The Importance of General Liability Insurance for Restaurant Owners

Every restaurant needs to carry several different types of restaurant insurance in order to protect business interests against financial loss. One of those policies should be general liability or commercial general liability (CGL), which is designed to protect the restaurant owner against legal claims in the event of an accident or negligence involving a third party.

Restaurant Risks

Restaurant owners can be held liable if a patron is injured on the property, or if the patron's personal property is damaged and the restaurant is found to be negligent. This includes slips and falls and being injured by hot food or grease. It may also covers you if an employee accidentally injures a patron or damages the personal property of the patron. Without general liability insurance, your restaurant could be forced to fully pay for the expenses of the accident.

General Liability Insurance

General liability insurance protects the restaurant and owner against claims of negligence or accidents that happen on the property. For example, if a person were to walk into your restaurant, slip on the wet floor and sue the restaurant for medical bills, your general liability insurance can help pay your legal fees (whether you won or lost the case). If you lose the case, the liability insurance can cover settlements as well.

Are Businesses Required to Have General Liability Insurance?

That depends on the state in which your business is located. Most states do not require restaurants to have general liability insurance. However, businesses that are structured as sole-proprietorships or partnerships should absolutely consider getting limited liability insurance. These two types of business structures can put the owners' personal property, as well as the business property, at risk if the business were to be sued for personal injury.

Risks of Not Having CGL Insurance

Court costs, legal fees and court mandated fines can be extremely expensive for restaurant owners. Think of the property and money you could lose if you were forced to pay for a lawsuit out of your business’ bank account and your own pocket. You could potentially be forced to file bankruptcy and lose your personal property.

CGL Insurance Packaging

CGL is typically packaged with the business' property insurance. However, business owners should review their policies and speak with their insurance agent to ensure the CGL is listed in the restaurant insurance policy. If not, it will need to be added to the policy, or the owner will have to purchase a separate CGL policy.