Terry's Restaurant Insurance Blog


Restaurant Insurance Basics – Part 2 of 10 – Liability Insurance

This is the second in a 10 part series on the how to’s of insuring your restaurant.  In this article we discuss liability insurance, what it is and what issues you should consider when purchasing your liability insurance.

Generally speaking your liability insurance will be a part of your package policy that also includes property insurance.  For help on property insurance issues for your restaurant, check out part 1 of this series by clicking here.

Your liability insurance for your restaurant is generally divided into two kinds of protection.  They are premises liability and products liability.  Premises liability insurance provides protection for your restaurant for damages caused by accidents for which you can be held liable that happen on your premises.  The easiest example of a premises liability claim would be a customer who slips on a wet floor and is injured as a result.   Products liability insurance provides protection for your restaurant for injuries or property damages caused by the products that you make and sell; the food in your restaurant.  A common example of a products liability claim would be a broken tooth when a customer bites down on some foreign matter in their entrée. 

The liability section of your restaurant insurance policy should provide you with both premises and products liability.  When you look at the limits of coverage provided by these different liability coverages you will usually see a per occurrence limit and a general aggregate limit.  The per occurrence limit is the most that the insurance company will pay on your behalf for any one occurrence of that type.  The general aggregate limit is the most that your insurance policy will pay in any one policy year.  So, each claim that you have in a policy year will reduce the amount left on your general aggregate limit.  Pay very close attention to these limits and make sure that you are comfortable with the limits on your policy.  Generally I would advise you to purchase the highest liability limits that you can afford.  The reason is that liability exposures, unlike property exposures, are unlimited.  For example, if you own your restaurant building and it burns down, you know how much you will lose and what it will take to rebuild it.  But with liability claims, you really can’t predict in advance how high the damages will go.  For that reason the most prudent approach is to purchase the highest coverage limits that are available. 

Liability insurance is rated based on a factor that helps anticipate your exposure to risk.  Some seem like better predictors than others to me.  Most common these days is to tie the liability rate to the property insurance costs, using a sliding scale or a flat amount for the different levels of liability coverage.  This approach is most common  in the  businessowners policy form and is more about simplification than anything else.  Other policy forms will have a rate per $1000 of gross sales to calculate your liability insurance premium.  These types of formats will often require an audit at the end of the policy term to determine your actual gross sales for that time period.  If you overestimated your gross sales, then you would be due a refund, if you underestimated them, then you would owe more money.  If you have this type of policy form, be sure to read my blog on avoiding the audit trap.

Take the time to really think about your liability insurance limits and make sure that your policy is set up correctly so that it will respond the way you want it to in the event of an accident.  If you are not using an agent who specializes in insuring restaurants, you should seriously consider doing so.  Ask your agent if he or she insures at least 25 restaurants and if the answer is no, you may want to consider using an expert to protect your largest investment and your livelihood.

At Clinard Insurance Group in Winston Salem, NC, we want all insurance consumers become better informed buyers.  Insuring and helping restaurants all across North Carolina and South Carolina is our specialty.  We even have ways to help you gain and keep more customers.  For one example of that type of program, visit our partners page.  We also know  that not all restaurants are the same.  That’s why we have created 5 different restaurant insurance programs so that you can choose a program more tailored to your needs.  We have a fine dining insurance program, a casual dining restaurant insurance program, a fast food insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers.  If you need help or advice for your NC restaurant or your SC restaurant, please call us, toll free, at 877-687-7557 or visit us on the web at   Don’t trust your livelihood to an agent that doesn’t specialize in restaurants.  There is just no need to take that risk.


Restaurant Insurance Basics - Part 1 Property Insurance

This article is the first in a 10 part series that will cover the basics of insuring your restaurant.  Our goal here is to give you a bird’s eye view of the options and issues that you, as the restaurant owner, should consider as you go about evaluating your current insurance coverage or as you tackle the job of insuring your restaurant for the first time.  Part 1 covers the property insurance needs that you will have.

