Reimagining Liability and Insurance for Restaurant Operators

Recent data from Aon and CoverWallet reveals that approximately 46% of surveyed restaurant operators lack workers’ compensation insurance, underscoring a critical need for a shift in perspective toward liability and insurance considerations.

While the day-to-day operations and financial concerns understandably occupy the minds of many restaurant operators, the results of a survey involving 250 independent operators, conducted by risk management company Aon and its subsidiary CoverWallet, emphasize the importance of heightened attention to legal liabilities. The survey exposes that more than half (56%) of restaurant operators lack a comprehensive understanding of the risks associated with running their businesses, encompassing safety hazards, cyber attacks, and various liabilities arising from serving alcoholic beverages.

Randy Storm, the Director of Sales and Account Management for CoverWallet, highlights the urgency for restaurant owners to reassess their approach, stating, “Restaurant owners are moving at the speed of light, and with the current economic climate, margins are king.” Storm emphasizes that misconceptions about the cost of insurance coverage may lead operators to underestimate the potential financial impact in the event of unforeseen incidents.

Among the crucial insurance coverage types for restaurants, workers’ compensation insurance and cyber liability insurance stand out. Workers’ compensation insurance covers employee injuries and job-related illnesses, yet surprisingly, 115 out of the 250 surveyed operators lack this coverage. Storm underscores the business risk and legal consequences of noncompliance, including fines and potential stop-work orders. He also emphasizes the significant protection it provides for both employees and business owners in the face of rising medical costs.

Cyber liability insurance, essential in an era marked by data breaches and ransomware attacks, is another area where operators may be leaving themselves exposed. The survey reveals that 218 out of 250 operators do not have cyber security insurance. Storm emphasizes the critical nature of this coverage, noting that it addresses basic costs associated with breaches, mandatory notifications to impacted parties, and required service monitoring for potential exposure of personal identifiable information.

Storm’s overarching advice for restaurant operators is to collaborate with agents or brokers to ensure their insurance coverage is current and comprehensive. He urges operators to seek advice when business conditions change, such as fluctuations in the number of employees, to align coverage with potential risks. In conclusion, the survey underscores the necessity for restaurant operators to proactively manage their liability and insurance considerations, ensuring compliance and comprehensive coverage in an ever-evolving business landscape.