Heading in to the second half of 2025, the restaurant industry stands at a crossroads, balancing a wave of anticipated growth with persistent operational and financial pressures. While there is optimism that the sector has the possibility for historic sales highs with the National Restaurant Association projecting $1.5 trillion in sales and employment growth this year, owners consistently grapple with tighter margins, increasing claim activity and a hardening insurance market.
While some owners and managers may have previously considered insurance as a ‘background’ concern, lower in priority than food costs or labor expenditures, the fact is business insurance is more important than ever when it comes to protecting your business from unpredictable events.
Costs continue to rise and underwriting standards are tightening. How can you find a balance when it comes to obtaining or maintaining sufficient business insurance? The expert team at Snapp & Associates has a combined 50+ years of experience when it comes to insuring and advising restaurant clients. According to Snapp Vice President Dan Beck, there are a number of ways businesses can deal with specific insurance issues:
Maximize Your Policy to Manage Costs — Part of your overall business plan should be a comprehensive policy review with your agent or broker. Schedule time each year to review your coverage in detail, enabling you to identify unnecessary coverage and reduce over-insurance, easing some financial pressure. These annual reviews are also an excellent opportunity to identify areas where you may be underinsured or have new service areas that require coverage such as off-site catering and associated specialized equipment.
Use Risk Management to Mitigate Exposure — Use that risk management protocol to help protect your business – Not only will safety, training and incident documentation procedures help you avoid a potential incident, underwriters like to see those protocols firmly in place when it comes time for renewal. A documented, comprehensive risk management plan can help lower your overall policy costs.
Examine Improvements to Reduce Weather or Catastrophe Risk — Despite an increase in catastrophe or weather related property losses, many restaurants lack adequate insurance for extreme events. Insurers have responded by raising rates or imposing stricter requirements in high-risk areas. What can you do? Speak with your broker and carrier to examine options such as property fortifications, facility modifications and other requirements that protect your operations but also meet underwriting guidelines.
This is a great spot to also examine your loss of use coverage and ensure you have enough protection if your establishment is out of service for weeks or even months after a weather event or other disaster.
Make Sure Your Broker Knows Your Market — Carriers increasingly refuse to cover certain types of establishments, particularly those serving alcohol late or featuring live entertainment due to liability concerns. Those that do offer coverage may add new exclusions or raise costs, leaving “fun” or nightlife-oriented restaurants struggling for adequate and affordable insurance. Businesses in this space also may have unique elements such as a dance floor, specialized lighting and sound systems or other interior special effects that can directly relate to a higher risk.
Restauranteurs benefit from seeking out insurers specializing in hospitality and working with brokers experienced in their market segment to secure more tailored and comprehensive coverage.
Keep Up to Date on Compliance Issues — New regulations—such as bans on gas appliances or shifts in wage-and-hour requirements — can quickly change insurance needs and increase risks for non-compliance. These shifts may require additional or updated coverage and sometimes lead insurers to reassess or withdraw from certain market areas. Staying ahead of regulatory changes by consulting legal and insurance advisors and regularly updating policy terms is critical to maintaining compliant, effective insurance coverage.
Understand Your Needs for Specialized Coverage — Restaurant and bar owners need to pay close attention when it comes to needs for specialized coverage such as food contamination and liquor liability. Your city, county or state may have very specific requirements when it comes to liquor laws and it is essential that you are adequately covered when it comes to a potential claim. Liquor liability is a key area to work with your agent or broker to ensure you have the policy that best fits your needs — helping to mitigate a potentially financially devastating loss.
Network With Peers for Feedback — The mantra “You Don’t Know What You Don’t Know” rings especially true in the restaurant and nightlife business. While you may have been in operations for years, there are always others that may have experienced an incident or loss you never imagined. Talk to your peers, attend mixers and speak to your staff about their experiences. While some issues may seem beyond impossible, it is best to keep an open mind and eye out for unforeseen risks – Always good when it comes to your overall protection plans!
