Restaurant Insurance Coverage That Often Goes Unmentioned

Mark StraussBusiness | Commercial Insurance, Cyber Liability | Data Breach, Employment Practices Liability

There are many events that could be financially devastating to your restaurant. One way to protect your restaurant is through insurance. There are restaurant insurance policy coverage basics that can either get overlooked or are not offered because some agents either don’t have access to the right restaurant insurance solution or aren’t educated enough with the risks you face.

There is restaurant insurance coverage that often goes unmentioned, the following are 3 coverages that you will need even if you don’t realize it.

1. Third Party & Wage and Hour Inclusion with Employment Practices Liability: Employment Practices Liability insurance provides protection for acts of employment harassment, wrongful termination, failure to hire, discrimination, and other similar allegations. The following coverages are not automatic within Employment Practice Liability Policies and must be specifically endorsed onto the policy. They are:

  • Third-party coverage, this coverage protects against claims brought by third-party non-employees who have contact with your business such as customers and vendors.
  • Wage & Hour coverage, this coverage provides the cost of defending claims that allege your business failed to pay overtime to a nonexempt employee—that is, an employee who is not exempt from, and therefore eligible to receive, overtime pay under the Fair Labor Standards Act (FLSA).

2. Computer Fraud with Crime Coverage: Commercial Crime Insurance is designed to protect your business from losses due to third party fraud or employee fidelity. Computer Fraud is an optional coverage within a crime policy and is designed to provide protection for the unlawful taking of money, securities, or property by a third party (not an employee) through a computer.

Your computer fraud exposure can be as high as the amount your business keeps at your financial institution. It is recommended that you contact your financial institution and find out how they would respond if someone fraudulently transferring funds out of your account. Once you know how your bank would handle this you can obtain a computer fraud limit that is appropriate.

3. Cyber Liability Coverage: There are several types of restaurant cyber liability coverages; most are purchased a la carte. In the event of a suspected data breach incident involving personally identifiable information you will want to have what is called “Network Security” or “First Party” data breach resolution coverage in place. The benefits of this coverage are:

  • It will assist with drafting an official notification that information was compromised or exposed as required by law;
  • It will provide credit monitoring and fraud monitoring services based on the specific facts of the incident;
  • It will provide public relations services to restore the reputation of your business.

Another area you need to consider is “Third-party” Cyber Liability Insurance. This will protect your business as the “responsible” party for allowing a data breach to occur and will pay damages sought against your business.

As more and more customer data flows through the internet the chances of a data breach increase each year. If you have not put much thought to it, common risk areas where a cyber liability incident can affect your restaurant are due to the following:

  • You have an internet connected computer network at one or more office or restaurant locations.
  • You utilize an electronic payment processing system.
  • You have a laptop computer that may contain customer or employee information

Next Steps

Now that you know the restaurant insurance coverage that goes unmentioned it’s your job to make certain you have these areas risks covered within your restaurant insurance policy. A little extra effort in knowing what’s in your restaurant insurance goes a long way in protecting the profits of your restaurant.