If the past two years have taught us anything, it’s that anything can happen.
There are dozens of unforeseen possibilities that could make your business financially responsible or otherwise discourage customers from returning. And in the restaurant industry, this lesson is especially clear. For restaurant owners and operators, understanding all coverage options is critical.
General liability coverage is the first step
In environments like restaurants and bars, the risk is high. There’s a higher chance of employees or customers slipping and falling, getting sick from foodborne illness, or property damage occurring, and when these things happen, the restaurant is usually held liable. General liability insurance is a great starting point for restaurants in their arsenal to cover a customer’s injury or illness caused by restaurant food or property.
Most restaurant owners and operators think general liability coverage is a stopping point because their policy covers them for things like bodily injury, property damage, and personal injury. But these are just some of the claims that could be brought against a restaurant, and often a wider net must be cast to completely insulate a restaurant from these threats and the lasting impact they can have on operations. commercial.
The Benefits of Broader Coverage: Trade Name Restoration
Think about the threats that could negatively impact your restaurant if they come true. A loyal customer could contract a nasty foodborne illness and swear never to eat at your restaurant again. A disgruntled employee could get angry and damage your property, or even spread false rumors about your establishment that negatively impact your reputation. A global pandemic could shut down restaurant dining and hamper your restaurant’s cash flow.
All of these scenarios can harm a restaurant’s business operations, and the damages are often too great for a general liability policy to be very effective. The best way to be fully prepared with the right cover for a situation like this is to be fully informed of the cover options available. Business interruption policies generally exclude losses resulting from anything other than direct physical damage, although courts have recently ruled differently on this.
Another option is to purchase a trade-name catering insurance program that goes beyond the limits of a traditional general liability policy to cover unique costs associated with things like foodborne illness outbreaks. , property damage and more.
In one case, one of our restaurant customers with a multi-state presence and hundreds of locations suffered a significant loss due to a foodborne illness that could have had a significant impact on the business, had it not been for restoration of the trade name. News of their customer’s illness reached the news station and sent the story viral, and this rapid escalation of damaging news can sink a restaurant’s brand.
We had advised a trade name restoration policy and educated our client on how to weigh the benefits against the risks. Our client was able to save millions of dollars in lost revenue and unforeseen expenses like vaccinations.
Hope for the best, prepare for the worst: protection against workplace violence
Unfortunately, foodborne illnesses and reputational threats aren’t the worst a restaurant can face. Millions of workers in all industries are victims of workplace violence each year, and in In 2020 alone, attacks left more than 20,000 injured and nearly 400 dead. Certain factors specific to the nature of the restaurant industry make restaurants a high-risk environment for workplace violence, including long hours of operation and ease of access.
The fact that every place of business must address workplace violence becomes more evident every year – and this year was no exception. One of our hospitality clients recently suffered a traumatic active shooter situation that might have left him perplexed had he not been educated on active shooter coverage and violent acts.
While developing employee training programs and creating action plans is an important first step, restaurant owners need to think about how they can make the most of their insurance coverage to protect their business from harmful consequences of workplace violence.
Active Shooter and Violent Act coverage goes beyond the limits of general liability insurance to cover things like bodily injury, response costs and loss of earnings. Beyond that, it connects advisors with employees to provide them with additional support and a sense of community to recover from the trauma of having experienced an active shooter situation. Employees, guests and customers want to feel safe at their favorite restaurants – safety is an unspoken expectation they have, after all.
The value of coverage in the event of equipment failure
Every time the power goes out or a refrigeration unit stops working, a restaurant’s revenue and expenses are at risk. Having equipment breakdown coverage when these unfortunate situations arise is well worth the time and investment for restaurants because the things they need to operate successfully can be threatened at any time by events beyond their control. will. For example, earlier this year, a customer at a restaurant suffered a colder outage.
Without an equipment breakdown policy in place, our client would have had to raise the funds to repair the cooler, rent a mobile box and replace spoiled food with fresh ingredients. Because we advised the client to obtain coverage for equipment breakdown, the client’s only expense was his property deductible, and his restoration operations never lacked momentum.
Matt Mallory is CEO of The Mallory Agency, based in LaGrange, Georgia.
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