Restaurant owners are regularly exposed to unique business and personnel issues, among them onsite accidents and foodborne illness. Investing in the right risk management program can help reduce costs and improve your bottom line.
Things to Consider Before Binding Coverage
- Your XMod Worksheet May Contain 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 and experiences 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 the Same
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, your broker should help you consider important details and ask the right questions, such as:
- Report All Staff Claims to Your Workers’ 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.
- You Can Request a Free Space Inspections from Insurance Carriers
Many carriers offer site reviews, and provide feedback on safety issues as a free service. This usually leads to better lower premiums and safer working spaces.
Examples of Insurance at Work for Restaurants
- B’s Cracklin’ Barbecue, an award-winning restaurant in the Riverside neighborhood of northwest Atlanta, went up in flames. It is the second time its chef has lost his restaurant to fire.
See: Popular Atlanta Bbq Restaurant Destroyed By Fire
- Milk and Honey, a Nashville eatery, was sued for serving salmonella-tainted short rib gnocchi to patrons in August 2018, causing over 20 patrons to fall ill.
See: Milk & Honey Sued Over Salmonella Outbreak
- Three Greenville restaurants were sued in connection to a fatal DUI wreck involving a 19- year-old driver. The complaint alleged that 19-year-old was served alcohol the three restaurants, before driving on Interstate 385, where the wreck took place.
See: 3 Greenville Restaurants Sued After Teen Served Alcohol
- Dallas-based Brinker International, which operates over 1,600 Chili’s outlets worldwide, stated that it had suffered a data breach which may have exposed clients’ credit card information.
See: Chili’s Restaurant Chain Suffers Data Breach
Restaurant Insurance Costs
As is the case with any industry, there are many different factors that need to be considered before determining how much your restaurant insurance is going to cost. Cost drivers will always be different based on the policies you choose, the unique risks your restaurant faces, the value of your equipment, the size of your establishment, your turnover rate, and other key factors.
Working with the right partner will ensure they are not only negotiating the right coverage but the best possible pricing options for your restaurant as well. Embroker believes in giving our clients better choices using data and transparency. We benchmark your policies against similar businesses in your vertical then procure quotes from multiple insurance carriers for coverage you may not carry and might want to consider purchasing. We also cross-reference your costs with restaurants of comparable size, policy limits, claims history, and risk tolerance so we know your premiums are as competitive as possible.
Now that you have a better understanding of insurance for restaurants, you may be wondering how all of this affects your business and where to go from here. If you need more help or information, you can reach out to our team of expert brokers. If you prefer to get started on intelligent quotes, create your Embroker account today.
Restaurants require unique insuring expertise and experience. Our restaurant practice is redefining the way insurance is purchased, combining technology with deep insurance expertise and genuine understanding and care for your business.
Embroker is the easiest way to intelligently insure any business. We’re here to help!