A restaurant owner’s worst enemy is fire.
Most restaurant fires result in near or total devastation. Because of this, having the right amount of insurance coverage is vital to cover the property damage and lost income that might result from both a small kitchen grease fire all the way to a massive, devasting fire.
Replacement Cost
A restaurant owner wants to make sure that if they own the building, it is insured for replacement cost. Replacement cost coverage is a simple way of making sure that the property can be built by today’s standards and costs (what you paid for 10 years ago shouldn’t be your insured value) since both construction costs, materials, and building codes have changed from the original building. Even simple things like ADA-compliant bathrooms and dining rooms can add tens of thousands of dollars to your rebuild.
Whether the business owner owns the building or not, I always ask that they insure their contents (furniture, fixtures, inventory, office equipment, supplies) for replacement cost. Underestimated values could result in surprise (not the good kind) with not enough money to open your doors in a timely fashion…if at all. It is a good idea for you to sit down with your agent at least once a year and go over your values to make sure they are still up-to-date with current construction cost for your area.
Loss of Use or Business Income
Another key element in the insurance equation is Loss of Use or Business Income insurance. This insurance protects your revenue stream when you have a loss. If you are forced to close your restaurant due to a loss, this coverage will provide you with lost revenue while your establishment is being repaired or rebuilt. This is another area of your insurance that needs to be reviewed and revised every year.
