Restaurant insurance claims every owner should know, and how to prevent them

In the hustle and bustle of a busy restaurant kitchen, accidents are common. In fact, an estimated 3 million foodservice employees and 1 million guests are injured in slip-and-fall accidents annually. These incidents cost businesses more than $2 billion, and that number keeps rising by about 10% every year.

Why Restaurant Insurance Claims Are So Common

Restaurants are among the largest and most fast-paced workplaces in the country, employing more than 11.6 million people in the United States, according to OSHA. Nearly one in three of those employees is under 20, and these younger workers are often inexperienced at identifying and preventing risks. Combine that with tight spaces, constant foot traffic, sharp tools, and hot equipment, and it’s easy to see why accidents happen even in well-run kitchens.

6 Common Restaurant Insurance Claims

Hazards are commonplace in restaurants, and even the most organized kitchens occasionally face issues. One of the best ways to reduce injury, damage, and downtime is to understand where most claims come from and how you can prevent them. Simply Business breaks it down.

1. Employee Injuries: Ensure employees undergo regular safety training. Provide and require employees to use proper protective gear and footwear. Keep first-aid kits available and stocked and become familiar with the company’s reporting processes by regularly reviewing and analyzing incident reports.

2. Slip-and-fall accidents: Avoid slippery floors (the leading cause of slip-and-fall accidents) by cleaning spills immediately, using non-slip mats, and placing clear signage in wet areas. Train staff to report and respond to hazards quickly and inspect flooring regularly for worn tiles or grease buildup.

3. Equipment breakdown: When critical equipment — such as your oven or walk-in freezer — fails, it can bring your kitchen to a standstill. These occur when appliances break down from normal wear and tear or when scheduled preventive maintenance is skipped. The best way to reduce the likelihood of an unexpected interruption is to establish a preventive maintenance schedule for your appliances and generators and stick to it. The schedule should include inspections of ventilation ducts and appliance seals. Maintain service logs for all inspections and provide them to your vendors when they inspect or service your equipment. Follow the same guidelines for emergency services.

4. Fire Damage: Every year, the National Fire Protection Association (NFPA) estimates that the restaurant industry suffers approximately $165 million in fire losses. Fire loss is often higher in facilities where open flames or grease combine with electrical devices. Numerous methods can help prevent fire loss. Fire extinguishers and/or fire suppression systems can limit certain losses. Losses may also be prevented through the maintenance of a clean cooking facility by regular cleaning of the hood and ventilation systems. Annual preventative maintenance and inspection of facility wiring and outlets may help to eliminate potential fire loss exposures.

5. Theft/Burglary: Restaurants have a high exposure to both external and internal theft due to the nature of the product, hours of operation, and the value of property on the premises. Turnover and employee theft may be reduced through a culture of safety and security. If theft does occur, it may be reduced through cameras and/or security personnel. Limiting access to cash and other negotiable items may also help prevent employee theft. The restaurant can increase security through locks and alarms.

6. Food Spoilage: While food is a restaurant’s most important asset, it is also one of the most unmanageable. Refrigerators and freezers break down. Power can go out. Equipment can malfunction and cost thousands of dollars. It can also cause a health department violation for a facility to remain open with malfunctioning equipment or cause the sale of food that can make customers sick. Routinely check equipment temperatures to ensure food stays out of the temperature danger zone. A backup, like dry ice or a backup cooler, can also help. Employees should also be trained to maintain food integrity. This can be accomplished through consistent hygiene and rotation practices as well as proper labeling.

The Claims Process: What Restaurant Owners Should Expect

Insurance claims are complicated and add stress to an already stressful situation. Knowing what to expect helps to ease the stress and anxiety. Each situation is unique, and therefore the steps to fully resolve a claim will also vary. The steps outlined below are a general guide and may change based on the rules, regulations, and standards in the state where the loss occurred, the amount of the loss, the insurance company, and other factors.

• Notifying the Insurer and Starting the Claim: After an event covered by a business insurance policy occurs, the first step is documenting the event and any loss or damage. Report losses and claims to the insurance company in a timely manner (usually within 48 hours). The insurance company will send an adjuster to investigate the loss and evaluate the claim. The adjuster may request documentation, such as business records and maintenance or inspection reports.
• Claim reporting: After an accident, inform your insurance company by filing a claim. Often, insurance providers give policyholders several ways to report a claim (for example, online and/or by phone). Generally, the company will try to process your claim as quickly as possible to increase the chance you will use them for future business. After you report your claim, expect to hear from an adjuster within a day or two.
• Review process: The adjuster’s investigation time largely depends on the complexity of the damage and the claim. For a straightforward claim, the adjuster may take a couple of weeks to finalize the review. More complicated reviews, such as a fire claim, may take the adjuster and the company nine months to a year to complete.
• Settlement: After the adjuster reviews your claim and the review supports your claim, the insurance company will issue you a check for the amount supported by your policy. Usually, the review takes about a month; however, it can take longer. Your insurance agent may have a better estimate of when you can expect to receive your claim proceeds.

How to Reduce Claims and Premiums Through Prevention

A prevention plan is always better than a claims plan. Identify the most common reasons for claims and take preventative measures to eliminate them. It is also helpful to document the measures that you take.

• Create safety and maintenance checklists for daily, weekly, and monthly tasks. For example, your monthly to-do list may include cleaning hoods, while your weekly checklist may include checking floors and testing alarms.
• Schedule periodic employee training on slip prevention, equipment safety, and food safety.
• Schedule regular equipment inspections and document service activities on wiring and fire suppression systems.
• Implement preventive measures to protect against theft (e.g., install security cameras, control inventory movement, and use a secure cash/receipt transfer system).
• Maintain records of maintenance activities, safety drills, and repair activities performed by outside vendors to assist in proving your case in the event a claim is made.

Protecting Your Restaurant’s Future

Some claims are just unavoidable. You should always take measures to protect your restaurant from unforeseen closure and financial hardship.

You should always take precautionary measures to ensure your restaurant is as safe as possible. The unexpected will happen, and if you prepare for it, your restaurant will suffer less.

This story was produced by Simply Business and reviewed and distributed by Stacker.