The recession may be over, but restaurants are still finding it tough to bring back customers in the numbers they saw during boom times. Many are turning to innovations to grow their business. While that can be a plus for their balance sheets, it can also open the door to unexpected liabilities that their California business insurance policies were not originally designed to cover.
All too often, the lack of appropriate coverage only becomes evident when a mishap occurs and a claim is filed. After someone has already threatened to sue for damages is usually a bad time for restaurant owners to discover they should have consulted with their insurance agent about their insurance needs before changing their business model. Here are some of the trends that could put restaurants at risk and the questions you should discuss with your agent:
On the Road
Has your restaurant added new services, such as delivery of meals using hired drivers with their own cars?
When restaurant owners saw a steep drop-off in business several years ago, some decided that if the customers were not coming to them, they would take the food to the customers. Delivery of prepared meals moved beyond traditional pizza joints and began to show up in a variety of restaurants – even Burger King is testing the market for delivery. Unfortunately, many restaurant owners forget to take insurance needs into their calculations. Standard commercial auto coverage does not address their liability for drivers they hire who use their own cars, the typical arrangement for delivery services. Your agent will help you differentiate between “hired and non-owned” auto coverage – a distinction that could protect your company if you become the deep-pocket target of someone injured by a delivery driver.
Catering and Special Events
Has your restaurant branched out to a new line of business, such as catering?
Some restaurants have opened up side businesses to provide food for off-site conferences, special events such as golf tournaments, weddings, bar mitzvahs and other private functions. This catering service may be something that is provided regularly or as an infrequent, one-off occurrence. Either way, exposure to liability increases across several dimensions. One area to examine is workers’ compensation. Employees who are delivering food, lifting trays and equipment from delivery vans and putting them in place at unfamiliar event locations may be more exposed to back strains, slips and falls and other injuries. For restaurants that cater on only an occasional basis, special event insurance may be the most economical solution, issued to cover the exact circumstances of each situation. For those who do multiple events each year, a policy can be put in place that covers all events, with the customer reporting in advance details about the events as they are scheduled.
Keeping Up with Food Trends
Has your restaurant introduced new menu offerings, such as locally sourced foods and an emphasis on organic ingredients?
Increasingly, high-end restaurants are interested in demonstrating to potential diners that they are in line with the latest culinary trends. This includes offering locally grown produce and specially raised meats, using organic ingredients and avoiding items that are allergens for some people. While these trends are rooted in the desire to have fresh, pure, uncontaminated food that has traveled only a short distance from farm to plate, they introduce an element of risk if careful controls are not put in place. Food-borne illness, such as a reaction to salmonella on fresh spinach or e coli bacteria on meat, is a problem, regardless of the source. Restaurants that choose to buy locally should ensure that growers have proper procedures in place to limit contamination and deliver unspoiled food. They also ask produce and meat providers to show proof of liability insurance with a highly rated insurance carrier and require that the restaurant be added as an additional insured.
New Methods of Payment
Is your restaurant accepting additional methods of payment, such as online credit charges or smartphone purchasing?
Another area that is evolving rapidly for restaurants is how consumers pay for their meals. To encourage more business, some restaurants now allow ordering and payment online. Others may have the capability to allow people to pay with their smart phones in place of a credit or debit card. With increased exposure to ways for hackers to steal private information, including account numbers for credit and debit cards, restaurants should consider purchasing cyber liability insurance. These policies typically cover the costs of dealing with the state-by-state regulations that govern steps that must be taken in response to security breaches that expose people to identity theft and fraud.
Contact your Tower Insurance commercial agent to review these questions and your current coverage. We’ll help you be certain that have all the right “ingredients” in your policies.
Article Information from Property Casualty 360