A restaurant is one of the few small businesses where a single Friday night can produce a slip-and-fall, a food-borne illness complaint, an over-served guest, a grease fire and a walk-in cooler full of spoiled product — five different losses that land on five different parts of an insurance program. The coat that holds them together is usually a business owners policy or a package. The parts that get missed are the ones a general liability form was never written to answer: liquor, spoilage, equipment breakdown, and the people on payroll.
Here is how the pieces typically fit for a place off Broadway in Edmond or on Main Street in Yukon.
General liability, and what it is not
General liability handles the classic third-party claims: a guest slips on a wet tile, a server spills soup on a laptop, a customer alleges the chicken made them sick. It is the foundation and it is what the landlord’s lease almost always asks for.
Two things it generally does not do. It does not respond to injuries to your own employees — that is workers’ compensation’s job. And in most forms it does not respond to injury caused by a guest who was served alcohol, because the standard general liability form carries a liquor exclusion for businesses in the business of selling it. That exclusion is the reason the next section exists.
Liquor liability, and the ABLE Commission’s requirement
If the restaurant holds a mixed beverage license, the state has already made part of this decision. The Oklahoma ABLE Commission’s licensing FAQ states that every applicant must provide proof of liability insurance for bodily injury, property damage and medical expenses, and that a certificate of liability insurance is required again at renewal.
That requirement is about liability generally; it is not the same as liquor liability. Liquor liability is typically a separate coverage or endorsement that responds when a guest is over-served and hurts someone on the drive home. Given the general liability form’s exclusion, a restaurant that pours without it is carrying a bar’s biggest exposure uninsured.
One more line from the same ABLE page worth taping to the office wall: under 37A O.S. § 2-133, a licensee is responsible for an employee’s acts or omissions that violate the alcohol laws. Servers have to be 18, bartenders 21, and every one of them needs an ABLE employee license with training completed within 14 days. The training is a compliance item. It is also, quietly, a loss-control item.
Property, spoilage and the walk-in
The building, or the tenant improvements if the space is leased, the kitchen line, the dining room, the POS system — those sit on the property side of the package. The two exposures that most often fall outside a standard property form are the ones restaurants fear most.
Spoilage. When the power goes out on a July afternoon in Moore and the walk-in loses temperature, the product inside is a loss, but it was not damaged by a named peril in the usual sense. Spoilage coverage is typically an endorsement with its own limit, and it is often what answers for that inventory.
Equipment breakdown. A compressor that dies of old age, an electrical arc that takes out the hood system, a fryer thermostat that fails — mechanical and electrical failure is generally excluded on a property form and picked up by an equipment breakdown endorsement or policy. In a business whose entire output runs through refrigeration and heat, it is the endorsement that gets asked about most often after the fact.
Business income coverage is the piece that keeps payroll going while the kitchen is closed. Many restaurant packages include some of it; the number of days and the waiting period vary widely.
Workers’ compensation
Oklahoma generally requires workers’ compensation coverage once a business has employees, with narrow exemptions laid out in Title 85A. Kitchens produce burns, cuts and slips at a rate few other small businesses match, and comp is the policy that answers for them. It is also the one that regulators and payroll auditors check.
The part that does not flatter anybody
Restaurant premiums are not small, and the coverages in this post add to them. A new owner opening on a thin margin sees the liquor liability quote and the equipment breakdown endorsement as line items to cut. We understand it, and we have watched that math get made. The honest counter is that the coverages most often trimmed at opening are the ones most often needed in year two, when the equipment is older and the crowd is bigger. There is no version of this where we get to tell you what to carry. There is a version where the policy answers the question in writing, and reading it before opening night beats reading it after.
Where the policy answers
Which of these is on your package, at what limit, with what waiting period — your policy is the thing that answers this, and a restaurant package is long enough that the answer is worth locating on paper rather than assuming.
Opening a place, adding a bar, or renewing a package that has not been read since the lease was signed? See our business insurance page, or call (405) 861-8500 — Brandon handles commercial personally, and a walk-through of a restaurant package takes about the time it takes to make a pot of coffee.
This article is general information about how coverage typically works, not advice about your specific situation. Policy language — not website descriptions — determines coverage, and your policy is the only thing that says what you have.
