Workers’ compensation insurance for restaurants and other food businesses

In a busy kitchen, cuts and burns are almost inevitable. An injury at a restaurant, bakery, or food truck can lead to an expensive hospital bill and time off work, which can mean tremendous financial losses.

Workers’ compensation insurance pays for an injured worker’s medical expenses and provides disability benefits during their recovery. It also protects sole proprietors from work-related injury costs that health insurance might deny.

• Immediate medical costs, such as an ambulance and emergency room visit
• Ongoing medical costs, such as medications and physical rehabilitation
• Partial lost wages for time spent recovering

Typically included in your workers’ comp policy, employer’s liability insurance provides protection when an employee says you are liable for an injury and decides to sue.

Employer’s liability insurance can help cover:

• Attorney’s fees
• Court costs
• Settlements

Even if a lawsuit is frivolous, you could find yourself paying for a costly legal defense. That means it’s worth getting workers’ comp even if you consider your restaurant, bar, or catering business low-risk. In most states, it's also required by law if you have employees.

The amount you pay for workers’ compensation is a specific rate for every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and payroll (per $100).

The formula providers use in underwriting to calculate workers' comp rates is:

Each state sets its own laws for workers’ compensation requirements. For example, every restaurant in New York must carry workers’ compensation insurance for its employees – even part-time workers and family members. However, Alabama restaurants are only required to carry workers’ compensation when they have five or more employees.

Independent contractors, sole proprietors, and partners typically don’t have to carry workers’ compensation insurance, but you can purchase a policy to protect yourself, too. It's a good idea to carry this coverage for financial protection against work injuries, which health insurance might not cover.

In certain states, restaurants, bars, and other food service businesses must purchase coverage through a monopolistic workers' comp state fund. Those states are:

• North Dakota
• Ohio
• Washington
• Wyoming

If you purchase workers’ comp through a monopolistic state fund, it might not include employer’s liability insurance. However, you can purchase it as stop gap coverage from a private insurance company.

Every day, your workers place themselves at risk. Kitchens, restaurants, and bars are full of opportunities for serious injury. More accidents mean more insurance claims – and that makes the cost of your insurance go up.

Whether you’re the owner of a restaurant, deli, or concession stand, you can control your business’s risks. By providing safety training to your employees, developing a safe work environment, and other techniques, you can reduce workplace injuries along with insurance rates.

Workers’ compensation offers protection in the event of an employee injury, but it doesn’t cover every risk. Owners of food and beverage businesses should also consider:

Business owner’s policy (BOP): A BOP defends against the most common risks in the food service industry. It bundles general liability insurance with commercial property insurance at a lower rate than purchasing both policies separately.

General liability insurance: This policy protects against common risks, such as customer injury or damage to customer property. It’s often a requirement for a commercial lease.

Commercial auto insurance: This policy can cover expenses related to accidents involving your work vehicle. Most states require this coverage for vehicles owned by a business.

Liquor liability insurance: This policy covers risks involved with serving alcohol, such as an intoxicated customer damaging another customer’s property or causing an injury.

Cyber liability insurance: Cyber insurance helps food and beverage businesses recover financially from cyberattacks and data breaches.

Are you ready to safeguard your food service business with workers’ compensation or another type of insurance? Complete Insureon’s free online application to compare quotes from top U.S. carriers. Once you find the right policy, you can begin coverage in less than 24 hours.