Restaurant Insurance Massachusetts Policy Information
Restaurant Insurance Massachusetts. Restaurant ownership is hard work, and to open a restaurant in MA requires a substantial initial cash layout and lots of supervision of employees. Nonetheless, for the entrepreneur, restaurant businesses potentially provide good income potential. Protecting such a business with small business restaurant insurance Massachusetts designed for eating establishments makes a lot of sense.
Restaurants serve a full menu of food items which are served by a waitperson and consumed on the premises. They may serve beer, wine, or other alcoholic beverages. Others offer take-out or delivery services. A restaurant may specialize in a specific type of cuisine or may serve a general menu. Some entertain customers with contests, music, or other live entertainment, or promotions such as "happy hour" with discounts available during non-peak hours. Some have small dance floors.
One of the greatest perils facing the restaurant industry and all restaurant owners is the risk of fire. Each year, thousands of restaurants receive structural damage from fires, amounting to millions of dollars in damages. Around 65 percent of all fires result from cooking accidents, while around one in 10 occurs as a result of heating issues. Less than half of all fires originate in areas equipped with fire alarms or automatic systems to extinguish fires.
Restaurant insurance Massachusetts protects your eating establishment from lawsuits with rates as low as $77/mo. Get a fast quote and your certificate of insurance now.
What Type of Restaurant Insurance Does Your Business Need?
Restaurant structure fires are usually more damaging in terms of costs than those in residential properties. Fire is a common hazard that all restaurant owners face, but it is not by itself. A comprehensive policy for restaurants is necessary to ensure that restaurateurs weather any peril without losing their businesses. You may be required as the owner of a restaurant business to carry several insurance coverage types. The law requires some types of insurance, while financial institutions may require others if you have a large loan or you are paying on a mortgage for your business. Further, if you lease the building in which you do business, your lease may have a clause requiring that you buy this type of restaurant insurance Massachusetts to stay compliant.
Some types of insurance to consider for your restaurant business include:
- Worker's comp insurance. In MA, it is essential that eating establishments, maintain worker's compensation policies to protect their employees while they do work on the premises. This insurance covers work-related accidents, injuries, and deaths.
- Unemployment insurance. MA requires UI insurance for employees. Sometimes this is included in the taxes that the business pays; other times it is a separate cost for the business owner.
- General restaurant insurance coverage. This type of coverage is designed for restaurant owners, and it covers property and liability damage based on the specific eating establishment's potential perils.
- Commercial auto insurance. If your restaurant delivers food in company-owned cars or if employees use company-owned vehicles while on the clock, this type of Massachusetts restaurant insurance protects the business from liability.
- Life insurance. If you have a large loan for your business, you may be required to maintain life insurance to cover the lender's output of capital should you die.
Liability Insurance For Restaurants
Owning a restaurant can be a risky endeavor. There are several potential liability risks involved in the operation of a restaurant, but restaurant insurance can ensure the business is covered if the unexpected happens. Some types of liability coverage available for owners of restaurants include:
- General liability insurance. Premise liability and operations liability ensures that if a customer or employee is injured on your business' premises, you are protected. Lawsuits often arise because of poorly kept parking lots or objects placed in a manner that causes a tripping hazard, leading to a fall injury. This restaurant insurance Massachusetts coverage takes care of damages and medical bills for the injured party.
- Product liability insurance. If the food you serve sickens a patron, product liability insurance can help. Oftentimes food-borne illness is the root of product liability claims. This insurance protects your business from the expense of claims and lawsuits resulting from your restaurant's actions in preparing and serving the food.
- Liquor liability. If your MA restaurant serves alcohol, then liquor liability insurance protects you from damage when an intoxicated patron causes property destruction or harm to another person.
These types of coverages generally pay for the legal fees required to represent your business in the event of litigation against you.
Property Coverage For Restaurant Owners
Property insurance for restaurants ensures that damage to the property does not put your business in a hard position financially. This may include damages resulting from crime, theft, fire, weather, or electrical issues in the building that houses your establishment. Within this type of coverage, you will often find:
- Building insurance. Coverage to compensate you for damages to the structure of your restaurant is an essential type of coverage for restaurant owners.
- Contents insurance. The contents of your restaurant are often expensive to replace. This may include furniture, flooring, lighting fixtures, and equipment used in the kitchen.
