We have come a long way from the first week we started this venture down the road of How to Start a Restaurant. Last week instead of posting this article on how to start researching what kinds of insurance you will need for your restaurant I posted the transcript of a podcast I just completed with Laurie from the Small Business Development Center in Lansing Michigan about what a feasibility study will do for your. It turned out to be very informative. If you haven’t listened to the podcast or read the transcript I suggest you do that.
In Unit 2 of How to Start a Restaurant we have covered how to research your local laws and ordinances, and how to start preparing for your health inspection. In this lesson we are going to cover how to start researching what insurances you are going to need for your new restaurant.
I have a story about this. Ready for this? For the first 6 months I didn’t have any insurance. I was so small I didn’t need any. I was a one man show. I didn’t even realize I needed insurance until I went to apply for an outdoor seating permit. It was than I got general liability insurance for my restaurant. As I continued to grow I had to get driver insurance and workman’s comp insurance. Not only do you have to do this if you are going to have employees but it is a good idea to get to protect your own butt. You have worked hard to open your restaurant you don’t want some accident to happen and you loose everything because you thought you would save a few dollars and not get it. I will say that the first insurance company I went with was 1,500 dollars for a full year of general liability insurance. If you haven’t looked into insurance yet that is really really high. Now I pay $68 a month with is less than a $1,000 per year. That is just for liability insurance.
My workers comp insurance is with the company that does my payroll. I am saving $700 dollars a year sense I switched to them as well. And this is why I am doing all this work for you to save you tons of money and time looking for all the best deals. I wouldn’t steer you wrong on anything either because that is my reputation on the line. If you want information on who I use head over to the contact page and drop me a quick email.
What Different Kind of Restaurant Insurances Will you Need?
Now lets talk about what you need and what you should look for. I want to make a *disclaimer right now. I am not an insurance agent and you should contact a local insurance agency. Talk to the insurance agent to make sure you are covered correctly for your state and your restaurant type.
It is important that you start interviewing different insurant companies now before your doors are open for business. This is one thing I wished I would of known before I opened my restaurant. This is another reason I started restaurantmastering.com so I could help other restaurant owners like yourself not make the same mistakes I did.
General Liability Insurance
You don’t want to have something happen and your business take a financial loss because you didn’t have insurance. Listed below are some of the things you will want to discuss with your insurant agent.
Bodily Injury Claims
You want to be prepared encase someone falls in your restaurant, gets food poisoning, and the worst case scenario someone dies. All these things should be covered on a general liability insurance policy.
It will cover everyone entering on your premise but it won’t cover an injury that happens to one of your employees. For that you will want to check into worker’s compensation insurance.
Property Damage Claims
If you cater events you will want to verify that your insurance will cover incidents that happen there such as a warming table catches fire and causes damage to their property.
Liquor Liability Coverage
If your establishment serves alcohol to their customers you may need to buy a separate policy but if you sell it occasionally at corporate events you might not. It will depend on your state.
My restaurant we have a party store beer and wine license so it is not consumable on premise. It was the best I could do because there is no licenses available in my township. My state determines how many liquor licenses are allowed per township based on population. If I was to move my restaurant outside the township but still be in the same county I would be allowed to apply for a liquor license.
Because of what kind of beer and wine license I have I am able to wrap it all up into one policy.
Personal and Advertising Injury claims
If you use advertising to attract customers to your establishment it is a good idea to check and see if the insurance policy you are researching covers you if you infringe on anthers copy righted material. It may protect you from damaged caused by your advertisement as well.
Medical Expense Claims
Check to see if the policy your are researching covers you if someone is hurt on your premise. Medical bills can easily go upwards of 1,000 of dollars and can really hurt a small business. It is a real good idea to have this coverage.
You may find this article interesting as well : Restaurant POS Systems The Pros and Cons
Workers Compensation Insurance
What is workers compensation insurance?
I have heard workers comp insurance referred to workman’s comp insurance many times. They are the same thing just so you don’t get confused. Workers compensation insurance not only protects the employee but it protects you from being able to be sued by the employee. Workers compensation insurance is insurance that will pay medical bills and replace their pay while they are out of work. Usually workers compensation insurance will pay for you to be diagnosed and treated from the injury you acquired while working on the job. It will also usually pay for their loss wages. Usually it will pay 2/3 of what they usually got paid. It will depend on a lot of different things so it is best to ask your insurant agent for details. Each state and company may be different. Your workers compensation insurance may even pay for rehabilitation, retraining, and other benefits as well.
Your monthly premium might be different than mine because there are several different factors that go into your premium. Some restaurants are going to be higher risk than others. Some things that could determine your premium
- *Experience in the restaurant field
- *How long have you been open
- *Have you had a claim made before
- *Do you have delivery drivers (if you do you may be put into the high risk pool)
- *Age of a typical employee
- *Have you been a restaurant owner before
Those are just a few of the questions they asked me when I went to get workers compensation insurance.
Each industry has its own class code.
To a workers compensation insurance company you are not knows as what type of business you own but rather by a code and each code has its own rate. Some restaurants may have 2 codes like I do. I have 2 codes because I have delivery drivers. Delivery drivers have a higher rate than a inside restaurant worker. This is where my point of sale system comes in handy. Because I can print out a report that tells me how much time my drivers spend on the road versus inside the store. This saves me a ton of money every year. Make sure you ask if you can do this to because they just didn’t just offer this option. I had to ask for it. Even before I had my point of sale system I still did it this way. It was more of an estimation at that time but now it isn’t.
Check with who ever does your payroll to see if this is something you can get through them. My workers compensation insurance isn’t through my payroll company but they are the ones that get me set up with the company I use now and now it is taken out based on my payroll for that week. Much easier to do than a lump sum.
How I had to do my workers compensation insurance at first was a lump sum plan. I would pay for the next year a head of time based on what my payroll was the year before. It was really hard to do because some times I ended up owing them more money at the end of the year and I had to pay for the next year coming up. Definitely check with your payroll company. If you want to know who I use for payroll that helps me out so much go over to the contact page and fill out the form. I will get back to you shortly.
If you are a restaurant that offers delivery it is a good idea to check in to delivery driver insurance. This may be something that you will have to have a separate policy for. Some states require you to have it others may not. Check with your insurance representative.
Be sure to shop your insurance quote around to see what the best deal is you can get. The first one may not be the best one.