Considerations for Your Restaurant Insurance

Legal & Compliance Consulting

Insurance probably isn’t your favourite subject, but a critical one nonetheless. If an emergency or accident took place in your kitchen, your insurance coverage would serve as the lifeline that covers you from certain liabilities and damage costs you wouldn’t want to be fully responsible for. 

Business insurance for restaurants doesn’t have to feel complicated or keep you up at night. Let’s dive into the necessity of business insurance for restaurants and commercial kitchens. 

Budget Considerations 

First off, there’s no one-size-fits-all insurance plan for commercial kitchens. Costs vary wildly based on factors such as the type of coverage, the size of your kitchen (or restaurant), location and more. However, there are some general categories and coverage plans that apply to a wide range of commercial kitchens. 

Basic Commercial General Liability (CGL) starts around CAD $360/year for basic coverage, or approximately $1,200–$1,500 annually for comprehensive protection plans. 

Comprehensive restaurant insurance plans usually cost CAD $1,000 to $3,000 annually. 

Short-term policies, which may include plans such as 21-day coverage, may cost $250 to $300 for the term. 

Strongly Recommended Insurance Coverage for Commercial Kitchens 

Some forms of insurance are non-negotiable, and going without it can lead to legal trouble. Others might not be essential, but are highly recommended, depending on the type of commercial kitchen you plan to open. 

• Commercial General Liability (CGL)—Provides coverage for third-party bodily injury and property damage claims directed at your establishment. It usually covers products-completed operations, personal injury, and advertising injury.

• Product Liability Insurance—This offers protection against claims involving food-borne disease, allergic reactions, or contamination. 

• Inland Marine (Tools & Equipment) Insurance—This covers the cost of damaged or stolen kitchen equipment.

• Equipment Breakdown Insurance—This offers coverage against unexpected kitchen appliance failures, repair/replacement costs, and losses caused by spoiled inventory. 

• Business Interruption Insurance—Provides coverage for income and operational budgets lost during temporary closures (i.e., such as those triggered by COVID-19 lockdowns) and events related to fires or mechanical failures.

• Liquor Liability Insurance—Provides coverage for establishments serving alcohol, offering protection against liabilities related to alcohol intoxication. 

• Workers’ Compensation Insurance—Mandatory coverage for all commercial kitchens and establishments that hire employees, providing coverage for workplace injuries and wage replacement. 

Additional Coverage to Consider 

There are some insurance coverage plans to consider, even if they’re not essential or highly recommended. They can cover aspects of your commercial kitchen you deem vulnerable and need additional protection. 

• Additional Insured Requirement—Provides coverage against liability claims targeted toward renters in cases where commercial kitchen owners rent their space. 

• Commercial Automobile Insurance—This type of insurance is mandatory for commercial kitchens that also operate delivery cars or mobile food trucks to protect against vehicular accident liabilities. 

• Umbrella Insurance—Provides extra coverage beyond the standard limits of a policy in instances of significant lawsuits or liability claims. 

• Product Recall Insurance—Benefits restaurants and commercial kitchen spaces that also produce packaged food products that may be recalled due to contamination risks or labelling errors. 

How to Choose an Insurance Policy for Your Restaurant

With all these options available, the question remains: “What insurance policy is best for your commercial kitchen?”

First and foremost, budget for the essential insurance policies—you’ll need them anyway to comply with Canadian law. That said, there are some strategies you can employ to save on your insurance premiums. 

Consider purchasing your policies together—a.k.a “bundling”—from the same insurance provider. This usually results in discounts and lower fees. 

If you can free up some funds, invest in automated risk management systems, such as automated hood cleaning and oil management devices, which can significantly reduce kitchen hazards. Commercial kitchens that use these devices can reduce their insurance premiums by up to 15%.  

And you can always negotiate for a discount on some of your insurance premiums. Depending on who your provider is, you might ink a deal that saves you on insurance costs. 

Insurance Providers for Restaurants and Commercial Kitchens 

Now that you understand the basics of insurance for restaurants, we’ve provided you with a list of insurance providers known to offer reliable coverage for commercial kitchens and restaurants. Check them out as you research the best coverage plans for your business: 

• Federated Insurance  
• Chef Insurance  
• Zensurance  
• KASE Insurance  
• FLIP (Food Liability Insurance Program)  
• Scrivens Insurance Brokers  
• Cansure  
• Arthur J. Gallagher (AJG) Canada  
• TruShield Insurance  
• Apollo Insurance  
• Aviva Canada  
• TD Insurance for Business