Business Insurance for Healthy Fast Food Restaurants

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Business insurance is designed to protect a business owner's financial assets and is an essential investment for a healthy fast food restaurant.

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About General Liability Insurance

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).

Some of the risks CGL insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

Learn more about the risks covered by general liability insurance.

COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A HEALTHY FAST FOOD RESTAURANT

Example 1:  One of your employees spills food on a client’s expensive purse, damaging it beyond repair. General liability insurance would pay to replace the patron’s damaged property.

Example 2:  While an employee collects supplies to clean up soda spilled by a guest, another patron slips on the wet floor and injures himself. Even though your employee displayed a warning sign near the spill, the injured patron sues your restaurant. General liability insurance would pay for your legal fees and any damages awarded in the lawsuit.

Example 3:  After you rebrand your business as part of a new marketing campaign, a local competitor files a lawsuit against you. He claims your new slogan is too similar to his and that he’s lost business as a result. General liability insurance would cover your legal defense costs and any awarded damages.

Example 4:  In order to secure a loan to turn your business into a franchise, your bank requires you to carry at least $1 million in general liability insurance. A general liability policy would ensure you meet that requirement.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Cost of General Liability Insurance

On average, healthy fast food restaurants in America spend between $500 - $1,200 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner's policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Other Types of Coverage healthy fast food restaurants Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all healthy fast food restaurants should obtain:

Commercial Property Insurance

You made a major investment in the real estate, build outs, and equipment necessary to establish your restaurant. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building and the business materials stored there.

You can typically purchase commercial property insurance as part of a business owners policy (BOP). 

Product Liability Insurance

Product liability insurance offers protection to businesses that manufacture, supply, or sell products — including food. If a patron names your business in a lawsuit because they claim they became ill after eating at your restaurant, product liability insurance would cover your legal fees and any required settlement.  

You can typically purchase this coverage as part of a business owners policy (BOP).

Types of Coverage Some healthy fast food restaurants May Need

In addition to the policies outlined above, there are a few other types of coverage your healthy fast food restaurant may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident. For extensive injuries resulting in lawsuits, this type of policy also covers a business owner’s legal defense costs.  

Most insurers offer workers’ compensation insurance as a standalone policy.

Business Interruption Insurance

If you need to close your restaurant temporarily after a fire, severe storm, or other covered events, it could take weeks, months, or even years to complete the necessary repairs. Business interruption insurance helps cover your expenses and lost revenue until you can reopen.  

You can typically purchase this coverage as part of a business owners policy (BOP).

Additional Steps to Protect Your Business

Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.

 

With this in mind, here are three things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.

Frequently Asked Questions

What is included in a business owner’s policy?

A typical business owner's policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company's needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it's best to be proactive when it comes to protecting your assets. After all, you can't buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.