The Hidden Risks of Owning a Restaurant in New York
From bustling kitchens in Brooklyn and full dining rooms in the Lower East Side to loyal customers in Mamaroneck and private dinning rooms in White Plains, restaurants are a heartbeat of their communities. If you own a restaurant in New York, you already know how intense and rewarding the food service industry can be. But behind every delicious plate is a complex web of risks, and far too many restaurant owners find out too late that their insurance coverage wasn’t built to handle them.
That’s why understanding your essential insurance coverages isn’t optional, it’s necessary.
In this guide, we’ll break down the 5 insurance coverages every NY restaurant needs, why they matter, and how to ensure your business is protected, profitable, and positioned to grow.
Five Insurance Coverages Every NY Restaurant Needs
General Liability Insurance: Your First Line of Defense
Why Do Restaurants Need General Liability Insurance?
Whether it’s a customer slipping on a wet floor, getting burned by hot coffee, or claiming illness from your food, liability lawsuits are common and costly in the restaurant world. General Liability covers bodily injury, property damage, legal defense, and settlements, helping you avoid financial ruin.
What You Need to Know About General Liability Insurance
In New York, slip-and-fall claims and personal injury lawsuits can escalate quickly. Your insurance policy should cover:
- Medical payments for customer injuries
- Property damage caused by your operations
- Products and completed operations liability
- Advertising and personal injury claims
Insurance Pro Tip
Some Business Owners Policies or “BOP” policies include built-in General Liability and are rated off public area square footage, instead of sales, making it especially competitive for small to midsize restaurants.
Ask yourself: If a customer sues me tomorrow, am I 100% sure I have coverage — and enough of it?
Property Coverage: Don’t Just Protect the Building, Cover What’s Inside
Why Do Restaurants Need Property Insurance?
A kitchen fire, electrical issue, or burst pipe can devastate a restaurant in seconds. Property insurance helps you repair or replace damaged structures, equipment, and inventory and get back to serving customers fast.
Property Insurance Must-Haves
- Building coverage if you own the space
- Business Personal Property for kitchen equipment, POS systems, furniture, etc.
- Signage, decorations, and glass coverage
- Spoilage protection for perishable goods
- Loss of Income if a covered event forces you to close
Insurance Pro Tip
Some insurance policies automatically include extra coverages like Systems Breakdown and Cyber Liability in their restaurant package. You can also bundle important property extras like:
- Refrigerated food product loss
- Backup of sewers and drains
- Computer coverage
- Exterior signs
- Employee dishonesty
…and more. All priced well below piecemeal add-ons.
Real Story: One restaurant customer saved over $18,000 after a walk-in cooler failed, thanks to bundled spoilage and breakdown coverage.
Liquor Liability: Don’t Pour Without It
Why New York Restaurants Need Liquor Liability
If your restaurant serves beer, wine, or cocktails, you may be legally liable for incidents caused by intoxicated patrons, such as fights, injuries, or car accidents after they leave your premises.
Common Insurance Misconception
General Liability does not cover alcohol-related claims. You need standalone Liquor Liability coverage to protect yourself.
A Warning For New York Restaurant Owners
New York’s liquor laws are strict, and courts often rule in favor of injured third parties. Without Liquor Liability, one claim could bankrupt a small restaurant.
Liquor Liability Insurance Pro Tip
Some insurance companies offer Liquor Liability as an optional add-on for food service risks where liquor sales are under 30% and the restaurant closes by 12:00 AM. Making it ideal for family-style and fast-casual establishments.
Pro Tip: If you’re in NYC and have up to 40% in liquor sales, you could still qualify for a traditional restaurant insurance policy.
Employment Practices Liability Insurance (EPLI): Protect Your People and Your Reputation
Why New York Restaurants Need EPLI Coverage
Restaurants are people businesses. That means you’re vulnerable to employment-related lawsuits. Most New York restaurants will see at least one EPLI incident every 5 years including:
- Wrongful termination
- Harassment
- Discrimination
- Retaliation
- Wage disputes
Even if you win the case, legal fees alone can exceed $50,000.
Insurance Pro Tip
EPLI can be available as an add-on to most BOP and General Liability policies. This essential coverage comes with:
- Coverage for full-time, part-time, and seasonal staff
- Third-party coverage (claims from customers or vendors)
- Identity recovery benefits (because lawsuits often involve data exposure too)
Did You Know? Many EPLI claims in hospitality are driven by poor documentation. Refine Risk can help you set up HR best practices that reduce your risk before a lawsuit happens.
Business Income & Extra Expense Coverage: Your Cashflow Lifeline
Why Every Restaurant Needs Business Income Coverage
What happens if your restaurant has to close for two weeks after a fire or flood? Even if your Property policy pays for repairs, you’ll still lose thousands in revenue, unless you have Business Income coverage.
What Does Business Interruption Insurance Cover?
- Lost income during repairs
- Fixed expenses (like rent and utilities)
- Payroll to retain staff
- Temporary relocation costs (if Extra Expense is included)
Insurance Pro Tip
Some insurance companies have Business Income built into their Food Service BOP. You may be able to enhance your policy even further with coverage for utility service interruption and added expense coverage.
Ask Yourself: If you had to shut down for 30 days, could you survive without cashflow?
BONUS: Other Valuable Add-Ons New York Restaurants Should Consider
Depending on your specific operation, you may want to include:
- Cyber Liability – Covers hacking, ransomware, and compromised customer data (included automatically)
- Hired & Non-Owned Auto – If employees use personal vehicles for errands
- Professional Liability – For businesses offering cooking classes or consulting
- Food Truck Coverage – For mobile kitchens as standalone or add-on policies
Your Five Essential Restaurant Coverages
Here’s a quick recap of the 5 coverages every NY restaurant needs:
| Coverage Type | What It Protects Against | Can Be Packaged |
|---|---|---|
| General Liability | Lawsuits from injuries, property damage | Yes |
| Property Coverage | Fire, theft, equipment damage, spoilage | Yes |
| Liquor Liability | Alcohol-related claims | Optional Add-On |
| EPLI | Employee-related lawsuits | Optional Add-On |
| Business Income | Lost revenue from closures | Yes |
High Risk, High Reward
Owning a restaurant is more than a business, it’s your dream, your livelihood, your legacy. But that legacy can vanish in a flash without the right coverage. By working with a partner who understands the real risks restaurants face, you ensure that your dream doesn’t just survive it thrives.
Is Your Restaurant Protected?
Are you a restaurant owner in New York? Let’s make sure your insurance program is working as hard as you do. Contact our team today to review your coverage and get started.