6 Common Mistakes to Avoid When Buying Restaurant Insurance
Running a restaurant can sometimes be full of mistakes and missteps. You can easily overspend in some areas while neglecting important obligations.
If you own or run a restaurant, buying a proper insurance policy is a must. But, with many policies available, knowing exactly what you need can be difficult.
Unfortunately, most restaurant owners are not careful about the decision to buy restaurant insurance and end up facing difficulties in the future. Here are pitfalls to avoid when buying insurance for your restaurant.
3. Choosing Low Liability Limits
Virtually any business, restaurant included, can be hit with a lawsuit. As a restaurant owner, you can’t tell when you’ll be faced with a lawsuit, who will sue your business or even the amount of damages they’ll seek.
When buying general liability insurance, avoid gambling on low liability limits. Ask your insurance broker about how much insurance is right for your restaurant.
4. Purchasing Too Little Property Insurance
Property insurance protects your property in case of fire or vandalism. Most policyholders assume that property insurance will automatically cover the cost to replace or repair your damaged property. However, your policy will only pay up to your insurance limit.
Therefore, if the cost of repairing or replacing your damaged property exceeds your policy limit, your business will be required to cover the remaining amount.
You’ll also need additional coverage for natural disasters such as earthquakes and floods, not to mention that some lenders might require you to have property insurance policy before approving your mortgage.
You should also remember that most property policies include an agreed value provision or coinsurance clause, which can impose a penalty on you for underinsuring your property.
In the event of a loss and you don’t have the right insurance, your insurer will not cover the full amount of the claim.
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