Many of the risks that your restaurant faces, such as employee dishonesty, product liability, and employment practices liability are well-known. What is the biggest risk to your restaurant’s success? A fire in your restaurant or an outbreak of foodborne illness could quickly cause bankruptcy.
According to the National Fire Protection Association, cooking equipment was responsible for 14% of all non-residential structural fires in the US from 1999 to 2002. It is second only to arson.
According to the CDC, some food-borne diseases are on the rise between 2005 and 2006. The number of food imports into the USA has increased by 50% over the last few years. The FDA can currently inspect only about 1% of the approximately 25,000 shipments arriving in the US daily from 100 countries.
There is a greater chance of being linked with a food-borne illness than ever before.
Increased importation food from all corners of the globe
Infrared inspections by the FDA are less effective
Advanced methods, such as pulsed field gel electrophoresis or PFGE (pulsed-field gel electrophoresis), can link food borne disease to its source.
High turnover rates in the industry make it difficult to educate and train employees about food safety.
The law of strict liability and the doctrines that constitute constructive knowledge
Restaurants need to be vigilant about the supply chain and take proactive steps in order to ensure that the quality of the food they serve and the safety of their customers. It doesn’t suffice to just look at your renewal insurance and make sure you have first party food contamination, business interruption, and fire insurance.
Many restaurant owners feel inadequate security. They are unaware that they are underinsured and end up with insufficient coverage. After a loss, there is no way to change your policy provisions or limits of coverage.
ISO Commercial Insurance Services is fairly consistent in the standardization of coverage forms for real estate and business income. However, this is not true for first-party food contamination. (See the September Issue of Upscale Quality Insurance Newsletter).
You can control your exposure by:
You need to determine the coverage you need.
Knowing what triggers coverage.
Determine how long your carrier will continue paying your loss of income, advertising expenses, employees’ lost wages, and tips to your servers after you reopen.
To prevent these losses, loss control and safety measures must be in place.
What should you do?
Get a certified appraisal to determine the cost of reconstruction for your building.
Find out the replacement cost for all of your equipment, inventory, or business personal property.
Examine the terms of your lease to determine if it applies to property insurance requirements, especially for improvements and betterments.
All financial records, accounts receivables and customer lists should be kept in a safe place.
Complete a worksheet on business income loss.
Do a cost analysis of the potential event and post-crisis communication costs, including the cost of hiring a public relations company.
Obtain a loss control inspection by a qualified restaurant loss control specialist
You should implement an ongoing loss control and safety plan, which includes an emergency/crisis response plan.
You should carefully read and understand the policies that cover your loss and pay for it.
Fire insurance, including coverage for business interruption or food contamination, is very affordable when you compare the premiums and the risk you transfer to the insurance company. Even though the risk of food or fire contamination is unlikely, it can have devastating consequences.
There’s no risk in your restaurant with affordable premiums and free coverage analysis