Most commercial landlords require $10 million or $20 million in public liability cover, including alfresco and council-approved outdoor seating areas.
Add deterioration of stock cover to protect perishables like meat, dairy and seafood if a power outage or equipment breakdown spoils your fridges and freezers.
Cyber liability is a separate policy from your standard pack and is essential for protecting POS systems, online bookings and customer data.
Food delivery vehicles need commercial motor cover, and you can add employee dishonesty cover to protect against staff theft of cash or stock.
What types of insurance do restaurants and hospitality businesses need?
Because restaurants and other hospitality businesses have many moving parts, there is no one-size-fits-all insurance policy. In fact, there are dozens of overlapping policy inclusions to choose from.
It is important that you familiarise yourself with all of your options to ensure a small setback doesn’t turn into a serious threat. However, there is no need to be overwhelmed; most insurers will work with you to customize a policy that meets your exact business needs. Just make sure they explain any exclusions and limitations that apply to your policy.
To get you started in your search, here is a list of the policy types you are likely to encounter in your search results. They can be categorized into those that are required by law, and those that are optional.
Insurance products that are required by law
Workers compensation. Protects you and your employees if you are injured on the job.
Public liability. Protects your customers if they are injured or become ill in your restaurant.
Third-party commercial motor insurance. This is only mandatory if your business uses a vehicle, such as a food delivery truck. It protects third parties from damages caused by your vehicles.
Optional insurance products
Theft of contents and stock. Covers you for the theft of any contents or stock within your business. If you transport these goods, you’ll need the optional “goods in transit” policy option.
Theft or damage to money. Covers you for any loss of cash due to theft or damage (such as a fire originating in the kitchen).
Building and contents insurance. Covers you for damage to fixtures, fittings, contents and stock resulting from a number of unexpected situations including fire, explosion, water damage and vandalism.
Machinery breakdown. Covers you for unexpected equipment breakdown. If your freezer breaks down, it will cover the cost of the freezer's repair or replacement, but not for any spoiled food that results.
Management liability. Covers you and the company from liability due to business mismanagement.
Deterioration of stock. Covers you for the loss of any stock that has spoiled or deteriorated as a result of equipment malfunction.
Portable and valuable items. Covers loss or damage to valuable items that you carry with you.
Tax probe. Covers fees you incur if an official authority audits your business.
Make sure you read the PDS
Finder research suggests 23% of Australians can't be bothered reading the PDS. A PDS includes a comprehensive list of all the inclusions and exclusions of a policy.
Finder survey: How many Australians from different states have business insurance?
Response
WA
VIC
SA
QLD
NSW
I don't own a business
79.34%
64.03%
73.12%
73.73%
66.06%
Yes
11.57%
19.47%
8.6%
13.82%
18.96%
No
9.09%
16.5%
18.28%
12.44%
14.98%
Source: Finder survey by Pure Profile of 1112 Australians, December 2023 Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.
Key risks when managing a restaurant
Opening a restaurant can be a highly rewarding experience, but it’s not without its challenges. It pays to be aware of the risks so that you can take the proper precautions. Here are some of the risks you might face.
Cooking Fires. A fire in the kitchen can cause significant loss of life and property. Make sure your kitchen is up to code, keep the exhaust ducts clean and have an evacuation plan in place for employees and customers.
Food poisoning. Food poisoning can lead to lawsuits and negative publicity for your restaurant. Minimise the chances of this occurring by storing food properly, using separate cutting boards for raw meat and thoroughly washing fruits and vegetables.
Identity theft. Restaurants can be a revolving door for employees. Rogue employees could wreak havoc if they got their hands on another employee’s records or a customer’s credit card details. Make sure you have a secure document management system in place.
Slips and falls. The hustle and bustle of a busy restaurant create the perfect atmosphere for slips and falls. Keep your floors well-maintained by mopping regularly and by promptly fixing leaks, cracks and loose tiles.
Cuts and burns. The kitchen environment lends itself to cuts and burns. Make sure you have a first-aid kit on hand and that you keep it regularly stocked. Protect employees by equipping them with the correct personal protective equipment.
Theft and vandalism. Small businesses are prime targets for thieves and vandals. You can protect your business by installing a security system and making it clear that you don’t keep cash on your premises overnight.
Talk to a broker about restaurant and hospitality insurance
Receive a Quote for Business Insurance
If you are ready to speak with a consultant about different business insurance options available, simply enter your details in the form. Keep reading if you want to learn more about the different types of cover available.
The cost of restaurant and hospitality insurance varies significantly. It depends on several factors including the type of business, its location, size, annual revenue, number of employees, claims history, the level of coverage chosen and the excess applied to the policy. It is best to obtain multiple quotes tailored to your specific business needs to understand the exact cost.
If you need to make a claim on your hospitality insurance, you should contact your insurer promptly. Document the incident thoroughly with photos, incident reports and witness details if applicable. Gather all relevant documentation such as invoices for damaged property or police reports for theft. Follow your insurer's specific instructions regarding the claim process and provide all requested information accurately.
Hospitality insurance typically covers alcohol related incidents under its public liability component. This provides protection against claims for injury or property damage to third parties arising from the serving or consumption of alcohol on your premises. For businesses that serve alcohol, it's important to ensure your policy specifically includes or endorses liquor liability coverage as standard public liability may have limitations. Always review your policy’s terms and conditions.
Yes, there are common exclusions in restaurant and hospitality insurance policies. These often include general wear and tear, damage resulting from poor maintenance, pre-existing conditions and intentional acts. Certain natural disasters like floods in specific high-risk areas may also have sub-limits or require separate specialised coverage. Acts of terrorism and cyber attacks are generally excluded unless you have specific cyber insurance. Always read the PDS carefully.
Insurance for a food truck has some distinct differences compared to a traditional restaurant. While public liability insurance remains crucial for both, food trucks require comprehensive commercial motor insurance to cover the vehicle itself as well as third party damage. Additionally, coverage for contents and stock needs to account for their mobile nature. Business interruption insurance for a food truck may also have different considerations based on the mobility of the business. Many insurers offer specific "mobile business" or "food truck" policies designed for these unique operational needs.
You should review your restaurant or hospitality insurance policy at least once a year, typically before its renewal date. It is also important to review your policy whenever there are significant changes to your business operations. This includes expanding your services, purchasing major new equipment, increasing your staffing levels, changing your menu or experiencing a substantial increase in revenue. Regular reviews ensure your coverage remains adequate and aligns with your current business risks and needs.
The consequences of not having mandatory restaurant insurance can be severe. Businesses found operating without required coverage, such as workers compensation or public liability, can face significant legal penalties including large fines and potential business closure. Without insurance, the business owner would be personally liable for any claims for employee injury or public harm which could lead to substantial financial loss, bankruptcy and a damaged business reputation.
Business interruption insurance can cover damage from natural disasters provided the natural disaster is an insured event under the property damage section of your policy. For business interruption to activate, the interruption to your business must be a direct result of physical damage to your property caused by an event covered by your property insurance. It is vital to check your policy's PDS for specific definitions of natural disasters and any applicable exclusions or sub-limits.
Alex Reid is Finder’s business insurance cadet. He has a Master of Marketing from the University of Technology Sydney, with a background in business and sales. When not writing about business insurance for Finder he's a keen scuba diver, recently completed his 200th hour underwater and his PADI Divemaster certification. Before working at Finder he lived in Hangzhou China, where he studied Mandarin and Chinese culture.
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Liability insurance is a broad term that describes a few types of business insurance cover. The type you need will depend on the nature of your business.
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