Let’s start by touching on basics of the property that you need to insure.  Some of this is obvious and some of it less so.  The most obvious items here are the building, if you own it or are responsible for insuring it, and the contents in the building such as tools, equipment, inventory, dishes, tables etc.  There are also a few less obvious property items to insure.  The first of these would apply to restaurants who don’t need building coverage but who have invested in fixtures and remodeling that is permanently attached to the building.  For these items you need tenant’s betterments and improvements coverage.  Bear in mind that this coverage is added at the building insurance rate but will only apply to items that you actually did pay to install.  If your lease requires you to insure the air conditioners on the roof but you didn’t actually pay to install them in the first place, your tenant’s improvements and betterments coverage will not help you out if they are hit by lightning and destroyed.

This brings me to another issue that is often overlooked by restaurant owners.  It is very important that you take the time to read your lease carefully to see just what you are agreeing to in terms of insurance requirements.  You may be required to insure things that don’t belong to you and this may force some extra work and research on your part as you set up your property insurance coverage.  For more detailed help on this, read my blog about leases and their impact on restaurant owners’ insurance policies.

One of the sub categories of property coverage deals with the valuation of the items that you are covering. In general, there are 2 choices of valuations, actual cash value and replacement cost.  Actual cash value is defines as replacement cost coverage minus depreciation.  Replacement cost coverage is the cost that it will take to replace that item with a new one at the time of loss.   Most policies are written on a replacement cost basis and in general that is what I would recommend.  But there are some situations, for instance with older buildings, when you may want to consider using actual cash value as your valuation method.  For more detailed information on this situation, read my blog here.

The valuation decision is an important one in that it will help you decide how much insurance to buy for the building and contents and betterments.  You should always insure for the full value (either replacement value of actual cash value) of the item or items you are insuring.  That is because most policy will have a coinsurance clause.  Coinsurance is the tool that insurance companies use to make sure all of the policyholders carry full value.  The reason that is important to them is that most losses are partial losses and some people would prefer to reduce their insurance costs by insuring for only part of the value of their assets.  If this were to happen, then those who insure for full value would be heavily subsidizing those that purchased partial insurance.  To remedy this problem, most all property insurance policies have a coinsurance clause.  This clause imposes a penalty at the time of loss on those who did not carry full value insurance.  The coinsurance clause is a bit complicated but important to understand so please read my blog about coinsurance here.

The last consideration that this article will cover regarding your restaurant insurance property coverage is your deductible.  Your deductible is the amount of money that you will spend in the event of a loss, before the insurance money kicks in.  Since insurance is best used for large, catastrophic losses, it is generally felt that you should carry the highest deductible you can comfortably pay without a huge disruption to your cash flow.  Always evaluate the deductible you choose against the savings it provides on your insurance policy costs.  You can evaluate it by considering how many years you would have to go without a loss to break even on the additional deductible costs versus the amount you are saving by moving up to that deductible level.  But remember, when it comes to restaurant insurance, your deductible will apply to each and every loss all over again.  This is not like health insurance which generally has a per year deductible.

Taking the time to evaluate all of your property exposures and carrying full value replacement cost protection on them will pay off in spades should you ever experience a property loss to your restaurant.  Understanding your lease requirements and evaluating your deductible value will help you make sure you have the appropriate coverage and can afford the policy and the loss should it happen.  In part 2 of this series we will take the time to study liability insurance and its implications for the restaurant owner.

At Clinard Insurance Group in Winston Salem, NC, we work hard to help insurance consumers become better informed buyers.  We specialize in helping restaurants all across North Carolina and South Carolina with their restaurant insurance.  We understand that not all restaurants are the same so we have designed 5 different restaurant insurance programs so that you can have a program more tailored to your needs.  We have a fine dining insurance program, a casual dining restaurant insurance program, a fast food insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers.  If you need help or advice for your NC restaurant or your SC restaurant, please call us, toll free, at 877-687-7557 or visit us on the web at   Don’t trust your livelihood to an agent that doesn’t specialize in restaurants.  There is just no need to take that risk.


Keeping It Clean In The Restaurant

We all see the signs in the bathrooms of restaurants stating the rules for employees washing their hands on each trip to the lavatory.   But there are some other places in restaurants where the washing and cleaning doesn’t always get the top priority.  And it is making your clients sick.  Take a moment to read over some of my pet peeves when visiting restaurants regarding cleanliness and be honest with yourself.  Are you paying attention to these details?  If not, this may explain why some of your customers only visit once.