- Equipment breakdowns. Equipment that breaks down can mean a loss in business for your restaurant. Freezers, dishwashers, air conditioners, and other essential types of equipment are necessary for running your business, and equipment breakdown insurance ensures that you can get your equipment up and running if some crucial components fails.
- Food contamination insurance. Mechanical failures and power outages may lead to food defrosting and becoming unusable. This coverage helps you recoup costs from such events.
- Loss of income insurance. Should your restaurant need to close its doors due to a covered peril, loss of income insurance helps you stay afloat until you reopen again, providing money for wages, monthly expenses, and more.
Does Your Business Need Flood Insurance?
Although the coverage provided for damage to your MA restaurant by flood or high water varies between companies, many policies specifically rule out this type of coverage, which necessitates purchasing a separate policy for water damage/flood damage/sewage backups, and so forth. Work with an agent to determine if purchasing a rider or addendum to your policy is important to your business. This is particularly crucial for restaurants operating in flood zones.
Tailoring Massachusetts Restaurant Insurance To Your Needs
Because the cost of operating and maintaining a restaurant varies so much from one business to the next, it is important to work with a seasoned commercial agent who can help you determine what your risks are and how to protect you against perils that influence your business' bottom line. Obtain multiple quotes for policies, and review each policy before signing on the proverbial line to ensure you get the most bang for your business' buck without giving up needed protection that ensure the health of your MA eating establishment.
Massachusetts Restaurants - Risks & Exposures
Premises liability exposures are high due to public access to the premises. Serving of alcoholic beverages can impair customers' motor abilities and increase the likelihood of trips, slips, or falls. Servers move throughout the premises with trays of food and beverages, generating spills that can result in slips and falls. Spills should be cleaned up promptly. Temperatures of hot beverages must be limited to reduce injuries due to scalding.
Lists of ingredients should be posted to prevent allergic reactions. Customers may become ill from ingesting contaminated food or beverages. Cleanliness standards must be monitored. Floor coverings must be in good condition with no frayed or worn spots on carpet and no cracks or holes in flooring. Dance floors must be clean, smooth, and free of debris. Steps and uneven floor surfaces should be prominently marked. All fire exits should be plainly visible from any part of the premises and kept unlocked from the inside during business hours.
Backup lighting should be automatically activated in the event of a power outage. Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slips and falls. Outdoor security and lighting must be consistent with the area. All employees must be instructed in proper customer handling, including how to deal with disgruntled or intoxicated customers.
Property exposures are substantial from cooking equipment, electrical wiring, refrigeration units, and heating and air conditioning systems. All wiring should be current, up to code, and well maintained. All grills and deep fat fryers must have automatic fire extinguishing protection, hoods, and filters. There should be fuel shut-offs and adequate hand-held fire extinguishers. The kitchen must be kept clean and grease free to prevent the spread of fire.
Filters should be changed frequently. Ammonia used in refrigeration units can explode. Spoilage exposure is very high. A small fire or a power outage of even moderate duration can cause all fresh and frozen goods to be condemned as unfit for consumption or sale due to the potential for contamination. If alcoholic beverages are served, the liquor should be stored in areas inaccessible to customers. Business income with extended time period coverage should be purchased. Losses can be minimized if there is an alternative location to continue operations and not lose customers. Returning to normal operations after a loss is difficult due to the lag time between reopening and returning to full income as regular customers may have moved to a new "favorite" restaurant.
Equipment breakdown exposures can be high as operations are dependent on refrigeration and cooking equipment.
Workers compensation exposures come from slips, falls, cuts, puncture wounds, burns, foreign objects in the eye, hearing impairment from noise, heavy and awkward lifting, and interactions with customers. Employees must be trained on the carrying of heavy dishes between the kitchen and the serving areas. Food and beverage handling can result in passing bacteria or viruses, resulting in illness.
While smoking is prohibited in bars in many states, others still permit this. In those states, workers can incur occupational disease from the ongoing inhalation of secondhand smoke. As with all retail businesses, hold-ups are possible, so employees should be trained to respond in a prescribed manner. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. The employees in many restaurants tend to be minimum wage and turnover may be high. Company incentives to encourage long-term employment are positive signs of management control.
Liquor liability exposure can be very high in states that hold restaurants liable for injuries resulting from alcohol consumption. The type and amount of alcohol served, and the type of clientele directly impact this exposure. Failure to comply with state and federal regulations can result in the loss of a liquor permit.
