Insurance a la carte

Restaurant owners are normally exhausted after a grueling day of pleasing customers and soothing employees. But instead of sleeping, some owners
lie awake worrying about the liabilities and
exposures involved in the food industry.

“Most restaurant owners think they have
all the coverage they need to protect
against losses,” says Darren Wu, vice president and account executive at Gateway
Insurance. “But today’s insurance market
is like going to a sit-down restaurant and
ordering off the menu; you order what you
want and only get what you order.”

Smart Business spoke with Wu about
how to best protect a thriving restaurant
from losses due to equipment, employment
practices and business interruptions.

What current insurance issues are challenging restaurant owners?

The biggest issue today is finding a package policy that offers comprehensive ‘all-risk’ coverages.

Most business owners think they have
adequate coverage to insure against all
losses. In past years, most insurance companies offered comprehensive policies that
covered most perils that a small to medium-size business might face. Many coverages were automatic and included in the
policy. Things are very different in today’s
world of commerical insurance.

Buying insurance for today’s business
owner is very much like ordering à la carte
from a restaurant menu. Many coverages
that previously were included in package
policies now must be specifically requested. Three notable coverages that may not
be included in some business policies are
windstorm (hurricane), product liabiity,
and business interruption and extra
expense coverages.

What insurance coverages are crucial for
every restaurant?

First and foremost, all businesses should
purchase comprehensive general liability
insurance to cover claims for bodily injury
and property damage that occur either on
premises or wherever the business may go.

Included in this must be products liability
insurance in case a patron becomes sick
from food served by the restaurant.

All businesses also need property insurance to cover both business and personal
property (contents, stock, equipment, furniture, fixtures), as well coverage for real
property if the restaurant either owns or is
required to cover the building, as well as
coverage for improvements made to the
real property.

Additionally, all business owners should
consider business interruption and extra
expense coverages to handle the financial
burdens of a business after a covered loss to
the premises.

In most cases, state law will require workers’ compensation insurance for employees
who may be injured on the job.

Restaurants that serve alcohol should
always carry liquor liability insurance and
— whenever possible — should consider
crime coverage to guard against theft by
employees.

Restaurants with owned vehicles and/or
restaurants whose employees drive their
own cars for work purposes must carry
insurance in this area as well.

Lastly, it’s smart to take out an excess liability (umbrella) policy along with sufficient health, life and disability insurance to
protect owners, their families and/or partners.

What additional restaurant insurance products are often underutilized?

The most common ‘unique coverage’ for
a restaurant owner would include equipment breakdown coverage and spoilage
coverage in the event of a power loss. This
should include coverage whether there is a
direct physical loss to the premises or loss
of power due to an off-premises cause.

Employment practices liability insurance
(EPLI) is always a smart idea, especially
for restaurants. Most insurance companies
do not include these coverages in their typical package policies.

How does employment practices liability
insurance apply to restaurants?

These policies typically cover sexual
harassment, discrimination, wrongful termination, breach of employment contracts,
negligent evaluation, failure to employ or
promote, wrongful discipline, deprivation
of career opportunity and wrongful infliction of emotional distress.

These claims are typically never covered
in other business policies. Unfortunately,
they are becoming increasingly common
and the cost to defend them, without insurance, is incredibly expensive.

How can agents maximize coverage and
value for restaurant owners?

We as agents have to work as a team with
our clients to ensure that limits and coverages are sufficient to cover the insured for
catastrophic claims while recognizing that
it may be cost-prohibitive to insure each
and every peril. That means designing a
cost-effective program that neither under-or over-insures a business.

The most important thing is that the
agent sits with the owner and understands
the operation, and where and how sales
are generated. A truly professional agent
will never merely photocopy existing policies and offer a bid on those coverages.

DARREN WU is vice president and account executive at Gateway
Insurance. Reach him at [email protected] or (561)
253-1631.

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