Top 3 Insurance Mistakes by Restaurant Owners

Every restaurateur knows there are things that need to be done right to keep their restaurant in business.  Insurance is one of those things. Done properly, you can minimize your costs in time and money while protecting all you build. Done poorly, you not only run the risk of your business sinking, you waste a lot of time and money along the way.

Fortunately, some of the most costly mistakes restaurant owners make (and how to avoid them) are known. Let’s review some of the more common missteps.

1. Telling an agent you only care about the price 

If all you want is cheap, you’re likely to end up with bad coverage and still higher prices in the long run.  Sounds weird, we know. 

First, let’s talk about bad coverage.  If you start out saying, “All I want is a cheap policy,” some agents will assume you don’t care about coverage—and proceed to slash coverages (and often skip the conversation about what’s been cut—because it looks like you don’t care). 

Next, how can it result in higher prices?  Every time you shop, the best insurance companies are pricing your policy based on how risky you and your business look. One factor they often look at is your current levels of coverage.  Lower levels of coverage indicate a high-risk business owner; the type most companies don’t want. It’s counterintuitive but by opting for better coverage, you’ll likely save money in the long run (not to mention, you’ll have the coverage when you need it!

Instead, always communicate you want the best deal you can find on good coverage.  

2. No holistic planning—also allowing for major gaps in coverage

Most sources of insurance fail to do a comprehensive risk analysis and comprehensive planning. Most of the time, this is because they are only interested in selling the products they happen to have. In other words, an agent in the business of selling auto insurance won’t help with restaurant insurance, life insurance, disability, etc. For small business owners, this can create a very real chance for gaps in coverage.

One common mistake among restaurateurs is to have really good liability limits (often a $1 million) for their business but then only have minimum limits on their personal auto liability (or certainly limits lower than a $1 million). This is common only because most personal lines agents are primarily working with wage earners that don’t have a business to lose and so they tend to get accustomed to quoting and selling policies for the ‘average joe’ and often don’t factor in the greater need for liability protection. 

3. Not shopping every few years—allowing for premium creep

Restaurants are a type of business that many insurance companies love. Each company is constantly tinkering with their rates and benefits offered to try and gain an edge over their competition. Who comes in with the best coverage at the best price, for your restaurant, can change every few years. Not only that, sometimes discounts or credits that were offered when you first signed up can expire with time resulting in what some call “premium creep.”  

You might be thinking, “I don’t have time to shop.” Fair enough. It can feel like there isn’t time to squeeze it in. Perhaps a few of the following tips will help make it easier:

Summary:

Perhaps getting all of this just right feels like a pain—given all the other demands in your business. If so, we understand!

Please know that one of our favorite work-comp resources is Mylo. They take everything you might like in your local independent agency and make it even better: 

• 100+ of the leading companies in the states
• licensed experts in all 50 states 
• solid online presence accessible anywhere
• leading-edge tech including instant quotes for some types of policies

Backed by one of the largest brokerages in the world: Lockton
– and the list goes on.