Restaurant Insurance: Protecting Your Food Business

What Is Restaurant Insurance?

Restaurant insurance is a package of covers designed to protect food businesses against the specific risks they face. Running a restaurant, cafe, or takeaway involves a unique combination of hazards — from cooking with open flames and hot oil to serving food to the public and employing staff in a fast-paced environment.

A typical restaurant insurance policy combines several elements under a single arrangement, including buildings and contents cover, public liability, employers' liability, and business interruption. Additional covers such as product liability, stock deterioration, and money cover can be added depending on the specific needs of the business.

Legal Requirements

While there is no single law that requires restaurants to have insurance (other than employers' liability), several legal obligations make certain covers essential in practice:

• Employers' liability insurance — legally required if you employ anyone, with a minimum cover of £5 million
• Motor insurance — required if you use vehicles for deliveries
• Lease requirements — most commercial leases require the tenant to hold public liability and other covers
• Licensing conditions — some local authorities require proof of insurance as part of the licensing process
• Lender requirements — if you have a business loan or mortgage, the lender may require specific covers

Key Covers for Food Businesses

Public liability insurance. This covers your legal liability if a customer or member of the public is injured or their property is damaged as a result of your business activities. Common scenarios include a customer slipping on a wet floor, being injured by a falling object, or suffering an allergic reaction to food. Cover of £2 million to £5 million is typical for restaurants.

Product liability insurance. This is a specific form of liability cover that protects against claims arising from products you supply — in this case, food and drink. If a customer becomes ill as a result of food you have prepared and served, product liability cover responds to the claim.

Contents and stock cover. This protects your kitchen equipment, furniture, fixtures, fittings, and stock against damage from fire, flood, theft, and other insured perils. For restaurants, the contents sum insured can be substantial — commercial kitchen equipment alone can cost tens of thousands of pounds.

Stock deterioration cover. If your refrigeration or freezer equipment breaks down, the cost of spoiled food stock can be significant. Stock deterioration cover pays for the replacement of perishable stock lost due to equipment failure or power cuts.

Money cover. This covers cash held on the premises, in transit to the bank, or in a safe. For cash-intensive businesses, this can be an important protection.

Food Safety and Product Liability

Food safety is a critical concern for any food business. Under the Food Safety Act 1990 and the Food Safety and Hygiene (England) Regulations 2013, food businesses must ensure that food is safe to eat and does not cause harm to consumers. Failure to comply can result in prosecution, fines, and closure orders.

From an insurance perspective, the main risks are:

• Allergic reactions — failure to identify and communicate allergens is a significant liability risk
• Food contamination — bacterial contamination (e.g., salmonella, E. coli) can cause serious illness
• Foreign objects — items found in food (glass, metal, plastic) can cause injury
• Incorrect labelling — particularly relevant for pre-packaged food and takeaway items
• Cross-contamination — between allergens, raw and cooked foods, or different food types

Natasha's Law (the Food Information (Amendment) (England) Regulations 2021) requires all food businesses that produce pre-packed for direct sale (PPDS) food to include full ingredient labelling with allergen information. This has significant implications for cafes, bakeries, and delis that pre-pack sandwiches, salads, and other items.

Business Interruption Cover

Business interruption insurance covers the loss of income that results from an insured event — for example, if a fire forces your restaurant to close for repairs. The policy pays for the loss of gross profit during the period of interruption, plus any additional costs incurred to minimise the disruption (such as renting temporary premises).

For restaurants, business interruption cover is particularly important because:

• Fixed costs (rent, rates, staff wages) continue even when the business is closed
• Loss of regular customers during a closure can have lasting effects on revenue
• Repair and refurbishment of a commercial kitchen can take months
• Seasonal businesses may lose their most profitable trading period

Delivery and Takeaway Operations

If your restaurant offers delivery services — whether through your own drivers or third-party platforms — there are additional insurance considerations:

• Motor insurance — delivery vehicles must be insured for business use (or hire and reward if using third-party drivers)
• Goods in transit — cover for food being transported to customers
• Public liability extension — to cover delivery activities away from the premises
• Employer liability — if delivery drivers are employees rather than self-employed contractors

What Affects the Cost?

• The type of food business (sit-down restaurant, takeaway, cafe, pub food)
• Annual turnover and number of employees
• The value of contents and kitchen equipment
• Whether you have a deep fat fryer or open flame cooking
• Claims history
• Security measures (CCTV, alarms, fire suppression systems)
• Location and property type
• Whether you offer delivery services

Next Steps

Running a food business involves managing a complex set of risks, from food safety and public liability to property damage and business interruption. The right insurance arrangement provides a safety net that allows you to focus on what you do best — serving great food.

Focus Insurance Services can help restaurants, cafes, and takeaways find tailored cover that addresses the specific risks of the food industry. Contact our team for a no-obligation discussion about your restaurant insurance needs.