Insurance for Restaurants

As a restaurant operator, you know that running a restaurant — let alone a successful one — is a monumental task. Consider the obstacles, challenges and constraints facing restaurants today:

  • minimum wage Increases
  • rising costs of food, rent, and other commodities
  • employee health care mandates
  • keeping with food trends
  • a tight labor market

To become successful, restaurateurs need to rely on key partners to help them cut costs and maximize profitability. Embroker aims to be one of the partners restaurants need. We’re here to help create a smart and cost-effective insurance and risk management strategy to protect your restaurant’s future.

When considering insurance for your restaurant, consider these four factors:

  • Coverage: what’s the right coverage for the risks of your restaurant?
  • Premiums: what’s the appropriate cost for your risk?
  • Expertise: how well is your broker versed in the risks, claims management, safety protocols, and coverage options for your specific restaurant?
  • Experience: does your broker work to make risk management a smooth experience? Can they help relieve administrative burdens so you focus on running your restaurant?

A few points before you bind coverage

Your XMod worksheet likely contains errors

Experience Modification Rates (XMods) are mathematical formulas that insurance carriers use to compare similar businesses. An insurer compares a company’s estimated losses to actual ones over a three-year period, then assigns a number rating, with the hypothetical “average” being 1.00.

If a company has more losses than average, the score climbs above 1.00, thereby “taxing” the business for past claims. If a company outperforms its peers in safety, with fewer claims, the score drops below 1.00 and counts as a “credit.” The Inspection Bureau, which promulgates experience modifications, does occasionally make mistakes. It's advisable to review the worksheet yearly to confirm accuracy. Learn how Embroker helped Mixt reduce their XMod by 26 points. This is why we recommend you work with an experienced and knowledgeable broker who’s committed to protecting your restaurant from excessive costs.

No two policies are alike

When it comes to your insurance coverage, don’t assume that your policies have “standardized” coverage terms — they don’t. The devil is in the details.

For example, you broker should help you consider important details, such as:

  • How do I want my Business Interruption coverage written? — is it on an “actual loss sustained” or “stated limit?” Which one is better than the other?
  • Should I buy earthquake or flood coverage? What’s the difference between Earthquake Sprinkler Leakage coverage and EQ coverage?
  • How does my policy provide funds to rebuild to current codes?
  • Is my General Liability policy premium based on square footage or sales? Is one more advisable than the other?
  • Does my General Liability policy respond to off-site catering claims?
  • Does my Employment Practices Liability policy respond to wage and hour allegations?

Report all claims, even small medical-only claims, to your worker compensation carrier

Are you inclined to pay for small, medical-only claims so they don’t affect your workers’ compensation premium (this, by the way, is a common practice to avoid higher car insurance premiums)? If so, you’ve made a wrong assumption.

In some states, it’s illegal to not report a work-related claim (such as an injury) then pay the medical bill out of pocket. XMod worksheets also favor the reporting of all claims. For example, minor medical-only claims could be reduced by 70% on the worksheet and have little impact on your rate.

Swallowed by paperwork?

Most restaurant owners are familiar with the not-so-glamorous task of balancing books and reconciling receipts. In fact, pretty much any paperwork these days — mind-numbing forms, memos, calendars, contracts, applications, etc. — can steal precious hours from you and your business (especially the insurance stuff!).

We also hate paperwork at Embroker and we’re working on streamlining this so you complete it digitally once and make minor revisions each year - saving you hours of time and frustration. Additionally, our cloud-based platform dissolves the burden of paper by turning all your insurance policies, certificates, claims, etc. into clean, easy-to-access digital documents. Sayonara, files cabinets and papercuts.

You can cut costs without taking on unnecessary risk

A frequent question we hear — and a common problem with insurance underwriting in general — is that no one really knows how an underwriter arrives at a premium.

At Embroker, we believe in using data and transparency to give our clients better choices. We start with an expert audit of your current policies to look for gaps in coverage and potential premium savings. We benchmark your policies against similar companies in your vertical, then get quotes from multiple insurance carriers for coverage you may not carry but want to consider purchasing.

We also cross-reference your costs with companies of comparable size, policy limits, claims history, and risk tolerance so we know your premiums are as competitive as possible.

Once set up on our platform, our tools and data ensure you’re adequately covered and getting the best value possible in the insurance marketplace, even as market conditions change and your business grows.

Where would you like to start?

Are you opening a new restaurant and need insurance for the first time? At minimum, restaurants need:

  • Workers’ Compensation: a mandatory policy that provides benefits to your employees for injuries and illnesses arising out of and during employment.
  • Business Owner’s Package (BOP): includes three basic insurance coverages — business liability, business property, and business income policies. BOP protects a business much like the way a homeowner’s insurance policy protects a home and personal possessions.

As your company grows, you will eventually broaden your insurance program to include additional policies like an umbrella policy that extends the limits of existing coverage.

Don’t wait around for right coverage for your company. Take charge now and schedule a consultation call with one of our restaurant industry expert brokers.

Whether you’re searching for new policies, managing existing coverage, or just want a second opinion, access to Embroker is commitment-free. Why? Because nearly everyone who experiences our approach to insurance never looks back, so we like our odds.

P.S. Check out our blog to learn more or create an account on the Embroker platform.