There is no denying that we live in a litigious society, and restaurants are not immune to lawsuits. In fact, the very nature of the business often makes them more vulnerable to lawsuits. Don’t believe us?
The 1993 case of a woman suing McDonald’s (and winning $2.86 million) after spilling hot coffee on herself is still fresh in many business owners’ minds. But it doesn’t end there. Check out Eater’s article “The Five Pettiest Lawsuits Against Fast-Food Chains” where you’ll read about Starbucks getting sued for putting ice in iced drinks and Subway being sued for 11-inch sandwiches.
That’s not to say there aren’t genuinely legitimate lawsuits. Someone slips and falls on a spill that wasn’t cleaned up, or someone gets food poisoning from food that was improperly prepared at a restaurant.
The bottom line is that every restaurant is at risk of being sued. Which is why restaurant owners must take steps to 1) prevent those lawsuits and 2) protect themselves with the right Restaurant Liability Insurance in the event of a lawsuit.
How to Prevent Lawsuits
You may not be able to prevent every lawsuit – freak accidents do happen – but there is a lot you can do to prevent most of them. Here are six tips:
- Train your employees well including safety and customer service
- Create a culture of safety
- Maintain consistent processes and quality in your food prep
- Treat all employees with respect
- Hire a good attorney
- Insure your business properly
Liability Insurance to Protect Your Restaurant
General Liability Insurance
This type of insurance, required by most landlords and lenders, covers you when a customer is injured at your restaurant, when there is damage to a customer’s property, or if there are advertising issues such as slander, libel, and copyright infringement.
When a customer is injured – such as slipping, falling, and breaking a leg on your property - general liability insurance covers legal fees, medical expenses, and any judgments imposed against your restaurant. It does not protect your employees; that’s where Workers’ Comp Insurance comes in (see below).
When a customer’s property is damaged – such as a server spilling coffee on a customer’s laptop – general liability helps pay for legal fees, replacement costs, and out-of-court settlements.
When you cause an advertising injury, general liability insurance covers copyright infringement and defamation - both libel(written) and slander(spoken).
Liquor Liability
Serving alcohol increases a restaurants liability issues, and most General Liability Insurance Policies do not cover it, so if you sell alcohol at your establishment, you need to have Liquor Liability Insurance. Pennsylvania is one of 43 states with some type of dram shop law.
According to the Pennsylvania Liquor Control Board, “Generally, dram shop laws establish the liability of establishments arising out of the sale of alcohol to visibly intoxicated persons or minors who subsequently cause death or injury to third parties (those not having a relationship to the bar) as a result of alcohol-related car crashes and other accidents.”
In other words, if you serve alcohol to someone who then injures someone else or damages someone’s property, you could be held liable. Liquor Liability Insurance helps protect your restaurant from this type of liability.
Product Liability Insurance
Food poisoning is every restaurant owner’s worse nightmare. The fact is that you can train your staff how to handle food safely and have proper processes in place to avoid food contamination, but you can’t control how the food is handled before it arrives at your restaurant. Therefore, food poisoning can still occur, and customers can still sue you for it. Product Liability Insurance helps protect your restaurant from those lawsuits.
Workers’ Compensation Insurance
Workers’ Comp is required for most businesses in Pennsylvania that have employees. It covers medical expenses, lost wages, and disability or death benefits for an employee who is injured on the job. But did you know that WC also covers legal costs if the injured employee sues you over the injury?
When reviewing your insurance needs, make sure your restaurant is protected from all potential risk – including liability.
How to Get the Best Price on Restaurant Liability Insurance
The independent agents at American Insuring Group understand the specific needs of restaurants. We will compare the cost of your coverage with several competing companies to ensure that you get the best price for that coverage. Give us a call at (800) 947-1270 or (610) 775-3848 or connect with us online.
