Dealing with the cost of liability insurance for restaurants and cafes is a fact of life for those owning food and beverages businesses. Depending upon the jurisdiction in which your business operates, you may also be expected to have a public liability insurance policy in place to guard against potential mishaps. How do you get the right insurance without incurring prohibitively high costs?
Let’s take a look at several tips restaurant owners may want to consider in order to save some money without putting your hospitality business at risk.
Go for Public Liability
Public liability is generally a broad type of insurance that covers many areas where a company might be exposed to risk. Instead of looking through your needs item by item and purchasing insurance according to your risk profile, you can acquire a policy that covers broad needs within your business. For companies with common services and risks, this can be a superb way to manage small business insurance costs. On the downside, it may not cover everything you need, especially for food delivery that extends into unusual areas.
Think about Cyber Liability too
The proliferation of restaurants and cafes online transactions also carries with it significant risks. That nifty little swipe card terminal attached to your tablet that allows you to process credit card purchases when you take your taco truck on the road is also a source of exposure. Your customers’ personal information and financial accountant may be at risk if something untoward happens. Putting cyber liability coverage in place may actually save you money in the long run. No business is seen as too small to hack, so don’t assume the size of your business will allow you to lay low and avoid trouble.
See Costs as Benefits
It’s easy to look at the outlays your business puts into insurance as nothing but a cost, but credibility with customers is always a major selling point. If your restaurants and cafes are insured, you’ll be able to convert a liability insurance cost into a net benefit. It gives you extra liability coverage for legal costs, damaged reputation and more.
Don’t Forget Business Interruption Insurance
The reason for purchasing insurance is to guard against predictable, but low-probability scenarios. If you run a restaurant, there’s a legitimate risk in that commercial kitchen that your place of business might burn down. As you tally up the costs of lost equipment and inventory, it can be easy to overlook another cost: interruption of business. Every day that you’re not making money means you’re likely taking a loss. A small outlay for business interruption insurance now may help you avoid incurring massive costs during a recovery effort.
Beware of Contract Disputes from Day 1
Depending on the size of your business, opening a restaurant or a cafe means that you might get to sign contracts with your produce/food suppliers, your chef and your employees. Be reminded that contract disputes are a very common source of liability for businesses, given that this type of business litigation makes up about 60 percent of cases filed annually. You might need to consult with business litigation lawyers and have them go over each of your contracts from the beginning.
Get Workers Compensation Insurance
Food and beverage operations involve people and more people. This means you are required to have some types of workers compensation insurance to protect them in the event of an accident or illness during working hours.
Audit Risks Yearly
One of the biggest mistakes that business owners in the food and beverages industry often make is carrying insurance that isn’t even needed. Those looking to reduce the cost of liability insurance for small businesses may want to start by conducting an annual audit of their risks and coverage. For example, you can review your insurance policy and verify that you are not paying to cover a type of incident that can no longer happen. If you run a food delivery service but have ceased sending your drivers to a specific area, you may also want to ask your insurance company about lowering your rates. By taking time each year to review what your operation’s actual current exposure is, you might be able to save some money.
Getting the right coverage at the right price is the name of the game when trying to manage small business insurance costs. You need to have an itemised view of your operation’s risks, resources and coverage. It’s also worthwhile to ask your insurer how you can save money. If putting together a public liability allows you to cover more bases while incurring lower costs, it might be time to inquire. It’s also wise to embrace the notion that insurance is a good thing. Tell your customers that you’re proud to run an insured operation, and you might be amazed by the returns that may accrue.