Few small businesses pack as many risks into one location as a restaurant: open flames and hot oil, slippery floors, perishable inventory, alcohol service, delivery drivers and a large hourly workforce. Insurance for a restaurant is therefore a program of several coverages rather than a single policy. Here is how the pieces fit together.
Start with a package policy
Small businesses often begin with a business owners policy (BOP), which bundles property and liability insurance. The Insurance Information Institute (Triple-I) says companies with 100 employees or fewer and revenues of up to about $5 million are candidates for a BOP, but also notes that some businesses, such as restaurants, may be ineligible because of their specific risks and may need to buy coverages separately. In practice, many insurers offer restaurant-specific package programs; others place restaurants in a commercial package policy.
Property and business interruption
Property coverage protects the building (if you own it or your lease requires you to insure it), tenant improvements, kitchen equipment, furniture, inventory and point-of-sale systems. Business income coverage, which Triple-I describes as replacing lost revenue when the business must shut down after covered damage such as a fire, is essential: a kitchen fire can close a restaurant for months while rent and key staff still need to be paid. Check how the policy values equipment, whether it covers the cost of complying with current building codes, and how long the business income period lasts. See commercial property insurance.
Food spoilage and contamination
Refrigerated and frozen stock can be lost in a few hours of power failure or equipment breakdown. Spoilage coverage, usually added by endorsement, pays for food lost because of a breakdown or power outage, subject to conditions. Equipment breakdown coverage pays to repair walk-in coolers, compressors and other machinery. Some insurers also offer food contamination coverage for closures ordered by health authorities and for the cost of cleaning and replacing stock.
General liability and liquor liability
General liability covers customer injuries such as slips and falls, and illness or injury caused by food you serve. Alcohol is a separate matter. Triple-I warns that if your business serves liquor for a charge, or a license is required for you to serve liquor, your BOP liability coverage does not cover that exposure. Restaurants and bars that serve alcohol need liquor liability insurance.
The exposure comes from dram shop and social host laws, which let people injured by an intoxicated guest pursue the business that served the alcohol. Triple-I notes that these laws vary widely from state to state, but 43 states have them on the books. The market can be difficult in some states: a South Carolina Department of Insurance study, summarized by Triple-I in February 2025, found that insurers lost about $1.77 for every $1.00 of liquor liability premium earned since 2017.
Workers compensation and employment risks
Burns, cuts, slips and lifting injuries make workers compensation a core cover. Requirements are set by each state, typically based on the number of employees. Texas is the notable exception: the Texas Department of Insurance explains that employers may choose not to carry coverage (they are called non-subscribers), but they then lose the protection that workers compensation provides against employee lawsuits and must give notices to employees and the state. Employment practices liability (EPLI) covers claims of harassment, discrimination and wrongful termination, which are common in high-turnover workplaces.
Other coverages to consider
- Commercial auto and hired/non-owned auto for catering vans and employees who deliver in their own cars; see commercial auto.
- Cyber insurance for card-data breaches and ransomware affecting ordering systems; see cyber.
- Umbrella liability for limits above the general, liquor and auto policies.
- Crime coverage for employee theft and cash losses.
Keeping premiums under control
- Maintain hood and duct cleaning, and fire suppression service records.
- Train servers in responsible alcohol service and document refusals.
- Keep floors dry, use mats and log inspections.
- Monitor cooler temperatures with alarms.
- Report incidents promptly and keep video footage.
Policies are issued by licensed insurers and placed through licensed producers in your state. Request a quote to compare restaurant programs.