Risk Management for the Food Service Industry

Chapter 3: Tips for Purchasing Food Services Business Insurance
Part 3: When to Update Your Business Insurance Policies

By now, you know the risks that threaten food services businesses. You know the policies that can step in to save you from bank-breaking lawsuits and property damage. And you even know some strategies you can implement today to create a safer environment for your guests and employees.

But as your restaurant, catering service, or tavern continues to grow and succeed, you may need to update your insurance policies to account for the changes. So let's take a look at the situations that can affect your protection. You'll want to notify your agent when your business…

  • Purchases new equipment. When your business takes off, you may commemorate the milestone by purchasing that stove you've been eyeing. Or by installing a new bar. Whatever investment-worthy additions you take on, be sure your Property Insurance reflects the changes. Your premium is dependent on the type and volume of hardware and equipment your business uses, so you'll likely need an update if you make any big purchases.
  • Relocates or expands its premises. If you relocate or remodel to expand your premises, there are a few policies you'll need to revisit. Primarily, your General Liability and Property Insurance plan will need to be amended for the new location and its contents, fixtures, and furnishings. However, your insurance policies may take time to update, as your new digs may have a different risk profile than your last workplace. Some factors that could affect your Property policy include the square footage of your new commercial space, its security features, and its exposure to natural disasters.
  • Offers new services. If you expand the type of services or products you offer, you may need extra protection. If your equipment must travel because of these changes, talk to your agent about adding Off-Premise Coverage to your Property policy.
  • Has a significant change in revenue. The revenue your business generates affects your premiums. So if your business takes off or markedly declines, it may be time to reevaluate your plan. After all, more revenue means you have more financial assets to protect, so you may want to raise your limits to give yourself more security. On the other hand, pulling in less revenue means you may not need as much coverage, and reducing your limits may lower your premium costs.
  • Hires or fires employees. As your business grows, you may need more staff to help you serve your customers and clients. But this hiring spree will affect your Workers' Compensation Insurance needs. If you take on more part- or full-time employees, most states require you to offer those employees occupational injury coverage. Similarly, if you are downsizing and need to fire employees, you may be able to reduce the amount of Workers' Comp coverage you currently have.

As always, we are here to answer any questions you have about purchasing small business insurance or changing your plan. For advice or assistance, just call one of our insurance experts.

Next: Chapter 4: Managing Risks as a Food Business Owner

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