to cover the specific risks to which their policyholders are exposed. In other words, the best policy for you as a restaurant owner is one that is written to address the unique risk profile of your restaurant. If you have a particular problem with fresh seafood spoilage, employee theft or wine bottle breakages, a policy that includes additional cover in these areas will be the best choice for your business.

Managing Risks with Property Insurance

Property insurance can be tailored to help manage risks that would otherwise be difficult or even impossible to manage effectively. These risks may include:

• Flooding – Restaurants in certain locations are vulnerable to specific risks that businesses in other locations are not. For example, a beachfront café may be at risk of flooding and could be destroyed by a high tide, but inland eateries do not have to contend with such issues. Flood cover is included in some policies and is available either as an extra or excluded in others. It is important to consider these issues when shopping for restaurant insurance and purchase extra cover if necessary.

• Crime – It is important to consider local crime figures when purchasing cover for your property. Any insurer you approach will certainly consider the latest figures when calculating your premiums and from your perspective, it’s crucial to ensure that any policy you buy includes adequate cover for the most prevalent property crimes in the area.

• Specific Equipment Failure – If your restaurant is fitted with special equipment prone to failure, it may be necessary to request extra cover for the machines in question.

It may take some time to find an insurer willing to tailor their policies to suit your needs, so it’s a good idea to find an experienced broker who can do all the heavy lifting for you. Once they have identified some likely prospects, you can decide which one is right for your needs.

Additional Important Coverage

If you want to protect your business and not just your property, you may purchase additional coverage for:

• Data Loss/Critical IT Failure (Cyber Insurance)
• Interruptions to Utility Services
• Motor Vehicle Accidents (Commercial Motor Insurance)

Some insurers may offer these types of cover as additional extras, whilst others may offer them in separate policies. Motor insurance is almost always purchased separately.

Conclusion

It is vital to have sufficient cover in place for your buildings, contents, catering equipment and stock at a minimum. You should also consider adding optional coverage for risks unique to your business. By acquiring a property insurance policy that has been tailored to meet the specific needs of your restaurant business, you can ensure you are not exposed to unnecessary risk and maximise the odds of long-term success in the process. Don’t hesitate to contact Matrix Insurance to discuss your insurance requirements: we are Australia’s restaurant insurance experts and will be delighted to provide all the help and assistance you require