Opening a restaurant is a busy and exciting endeavor. But, despite the chaos, it is important that restaurant owners ensure they are keeping insurance and liability in mind.

By Maxime Rieman

Insurance is a requirement for all restaurant owners, and all food-related businesses should obtain some sort of restaurant-specific insurance to make sure they are adequately covered. The specifics and premiums will be decided by many factors, such as how many employees your restaurant will have, whether or not you will be serving alcohol, and whether your business decides to provide catering or delivery services.  When you are first deciding how to set up and run your restaurant business, here are a few key considerations to take into account.

Alcohol & Dram Shop Laws

One important question to reflect on is whether or not your establishment is going to be serving alcoholic beverages. If so, liquor liability coverage is something that is very strongly recommended. Dram Shop Laws are important to consider as, in the majority of states, they hold businesses selling alcoholic drinks to obviously intoxicated patrons liable for damages that are subsequently caused by the drunken patron. For example, if your restaurant over-serves a patron who then hits and kills a pedestrian on her way home, you could owe tens — or even hundreds — of thousands of dollars in damages. Though it may seem like the person drinking should be the one paying damages, it’s your business that can be held liable for any injuries or damage resulting from their service.

Lease Requirements

Like many businesses, your restaurant will be based out of a physical space. Before you open your doors to the public, you will have to arrange logistics, such as making sure you are clear on the terms of your lease. If the space you are running your restaurant out of is in fact leased, there are often insurance requirements that go alongside the lease agreement. For example, you may be required to hold Liquor Liability Insurance, even if your business doesn’t actually serve alcohol. Besides just the types of insurance required, it is important to be careful when selecting coverage, as your lease may have specific minimum coverage limits mandated.

Insurance for Vehicles

This insurance consideration is usually dependent on whether or not your restaurant will provide delivery or catering services.

Businesses that cater will face different liability risks while off-site. These risks will depend on the types of food and beverages you offer, and the potential for property damage at host sites is always a possible liability risk. However, you’ll also need to look into Commercial Auto Insurance, as it may be necessary to ensure your business has all of its bases covered.

Similarly, if you decide that your restaurant will offer a delivery service, there will be insurance considerations regarding transportation. Because you can be held responsible for your delivery driver, you will want to make sure that your bases are covered.

Whether your restaurant caters or delivers, if you’re using vehicles in the course of business, it means you should have either Hired & Non-Owned Auto Insurance or Commercial Auto Coverage, both of which can bring restaurant owners some peace of mind. What’s the difference? The simple answer is that if your business owns the vehicles, you should have Commercial Auto Insurance. If you rent vehicles, or your employees use their own, you’ll want the restaurant to have Hired & Non-Owned Auto Insurance.

There is a lot of planning that goes into starting a new restaurant, but there are many important things you will need to consider before you open up your doors to the public. Consulting with a professional is a great way to ensure you are making the proper insurance decisions in order to protect yourself and make sure your restaurant is on the right track from the very beginning.


Educating and assisting shoppers about financial products has been Maxime Rieman’s focus, which led her to joining CoverWallet, a startup dedicated to simplifying insurance for small businesses. Previously, she launched the personal insurance team at NerdWallet, and helped create an innovative brokerage comparison product.