Let’s face it, people have different tolerances for cleanliness in restaurants but if you are overlooking some of these areas that I will discuss below, you may be running off a certain percentage of your repeat customer business and the fixes for these are cheap and easy.

Bear in mind that if you are a restaurant that serves food that is sometimes eaten by your customers without utensils, then this problem gets magnified.  That means breads, rolls, French fries and so on.  You get the idea.  If I’m eating with my hands, then I don’t want to touch anything that I perceive to be dirty while I am visiting your restaurant.  And this perception can sometimes have little to do with the actual bacteria count.  So consider that your restaurant needs to not only be clean, but also to look and feel clean.

Are your tables clean?  A tablecloth certainly helps this problem because it removes the tactile feeling of filth.  So often I enter a restaurant and the busboy takes a pretty filthy rag and makes a cursory wipe at the table just before or even after I sit down.  Done right, this procedure can assure me that you are doing all that you can to allow me to eat in a sanitary environment.  But if the rag is dirty, stained or otherwise looks inept at the job, or if the job is done in a cursory way, then you are emphasizing to me that this establishment doesn’t put a high priority on keeping things clean.  Take the time to train your staff and give them the tools to make this a show of effort on your part to prove your dedication to sanitation in your restaurant.   Also, it goes without saying that if I am sitting at a table that is in any way sticky, I’m losing my appetite.  So show us your care and then make sure that the table really is clean.

Are your menus clean?  So many restaurants don’t pay close attention to their menus but this is the face of your restaurant to your patrons.  If your menus are sticky or greasy or otherwise feel that they have been handled by too many other hands (and they have) then reminding me of it by letting me see or feel the grunge is a big turn off.  Take the time to regularly clean your menus as they are a very important first impression.

How about your salt and pepper shakers?   These are handled by almost every patron that eats in your restaurant.  They are a haven for germs and bacteria and I remember this almost every time I reach for one and feel that it is sticky or just feels dirty to the touch.  Take the time to clean these regularly to protect your clients and to keep their impression of your restaurant  favorable.

These are just a few of my pet peeves and I am giving you an outsiders view of things you may forget about or take for granted and you rush around to deal with the daily pressures of running your restaurant.  But they leave impressions on a certain percentage of your diners and you should take the time to establish policies that will not only protect your customers but will put your restaurant in the best light in their minds As a side note,  you also have a lot to worry about trying to keep up with food borne illness issues to keep your customers safe.  To keep up with what is going on in that arena, be sure to keep an eye on the blog at


At Clinard Insurance Group in Winston Salem, NC, we specialize in helping restaurants all across North Carolina and South Carolina with their restaurant insurance policy.  We not only want to help restaurants cut their insurance costs, we also work hard to help them generate more customers and make more money.   We understand that not every restaurant is the same and so we have developed specialized programs for different types of restaurants to help you get the coverage you need at a price that will surprise you.  We have a fine dining insurance program, a casual dining insurance program, a fast food insurance program, a bar and grill and tavern insurance program and a caterer insurance program.   If you would like help with your restaurant insurance, please visit us on the web at or call us, toll free, at 877-687-7557.


Restaurant Insurance – Have You Read Your Lease?

Not every restaurant owner owns his or her building.  And not every lease is the same.  But if you have not taken the time to make sure that your lease requirements match up with your restaurant insurance policy, then you may be leaving yourself open to an uncovered claim and as a result, potential downtime or a huge hit to your cash flow.

Consider the case of James, the owner of a small family restaurant.  James signed his lease with his landlord but did not really study it carefully.  One of the stipulations in his lease was that he was responsible for all repairs to the heating and air conditioning units on the roof.  Two years into the lease, lightning strikes the roof units and destroys them.  The cost to replace them is $24,000.

Here’s the problem.  James has a businessowners policy which covers the contents of his restaurant - so everything not attached to the building.  In addition, James did think ahead and had his agent add coverage for betterments and improvements to this policy.  This betterments coverage is for items that are part of the building, which the tenant added – could be paint on the walls or even attached booths for the diners.  The problem for James is that he didn’t add the rooftop air conditioning units to the building so technically they don’t fall under the tenants betterments and improvements coverage.

