Business Insurance Tips for Food Business Owners
The savviest restaurant owners and catering business professionals know that good business practices, great customer service, and high quality products are not enough to protect a business. Too many accidents and scenarios exist outside of a small business owner's realm of control, which is why business insurance is a valuable asset to a food business's protection plan.
But before you purchase a business insurance policy, consider these seven tips for finding a policy that meets your protection needs:
1. Know your insurance needs and risks. Assess, assess, and assess some more. Which assets are integral to your operations? What risks do your customers and employees face at your establishment? Even if you do everything in your power to ensure your customers do not receive contaminated food and that your employees are properly trained in sharps safety, accidents and oversights are all too common. These risks are ultimately what you will want your insurance policy to cover.
When issuing your policy, your insurance company will determine the level of risk it will accept. This process is called "underwriting." While the insurance company reviews your application, it will determine how much coverage it will provide for your business based on the level of risk. Your premium (what you pay for coverage) will depend on these risks, so it's important to know what protection you need before you shop for insurance. And as your business grows, your insurance needs may change, which means a yearly check-up on your coverage will help your food business stay protected as it thrives.
2. Be sure that you trust your provider. The convenience of online shopping comes with its inherent drawbacks, especially when you are in the market for business insurance. There's no shortage of information or offers available on the Internet, but it's important to make sure you differentiate between exaggerated sales pitches and legitimate information. Your best defense when shopping online for insurance for your food business is to go with a name you trust and to always check for proper licensing. Because state governments regulate the insurance industry and license insurance brokers, many states will provide a directory of licensed agents.
The licensed agents at insureon can help you find policies from A-rated insurance carriers that match your business needs. Talk to one of our licensed insurance agents today for any questions you have about your business protection needs—we're happy to help!
3. Know that cheapest option is not always best. Though many small business owners cannot spare any extra expenses, it's imperative to think of your food business insurance as a necessity rather than a luxury. In the event of a covered claim, a less expensive policy may offer your business less coverage than a policy that costs a little more.
Depending on the insurance company, some may resort to unfavorable practices such as slow payouts for a covered claim or offering a policy that starts out with low premiums, only to have them hit the roof later on. Instead of shopping around for the least expensive policy, base your decision on the amount of coverage offered and the insurance provider's reputation. One way to avoid unfavorable policies is to work with an agent who can guide you to a more cost-effective choice.
If you are concerned about the cost of business insurance, you may want to consider a Business Owner's Policy (BOP). This kind of policy bundles General Liability Insurance and Property Insurance into one neat package. If your business is eligible for this special policy, the premium is typically less than the cost of purchasing each type of coverage separately. Note that not every type of insurance is included in this policy, but if your business has unique risks, you can usually add on specific endorsements or policies to your BOP.
4. Work with a company that specializes in business insurance. The amount and price of coverage varies from company to company and policy to policy. To find the proper coverage at affordable prices, look for brokers who specialize in insurance for specific types of business (such as our experts at insureon!). For example, since you own a restaurant or catering business, you'll want to find an agent that can help find policies that specifically cover food services businesses. Specialist agents know what risks your business needs protection against and can help you find the appropriate coverage and competitive rates.
Typically, food business owners will want to carry…
5. Read the fine print. Insurance policies have a reputation for being complex, but it's important you understand the exact terms of your insurance coverage. Remember that you can add endorsements or additional coverages to your policy, so don't be afraid to ask your insurance agent for more than the basics. For example, as a restaurant owner, you will need Liquor Liability added to your General Liability policy if you serve or allow alcohol on your premises. You don't want any gaps in your coverage. Because you are agreeing to the terms of the policy, be sure you know the exact coverage you can expect in the event of a claim and what your coverage includes before you sign. You don't want to be surprised when it comes time to file a claim.
6. Consider the deductible. Most business insurance policies come with a deductible—that is, the amount you will be responsible for paying in the event of a covered claim. A higher deductible will likely mean you pay less for premiums, and a lower deductible usually means you pay more for premiums. To assess which approach is most beneficial to your business, consider how frequently you might actually incur a covered loss, and how much of that loss you can afford to carry yourself. Your deductible should never be more than the amount of loss you could afford out of pocket.
7. Buy more coverage than you think you'll ever need. When it comes to protecting your business against liability claims, it's best not to underestimate the amount of coverage you may need. Attorney's fees alone can exceed thousand of dollars—and should your restaurant be found liable in a case against it, your company could be responsible for paying any amount that exceeds your policy limits. Umbrella Insurance may be something to consider, as it beefs up the limits of your existing policies and typically costs as little as a couple hundred dollars a year.