What kind of insurance should a restaurant have?

Most restaurants need general liability, commercial property, workers' compensation, and liquor liability coverage. General liability protects against slip-and-fall claims and food contamination lawsuits. Commercial property covers your building, equipment, and inventory. Workers' compensation is required in most states if you have employees. Liquor liability is essential if you serve alcohol. Many restaurants also add business interruption insurance to protect against lost income from kitchen fires or other disruptions.

Do restaurant owners need workers' compensation insurance?

Yes, workers' compensation is legally required in all states if you have employees. It covers medical expenses and lost wages if an employee is injured on the job. Even if your state allows sole proprietors to opt out, carrying it protects your personal assets from lawsuits. Claims are common in restaurants due to slip-and-fall hazards, burn injuries, and kitchen accidents. This coverage also helps with regulatory compliance and is often required by landlords or lenders.

What is errors and omissions coverage for food service?

Errors and omissions (E&O) coverage protects against claims that your business failed to deliver promised services or caused financial loss through negligence. For restaurants, this might cover allegations about food quality, service failures, or catering contract breaches. While general liability covers bodily injury and property damage, E&O protects your professional reputation and covers legal defense costs. It's especially valuable for catering operations or restaurants offering specialized services like meal prep delivery.

What restaurant insurance cost factors should I consider?

Your premium depends on annual revenue, number of employees, location, claims history, and coverage limits. Restaurants with higher payroll and revenue typically pay more because exposure is greater. Properties in high-crime areas or flood zones cost more to insure. Whether you serve alcohol significantly increases liquor liability costs. Kitchen equipment, square footage, and business type (fine dining vs. quick-service) also affect pricing. Getting a quote or speaking with an insurance advisor helps you understand what drives your specific costs.

What is liquor liability insurance and why is it required?

Liquor liability insurance covers claims arising from serving alcohol, including injuries caused by intoxicated customers or third-party damage claims. Many states require it by law if you serve alcohol; others require it only if you have a liquor license. Dram shop laws hold establishments liable for harm caused by intoxicated patrons. This coverage protects against lawsuits from accidents involving customers who consumed alcohol at your restaurant. Premiums vary based on your alcohol sales volume and whether you serve beer/wine only or full spirits.

Is general liability insurance enough for a restaurant?

No. General liability covers bodily injury and property damage claims (like slip-and-fall injuries or food contamination), but it doesn't protect your building, equipment, or inventory. You also need commercial property insurance for those assets. If you serve alcohol, general liability won't cover liquor liability claims. Workers' compensation is separate and legally required. Many restaurants also benefit from business interruption insurance to cover lost income during forced closures. A comprehensive business owners policy (BOP) bundles these coverages.

What is the difference between property insurance and business interruption insurance?

Commercial property insurance covers physical damage to your building, equipment, inventory, and furnishings from fire, theft, or weather. Business interruption insurance covers lost income if your restaurant must close temporarily due to covered damage. For example, a kitchen fire damages your equipment (property claim) and forces you to close for three weeks (business interruption covers lost revenue during that period). Together, they protect both your assets and your cash flow. Many restaurants add spoilage coverage to protect food inventory from equipment breakdown.

Business Insurance Questions for Restaurant Owners

Wednesday, September 2, 2026

An organized review helps restaurant owners discuss the exposures that matter to their business. Start with current information about the premises, staff and services.

What has changed?

Share updates on payroll, sales, equipment, delivery, catering, alcohol service and events. Bring relevant leases and contracts.

What does each policy address?

Ask your advisor to explain the proposed property, liability and other coverage options. Discuss exclusions, limits, deductibles and conditions rather than assuming a package covers every interruption or accident.

Which requirements apply?

Workers’ compensation obligations depend on the applicable state rules and your workforce. Alcohol-related insurance obligations can depend on your operation, license and contracts. Verify your specific requirements with the relevant authorities and qualified professionals.

What happens after a loss?

Keep reporting instructions and current policy documents accessible. Ask what records would help support a claim and how your advisor can assist with questions.

Start a restaurant insurance review with GALT.

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Business Insurance Questions for Restaurant Owners

What has changed?

What does each policy address?

Which requirements apply?

What happens after a loss?

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