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With business interruption insurance, an interruption needn’t become a closure for a restaurant

June 15, 2021

No matter how diligent you are as a restaurant owner, there will always be circumstances that can unexpectedly force you to temporarily close your doors. Perhaps you suffer an equipment failure, a hygiene issue, or a water leak. For such events there are specific restaurant insurance policies that will cover losses and repairs. But what if the cause of closure is because of something far out of your control, such as a severe weather event or fire?

For restaurants, even a short business interruption can have far-reaching financial consequences. Closed doors mean no income and yet many of a restaurant’s expenses will be ongoing—rent, mortgage, or lease payments will still come due; loan and tax payments will have to be made; payroll will continue. There may also be additional expenses such as relocation costs should you need to move out of your current premises; storage rent if you need to move your equipment out. Such expenses can be covered by business interruption insurance bundled under restaurant insurance. And, in addition, during the period of coverage—the period of restoration—business interruption insurance will match the revenue you would have made had your restaurant remained open.

The level of coverage offered by business interruption insurance for a restaurant will vary depending on the policy and there will always be a coverage limit. The cost of coverage will be affected by the size of your business, how much revenue you usually make, how many employees you have, what expenses you wish to cover, and what causes of interruption you wish to cover.

Most business interruption insurances cover only loss of income caused by damage to the business property. Thus, as many restaurants and other businesses within the food industry learned during the COVID-19 pandemic, most business interruption restaurant insurances do not provide coverage when a business interruption occurs because of illness or a government shutdown order to prevent the spread of illness. Most business interruption policies will also not insure you against a power failure or nuclear event. But, if you think your restaurant might be at risk from something not covered in a standard business interruption restaurant insurance policy, there are often endorsements that can be added.

As a business-owner within the food industry you know that there is no such thing as 100% risk free, but you can reduce the risk with appropriate restaurant insurance coverage and that should always include business interruption insurance.

Contact Vozza Agency for restaurant insurance in New Jersey.

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