There must be a set procedure to check ages of anyone attempting to purchase alcohol, as well as monitoring so customers purchasing alcoholic beverages do not then give them to patrons who are underage or intoxicated. All employees who serve alcohol should be trained in recognizing signs of intoxication. A procedure should be in place to deny serving underage or intoxicated patrons. Programs that encourage designated drivers or offer free taxi service can be useful.
Crime exposures are from employee dishonesty and money and securities. Criminal background checks should be conducted on any employee handling money. If the restaurant uses expensive cuts of meat or serves alcohol, theft of stock could be a problem. Cash receipts may be high. There must be consistent rules on cash drawer management and job assignments. Money should be regularly stripped from the cash drawer and irregular drops made to the bank during the day to prevent a substantial accumulation of cash. Closing time is the most vulnerable time so security procedures should be in place to prevent hold-ups. There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements.
Inland marine exposures include accounts receivables if the restaurant offers credit to customers, computers for tracking inventories and payrolls, and valuable papers and records for supplier and employee information. Duplicates of all records should be kept off-site. Cash registers, cooking equipment, and office equipment may have computer applications. There may be a bailees exposure from offering coat check services to customers or from storing entertainers' property. Some establishments will have paintings, statues, or other fine arts on premises.
Products liability exposure is due to food poisoning, contamination, and allergic reactions from food and beverages carried off premises for consumption. Monitoring the quality of food received, posting lists of ingredients, and maintaining proper storage temperature can reduce this exposure.
Business auto exposure may be limited to hired or non-owned liability exposures from employees running errands. If the restaurant offers delivery services, all drivers must have appropriate licenses and acceptable MVRs. Company vehicles should be used for all deliveries. Maintenance should be documented. If employees use their own vehicles, the vehicles should be checked for maintenance and upkeep.
Because most personal auto policies do not provide coverage when the vehicle is used for commercial purposes, requiring proof of insurance will be of little assistance. If the restaurant offers valet parking, garagekeepers coverage should be purchased to cover damage to customers' vehicles. MVRs and driving records should be obtained for any employee driving or parking customers' vehicles. If valet parking services are contracted to another firm, the restaurant should be named as additional insured on the contractor's policy.
Insurance Classification Of Restaurants
Insurers classify food service businesses using several coding systems. You can wind up paying more for your insurance if your restaurant is not properly classified - like a take out lunch place being coded a full service restaurant with liquor. Below are the most commonly used coding systems for restaurant insurance:
- ISO General Liability Codes: 16900, 16901, 16902, 16910, 16911, 16915, 16916, 16920, 16921, 16930, 16931, 16940, 16941
- NAICS CODE: 722511 Full Service Restaurant
- SIC CODE: 5812 Eating Places: Establishments primarily engaged in the retail sale of prepared food and drinks for on-premise or immediate consumption. Caterers and industrial and institutional food service establishments are also included in this industry. Includes: Box lunch stands, Buffets (eating places), Cafes, Cafeterias, Carry-out restaurants, Caterers, Coffee shops, Commissary restaurants, Concession stands, prepared food (e.g., in airports and sports arenas), Contract feeding, Dairy bars, Diners (eating places), Dining rooms, Dinner theaters, Drive-in restaurants, Fast food restaurants, Food bars, Food service, institutional, Frozen custard stands, Grills (eating places), Hamburger stands, Hot dog (frankfurter) stands, Ice cream stands, Industrial feeding, Lunch bars, Lunch counters, Luncheonettes, Lunchrooms, Oyster bars, Pizza parlors, Pizzerias, Refreshment stands, Restaurants, Restaurants, carry-out, Restaurants, fast food, Sandwich bars or shops, Snack shops, Soda fountains, Soft drink stands, Submarine sandwich shops, Tea rooms, Theaters - dinner.
- Suggested Workers Compensation Codes: 9082, 9083, 9084
Massachusetts Economic Data, Regulations And Limits On Commercial Insurance
If you are thinking about starting a business in the Massachusetts, it's important that you have an understanding of the economic trends and commercial insurance requirements in the state before you set up shop.
Economic trends are important, as they indicate whether or not the area offers a strong economy that will be able to support your business. You also need to know what type of commercial insurance you'll need to carry so that you can plan accordingly and ensure that you are complaint with the law.
To help you determine if the Bay State is the right location for the business you are thinking about opening, below, you'll find an overview of MA's current economic trends, as well as the types of insurance policies you'll need to carry.
