The catering industry has suffered considerably over the past few years, but it is making a comeback, particularly in the takeaway sector with many hundreds of new takeaway outlets having started up recently, helped by the opportunities to deliver provided by the likes of Deliveroo, Just Eat, Uber Eats and more. Just Eat alone can deliver from over 30,000 outlets.
UK diners continue to demonstrate their appetite for a wide range of different cuisines that each need catering business insurance. Within a few miles of where I live there are places offering:
- American
- Bangladeshi
- British – whatever that is nowadays
- Burgers
- Chicken
- Chinese – the nation’s favourite takeaway option
- Curry
- Desserts
- German sausage
- Greek
- Fish & chips – my personal favourite
- Halal
- Indian
- Italian
- Jamaican
- Japanese
- Kebab
- Korean
- Lebanese
- Mediterranean
- Piri piri
- Pizza
- Thai
- Turkish
There may be more, but it will be a while before I work my way through that lot.
It is not just takeaways but restaurants up to and including ones with Michelin stars, pubs – very few pubs now do not offer food -, cafes, coffee shops, vans, trailers and more. We did arrange cover for one in a converted steel shipping container but sadly they did not survive the recession. There are also a growing number of small businesses operating from their home kitchens or, as with a lady local to me (who makes the most wonderful cakes) from her garage. Her husband’s beautiful classic car is now on the drive.
The range of types of cover available is almost as long as the variety of foods on offer.
- Buildings – many catering establishments rent the property and therefore the property owner should deal with the buildings insurance but do check the terms of your lease. Fire and flood – especially with the continuing popularity of riverside, canal side and seaside dining – are major concerns but storm (including lightning), subsidence, impact from vehicles, malicious damage and accidental damage are also important. It is essential to insure for the correct amount, which is the rebuilding cost of the property including removal of debris and any professional and planning fees. This may be far removed from the market value, so we strongly recommend obtaining a rebuilding cost estimate from a professional valuer and update it regularly – every 3 to 5 years at the most.
- Tenants’ improvements – where the occupier does not own the building, they may improve it with partitioning, shelving, kitchen units, work surfaces and so on. Anything fixed to the building which is not original comes under the tenants’ improvements heading. The sum insured should be the cost of reinstating the item with a replacement of the same type, again adding in a figure for removal of debris.
- Contents – this would be things like tables, chairs, cooking equipment, tablecloths, cutlery, glassware, crockery. The rule I was taught when I set out in insurance is that if a giant came along, grabbed hold of the building and turned it upside down, anything that moves is contents.
- Stock – needs to be divided between “target,” refrigerated and other. Target stock is wines and spirits. It used to include tobacco products, but they have pretty much gone now. See below for separate item regarding refrigerated stock. The “other” is any consumable that is not target or refrigerated stock. The sum insured should be the maximum amount you have on the premises at any one time. Most policies include an automatic increase of 15-20% around the Christmas, Easter, Diwali, and other holiday periods but you do need to check your policy carefully to find out how much and how long for.
- Refrigerated stock – as well as the fire, flood etc. risks, there is also the chance of losing temperature-sensitive stock to power outages or equipment breakdown. For the latter, it is essential that your equipment is regularly maintained, with proper records kept and it is unlikely that a fridge or freezer unit over 10 years old would be covered.
- Business interruption/loss of profits – basically, if you are closed for business due to an insured event, you cannot sell your food to the public as you would normally. This area of cover is essential to ensure that you can continue to pay business rates, standing charges, wages for staff whom you wish to retain and so on. Cover also includes the cost of finding alternative premises – even temporary -, advertising where you can be found, transferring telephone and internet services and so on. Also, there may be a significant period between getting repairs completed and regaining your normal flow of customers. Your accountant will advise on the appropriate amount to insure for. This area of cover has something called an “indemnity period” of anything from 12 to 36 months and the length of this that you should opt for is dependant on an number of factors such as the type of property – listed or thatched buildings can take much longer to bring back to standard and any specialist equipment required – some equipment has a very long waiting time, especially where the manufacturer is overseas.
- Public liability – where members of the public come onto property that you control, they have the right to be safe. Trips and falls are the most common claims that we see under this area. Something as simple as a worn or rucked carpet can cause significant injury. I have also seen claims where waiters have dropped hot food onto customers causing injury and property damage. We recommend a minimum indemnity limit of £5,000,000 for this cover.
- Products liability – we all hope that a night of dining out is not going to result in a trip to A&E for a stomach pump, but it does happen – thankfully rarely. Even where the establishment does not actually process something sold – a bottle of wine or water, for example – as the retailer, the original claim comes to them, and it can take much time and effort to pass the claim onto the original supplier. The indemnity limit usually follows the public liability limit.
- Employers’ liability – if you can hire or fire someone or tell them what to do, they are an employee – even in those small establishments where family work for nothing or just for their food and lodging. This is strictly enforced in law and cover must be for a minimum of £10,000,000. All employees must be included – sometimes drivers are forgotten because they come in only to pick up deliveries. As an employer, you are responsible for them at all times so you must ensure that vehicles are safe and that they do not exceed the legal hours of work.
- Loss of licence – having a liquor or entertainment licence can be vital to a catering business so this is essential cover. It will not apply if you deliberately flout the law but loss due to local objections can happen.
- Money – although most establishments now take card payments, there is still quite a cash economy in place so this needs to be covered on the premises, in transit to a bank or building society, placed in a night safe facility or even at owners’ and employees’ homes. Larger sums can be covered in a safe, but it does need to be one from a known safe manufacturer, installed properly, any keys removed out of hours and combinations not written down on a scrap of paper next to the safe – as I found when I visited a client some time ago. A limited amount of cover is normally provided for “personal accident assault” – injury to staff during robberies or thefts in transit. It is not much as standard and you may wish to give thought to obtaining additional cover.
There are a number of things that catering establishments need to be aware of to ensure that their restaurant insurance is effective. One of the most common issues is cleaning, especially of flues etc. even more so where there is deep fat frying. Cleaning records need to be kept, preferably away from the premises. Records are not much use if they have gone up in flames. Another is keeping up with Food Standards Agency food hygiene standards. At least one insurer automatically ceases cover if the FSA score the establishment at 3 or less.
As with any type of insurance, we must ask lots of questions to ensure that we provide the correct advice and cover. We are not being “nosy”, just thorough. We really do need to know things like opening hours, types of entertainment provided, security – particularly if door or other security staff are employed – property type (near me there are a number of thatched properties providing catering services. For mobile units, we need to know that fitting out has been done properly – DIY jobs will be very difficult to find cover for.
Our advisers will guide you through the process, advice on the cover areas essential to you and provide quotations from our panel of insurers. Please phone 01442 242400 or contact us via our website www.aicinsure.co.uk.