So how could James have protected himself?  Well, for those air conditioning units he would need to add building coverage to his policy.  The problem is, there is a coinsurance clause on the building coverage that would reduce his claim payment.  (For more help with coinsurance clauses, read my blog about it by clicking here.)  The answer is that James should have added an Agreed Value Building coverage endorsement to his policy to cover the HVAC equipment.  This Agreed Value form should be written with no coinsurance penalty.

There’s one more area of concern in James’ claim that needs to be addressed.  Without the air conditioning units he is going to be in trouble keeping his restaurant open.  He needs mechanical breakdown coverage to protect him from the loss of earnings he will suffer while he is waiting on his HVAC system to be repaired.  To read my blog about mechanical breakdown coverage, click here.  To see a short video about mechanical breakdown coverage, click here.

This real world example shows how important it is to take the time to review your lease and make sure that your restaurant insurance policy seamlessly integrates with that lease.  When choosing a restaurant insurance policy it is very important that you select an agent that specializes in restaurant insurance.  At Clinard Insurance Group, in Winston Salem, NC, we do just that.  We write insurance for over 100 restaurants all across NC and SC.  We understand that each restaurant is different and that they don’t all need the exact same coverages.  For that reason we have developed 5 different restaurant insurance programs to help you find the program that best suits your needs.  We have a Fine Dining Restaurant Insurance Program, a Casual Dining Restaurant Insurance ProgramA Bar and Grill Insurance Program, A Fast Food Restaurant Insurance Program and a Catering Insurance Program.   Visit us on the web at or call us toll free at 877-687-7557 and find out how we can help you find the coverage you want and a price that will astound you.


Business Income Insurance for Restaurants

Running your restaurant business involves risk of course and you can look around you and see the things you need to insure in case of a large loss like  a fire.  Dishes, equipment, furniture, supplies, all of these seem obvious.  But there are also some hidden, less obvious things for which you should insure.  This article will help you understand one of the tools for covering these hidden assets and liabilities – The Business Income Insurance Form.

These days, most restaurant owners have a package policy called a businessowners insurance policy  as the centerpiece of their insurance program.  This policy can cover the building, your contents, any improvements and betterments that you have made to the building as well as more esoteric items like employee theft and employment practices liability insurance.  One of the coverages that is often included in this packaged policy is Business Income Insurance.

Business Income insurance coverage is triggered when you have a covered loss that is large enough to close down your operations for some period of time.  During this time of shut down, you will have ongoing expenses that will continue even though you are not bringing in revenue.  This can vary from rent to monthly fees on equipment leases and marketing products as well the profits that you lose by being out of business.  In addition, there are also extra expenses that you will incur in order to try and expedite the process of getting back into business more quickly.   These can be temporary rental of a new location, overnight shipping costs etc. 

Sadly,  few restaurant owners take the time to understand before a loss is how this built in Business Income coverage will affect their employees.   Policies vary of course but the most common language in North Carolina business owners policies for restaurants will allow you to continue to pay for employee payroll as long as you can put these people to work in some capacity, even if that is helping you get back in business quicker.  If keeping your employees available to you after you have been out of business for 4 or 5 months is important, then you should tailor your Business Income protection to make sure that ongoing payroll expense is included.  In some cases this may mean that the businessowners policy is not the right form and you may need a true commercial package policy that will allow a more customized business income plan.

Last of all, I would be remiss in this discuss if I didn’t mention to you the importance of putting together a disaster plan before the disaster strikes.  Take the time to think about what types of things could put you out of business temporarily and how you would deal with that particular situation from a non insurance standpoint.  Take the time review what is available to you in terms of disaster recovery plans and do a bit of pre-disaster study of some of the companies out there that specialize in restaurant disaster recovery and restoration programs.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping restaurants across North Carolina and South Carolina with their restaurant insurance programs.  We go a step further with our Partners Page which helps our clients find new customers from our customer base.  We understand that not all restaurants are the same and they don’t all need a one size fits all insurance plan.  For that reason we have established 5 different restaurant insurance programs; the fine dining insurance program, the casual dining restaurant insurance program, the fast food insurance program, the bar and grill insurance program and a specialized program for caterers.   If we can help you with your NC or your SC restaurant insurance needs, please visit us on the web at or call us, toll free, at 877-687-7557.