Matt McKenna
Underwriting Manager
Underwriting Manager
It may seem effortless to sign on the dotted line, assuming your restaurant insurance is up to par. Before renewing, however, it’s worth giving your policy the once over. When you own a franchise or operate a chain of restaurants, business dynamics can change quickly. The only way to safeguard your success is to guarantee that your restaurant insurance policy changes to meet your needs, too. In this post, we’ll review seven essential questions you should ask before renewing your policy.
1. Has Your Inventory or Operations Changed?
As mentioned, business dynamics can shift at lightning speed. Therefore, it’s essential to weigh your insurance needs against any significant inventory or operations changes. Whether the specific changes are tiny and seemingly insignificant or fairly dramatic, consider them all when you renew.
Underwriters need to be adequately informed to write a policy that fits your particular business structure accurately. Keep in mind that seasonal fluctuations influence operations, too. Dynamics such as the size of your employee pool may shift from quarter to quarter, and an underwriter will require these details. Without the correct information, portions of your franchise or chain may be at significant risk.
2. How Robust Is Your Cybersecurity?
It comes as no surprise that the more massive your franchise, the more significant your third-party liability becomes, including cyber liability. Data breaches can expose vital financial and private records, putting your business at higher financial risk.
Specifically, restaurants face exposure with Point of Sale (PoS) system, WiFi access, IT providers, and also employee training standards. Your general liability (GL) policy typically covers various other responsibilities but excludes the cleanup of a data security breach.
Safeguarding your entire franchise means giving your cybersecurity the strength test, and then adjusting your cyber liability coverage accordingly.
3. Is Your Equipment Replacement Value Accurate?
Developing a chain of restaurants calls for strategic placement of assets, such as operating equipment and machines. However, as foot traffic increases and customer demands rise, your professional needs are bound to shift. Often, necessary updates, such as a copier or a phone system, go unnoticed. Whether or not you lease them, they are still assets to your business.
It’s essential to consider the replacement cost of all your equipment and machines at renewal time. Remember, replacement cost is different than book value, and you want to refer to the former. Before you renew your restaurant insurance, update your balance sheet to include all your business assets.
4. Have You Reviewed Your Coverage Exclusions?
A broad insurance agreement is fantastic until it’s carved away by multiple exclusions. As a result, your restaurant insurance may not be as firm as you initially thought.
Of course, you’re going to see standard exclusions, such as non-accidental liabilities or damage from natural wear and tear. However, other exclusions may surprise you, so be sure to review your policy exclusions thoroughly before renewing. It’s not uncommon for broad language to offer you top-notch coverage only for an exclusion to strip it away.
Keep in mind that exclusions don’t render restaurant insurance useless. They merely specify what the insurer will cover. However, when you’re dealing with multiple locations, the more extensive the coverage, the better.
5. What’s the Value of Improvements and Betterments?
As you expand your franchise, establishing new chains or establishments across the nation, plenty of improvements will take place to your existing restaurants, as well. Perhaps you scaled up a specific piece of equipment to ensure uniformity among your company. Or maybe you opted for a minor renovation at one location while another one undertook a major overhaul.
No matter what betterment occurred, it’s crucial to valuate those improvements accurately. Securing a professional appraisal isn’t a bad idea as interior upgrades tend to get swept under the rug as equipment upgrades do.
6. Has Your Electronic Business Exposure Changed?
Although cash isn’t dead yet, modern businesses typically depend on electronic transactions for revenue. What may alarm you is the risk you run for electronic business interruption.
For example, should a storm wipe out your electronic data and electrical capabilities for a period, is your business prepared for the rebound? Electronic business interruption can be devastating and costly. Losing customers for any amount of time causes a ding in your revenue, especially if it’s a significant time frame.
Upon renewing your restaurant insurance, check over how your electronic business exposure has changed. Be sure to update the policy to protect your business adequately instead of keeping your fingers crossed.
7. How Has the Industry Market Changed?
Most of the time, renewing your restaurant insurance calls you to address changes that you’ve made to your company. However, it’s also critical to educate yourself on how your industry market and the commercial insurance market have changed, as well.
Because of recent trends or various insurance approaches, you could save a substantial amount on your premium. Also, don’t discount enhanced coverage as an option now, either. Even small changes to either market could benefit you in the long run.
Understanding what coverage your franchise needs can be a painstaking process. Founder Shield specializes in knowing the risks your restaurant operation faces to make sure you have adequate protection. Feel free to reach out to us, and we’ll walk you through the process of finding the right policy for you.
Want to know more about insurance for restaurants? Talk to us! You can contact us at info@foundershield.com or create an account here to get started on a quote.
