Many restaurant owners wonder, how much insurance does their business really need? They might also wonder, what the correct types of insurance are for their restaurant? They might wonder what types of insurance they can do without or what the bare minimum coverage is to get by. These are all very common questions asked of insurance agents on a daily basis. The answer to these questions and many other things in life are; ‘It depends’. There are many variables that go in to owning and operating a restaurant. Each variable brings on its own unique risk. Also, the amount of coverage you purchase depends upon you the business owner and the level of risk you are willing to take. Workers Compensation and General Liability Coverage are required by law in most states for most businesses. This is where most businesses start when purchasing coverages. Depending upon how much risk you are willing to take, here are 3 tips to help you make sure you are purchasing the amount restaurant insurance.
Are you classified correctly?
First and foremost, a small business owner needs to make sure their business is classified properly. This applies to both workers compensation and general liability insurance. Each state has their own governing body for these coverages. Usually it is the department of insurance or some similar name. An experienced independent insurance agent can help you determine what coverages are required, what coverages are necessary, and what coverages you can do without. When talking with your agent, it is crucially important to be honest with them. This is important in relation to the time you restaurant is open, how much and what types of alcohol you serve, and what exactly your employees do. Restaurants are classified different based upon the risks they face. You can understand the risks are higher for a business that serves primarily alcohol and is open until 2:00AM compared to a diner that is open Monday through Friday from 6:00 AM until 2:00 PM. The amount these businesses pay in premium is reflected in the premium they pay for insurance. Being properly classified can save your business immensely.
Pay as you go option
Restaurant work comp insurance is required by state law in 48 out of 50 states. Getting this coverage in place is an enormous cost for some businesses. Pay as You Go Workers’ Compensation is s a great option for seasonal or cash strapped businesses. The pay as you go option allows a business to pay premium based upon the amount of payroll each month. This is compared to a traditional workers comp policy that is based upon an estimate of payroll over the past 1-3 years. A traditional plan also requires an up-front lump sum payment of up to one third of the total premium just to get coverage in place. For many businesses, the pay as you go option can get coverage in place for as little as a few hundred dollars.
Implement Adequate Safety Programs
Safety programs are great for your restaurant for a number of reasons. They lower the number of accidents that occur and the severity of those accidents. They prevent both employees and patrons from hurting themselves while in your facility. They also can lower what you pay in premium for some insurance coverages. If you have a thorough and well-documented program in place you should mention this to your agent and ask if any carriers offer a discount for safety programs. Finally, when a claim occurs; if you have safety programs in place your agent can use them to demonstrate to the carrier that the incident is an outlier and not a sign of how you do business. This can prevent or limit the amount of increase in premium after a year in which you had several claims or one large claim. If you do not have a safety program in place, it does not have to be extremely time consuming to implement one. Most training can be done upon hiring all new employees and then periodically a few times a month with all long term staff. Putting forth a small amount of time towards a safety program can pay tremendous results the next time you are looking for workers compensation insurance for restaurants.