Restaurant and hospitality insurance can include a broad range of covers, from public liability insurance if someone becomes ill or injured in your venue, to payouts if any items kept at the premises are lost or stolen.
Some insurance products are mandatory. See what see types of insurances are required for you to run your business here.
Business interruption, machinery breakdown and contents insurance are all examples of optional insurances that can bring added peace of mind.
What types of insurance do restaurants and hospitality businesses need?
Because restaurants and other hospitality businesses have many moving parts, there is no one-size-fits-all insurance policy. In fact, there are dozens of overlapping policy inclusions to choose from.
It is important that you familiarise yourself with all of your options to ensure a small setback doesn’t turn into a serious threat. However, there is no need to be overwhelmed; most insurers will work with you to customize a policy that meets your exact business needs. Just make sure they explain any exclusions and limitations that apply to your policy.
To get you started in your search, here is a list of the policy types you are likely to encounter in your search results. They can be categorized into those that are required by law, and those that are optional.
Insurance products that are required by law
Workers compensation. Protects you and your employees if you are injured on the job.
Public liability. Protects your customers if they are injured or become ill in your restaurant.
Third-party commercial motor insurance. This is only mandatory if your business uses a vehicle, such as a food delivery truck. It protects third parties from damages caused by your vehicles.
The cost of public liability cover: An example
Finder ran some business insurance quotes for a NSW-based events company. We found a public liability policy with Vero may cost $40.75 per month ($500 policy excess). This indicative quote was correct as of 29 June 2023.
Optional insurance products
Theft of contents and stock. Covers you for the theft of any contents or stock within your business. If you transport these goods, you’ll need the optional “goods in transit” policy option.
Theft or damage to money. Covers you for any loss of cash due to theft or damage (such as a fire originating in the kitchen).
Building and contents insurance. Covers you for damage to fixtures, fittings, contents and stock resulting from a number of unexpected situations including fire, explosion, water damage and vandalism.
Machinery breakdown. Covers you for unexpected equipment breakdown. If your freezer breaks down, it will cover the cost of the freezer's repair or replacement, but not for any spoiled food that results.
Management liability. Covers you and the company from liability due to business mismanagement.
Deterioration of stock. Covers you for the loss of any stock that has spoiled or deteriorated as a result of equipment malfunction.
Portable and valuable items. Covers loss or damage to valuable items that you carry with you.
Tax probe. Covers fees you incur if an official authority audits your business.
Make sure you read the PDS
Finder research suggests 23% of Australians can't be bothered reading the PDS. A PDS includes a comprehensive list of all the inclusions and exclusions of a policy.
Finder survey: How many Australians from different states have business insurance?
Response
WA
VIC
SA
QLD
NSW
I don't own a business
79.34%
64.03%
73.12%
73.73%
66.06%
Yes
11.57%
19.47%
8.6%
13.82%
18.96%
No
9.09%
16.5%
18.28%
12.44%
14.98%
Source: Finder survey by Pure Profile of 1112 Australians, December 2023 Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.
Key risks when managing a restaurant
Opening a restaurant can be a highly rewarding experience, but it’s not without its challenges. It pays to be aware of the risks so that you can take the proper precautions. Here are some of the risks you might face.
Cooking Fires. A fire in the kitchen can cause significant loss of life and property. Make sure your kitchen is up to code, keep the exhaust ducts clean and have an evacuation plan in place for employees and customers.
Food poisoning. Food poisoning can lead to lawsuits and negative publicity for your restaurant. Minimise the chances of this occurring by storing food properly, using separate cutting boards for raw meat and thoroughly washing fruits and vegetables.
Identity theft. Restaurants can be a revolving door for employees. Rogue employees could wreak havoc if they got their hands on another employee’s records or a customer’s credit card details. Make sure you have a secure document management system in place.
Slips and falls. The hustle and bustle of a busy restaurant create the perfect atmosphere for slips and falls. Keep your floors well-maintained by mopping regularly and by promptly fixing leaks, cracks and loose tiles.
Cuts and burns. The kitchen environment lends itself to cuts and burns. Make sure you have a first-aid kit on hand and that you keep it regularly stocked. Protect employees by equipping them with the correct personal protective equipment.
Theft and vandalism. Small businesses are prime targets for thieves and vandals. You can protect your business by installing a security system and making it clear that you don’t keep cash on your premises overnight.
Talk to a broker about restaurant and hospitality insurance
Frequently Asked Questions
Hospitality insurance refers to a range of insurance policies designed to protect businesses in the hospitality industry, such as restaurants, cafes and hotels. It typically includes coverage for public liability, property damage, business interruption and workers' compensation, ensuring that the business is protected from financial losses due to accidents, damage or legal claims.
Alex Reid is Finder’s business insurance cadet. He has a Master of Marketing from the University of Technology Sydney, with a background in business and sales. When not writing about business insurance for Finder he's a keen scuba diver, recently completed his 200th hour underwater and his PADI Divemaster certification. Before working at Finder he lived in Hangzhou China, where he studied Mandarin and Chinese culture. See full bio
Liability insurance is a broad term that describes a few types of business insurance cover. The type you need will depend on the nature of your business.
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