Economic Trends For Business Owners In Massachusetts
Unemployment rate is a good indicator of a state's economy. The lower the rate, the more job opportunities there are, which is direct reflection of the health of businesses.
As per the Bureau of Labor Statistics, the unemployment rate in Massachusetts was 2.8% in December, 2019. That's 0.7% lower than the national average, which was 3.5% in December, 2019. This indicates that the state offers a strong workforce and that there are enough jobs to support the residents of the state.
While regions throughout the area are seeing business growth, there are certain areas in particular that are seeing more growth than others. This includes large metropolitan areas and the regions that surround them, including:
- New Bedford
Several industries are doing very well in the state of Massachusetts; however, there are particular sectors that are seeing more growth than others and are truly thriving in this part of the country. These industries include:
- Advanced manufacturing
- Commercial fishing
- Financial services
- Hospitality tourism
- Information technology
- Medicine and life sciences
If you are thinking about starting a business in any of these industries, chances are good that you will find the success you are looking for in the state of Massachusetts.
Commercial Insurance Requirements In Massachusetts
The Massachusetts Division of Insurance regulates insurance in MA. Massachusetts mandates very few forms of insurance coverage by law. They enforce worker's compensation.
Massachusetts requires you to have worker's compensation insurance if you hire even one employee on a regular basis. This includes part-time employees, family members, minors, and immigrant employees. It is not required for independent contractors, but employees in domestic service must be covered if they work at least 16 hours a week.
Massachusetts also requires all business-owned vehicles to be covered by commercial auto insurance. Other types of business insurance that business owners should carry depend on the specific industry.
Additional Resources For Food Service Insurance
Learn about restaurants, bars, liquor stores commercial insurance coverages. See how small business food service insurance help protect against accidents, oversights and lawsuits resulting from business operations.
- Bagel Shop
- Beer Distributor
- Coffee Shop
- Concession Stand
- Farmers Market
- Grocery Store
- Internet Cafe
- Liquor Liability
- Liquor Store
- Sandwich Shops
Bars, taverns, restaurants, cafeterias, and other eating and drinking places have significant insurance needs in three separate areas.
The first is property protection for physical damage to equipment, furnishings, building and supplies due to fire and other perils.
The second is premises liability coverage to protect customers due to slips, trips and falls on the premises, as well as for consumption of food products.
The final need is protection for employees due to frequent cuts, burns and other common employee injuries. Establishments that sell or serve liquor or other alcoholic beverages also need liquor liability coverage.
Slips and falls, along with customer illness due to being served tainted food or drink, are the primary liability exposures. The commercial general liability (CGL) is used to provide coverage for these exposures.
It is important to note that liquor liability coverage is excluded under the CGL form if a risk is in the business of serving alcoholic beverages. Many establishments in this category should therefore consider purchasing a separate liquor liability coverage form.
Restaurant kitchen equipment, inventory and dining room fixtures are common exposures for most eating and drinking places. Many of these establishments do not own the buildings they occupy but have long-term leases and have invested money in various improvements and betterments, including cooking equipment, dining room decorations and permanent fixtures.
There are major differences in the food service business and the very different exposures they present. There are many specific types of restaurants to cater to individual needs and tastes. There a several main commercial insurance classifications for food service.
Concessionaires: The most basic "eat on the run" type of restaurant is not classified as a restaurant at all but is referred to as a concessionaire. Class Code 11168: Concessionaires applies and the accompanying note states that all food and beverages must be sold through hawking or peddling. There can be no location to which customers walk up and purchase the food. This classification includes food sold at sporting events, exhibitions, and parks.
Caterers: Are very similar to restaurants with significant differences. The caterer prepares the meals at its own kitchen or commissary and then transports it to the locations where it will be served. Some final preparation may take place at the final location but the majority generally takes place at the caterer's location. The caterer's employees serve the meals and beverages and oversee the consumption of the food.
Restaurants: The way restaurants are categorized and classified uses the percentage of alcoholic beverage sales as the first criteria, followed by other features or operations.
Common to all of these categories is that entertainment-oriented venues such as nightclubs, cabarets, dance halls, discotheques, and comedy clubs must be separately classified and rated. This means that the sales that those entertainment activities generate must be broken out and rated separately from the sale or food and drink.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Spoilage, Equipment Breakdown, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonowned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivables, Bailees Customers, Fine Arts, Cyber Liability, Employment-related Practices, Environmental Impairment, Liquor Liability, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.
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