"A restaurant is a fantasy - a kind of living fantasy in which diners are the most important members of the cast."

-Warner LeRoy (1935 - 2001), American businessman.

Owning and operating a restaurant can be one of the most fulfilling of professions - you get to be close to food, meet different kinds of people and make money doing so. However, it is also a risky business, demanding a lot of dedication and hard work . Restaurant Startup and Growth magazine commissioned a study that found that 23% of new restaurants fail in their first year, while another study by the Ohio State University threw up similar numbers with possible failures in ten years increasing to 57% - 61%. Clearly, running a successful restaurant is no child’s play.

One area of the restaurant business where you cannot afford to compromise is insurance. Not only can insurance protect you from a variety of misfortunes like property damage, loss of business, etc., it may be a condition attached to your lease and loan agreements. Although each individual restaurant has its unique set of problems requiring unique insurance solutions for protection, all the insurance needed when opening a restaurant can be broadly classified into the following categories:

1. Property insurance - Protects your business property and inventory against physical loss or damage. It may not cover natural disasters, such as floods or earthquakes.

2. Loss of business insurance - Protects your revenue stream in the event of a loss or damage to your establishment, while repairs are being carried out.

3. General liability - Protects the business against losses even if you are negligent or liable for damage, injury or loss to another’s property, reputation, or health. Absolutely necessary nowadays when people don’t hesitate to sue.

4. Liquor liability - Protects you if a customer has too much to drink and drives and hurts themselves or someone else. Often, this is a compulsory requirement for any establishment holding a liquor license.

5. Automobile liability - Protects your company vehicle as well as any damage caused in an auto accident that you or one of your employees has in a personal vehicle while on company business.

6. Food contamination insurance - Protects your food from spoilage and contamination caused by unforeseen circumstances such as power failures.

7. Workers compensation - Protects you if an employee is hurt at work May also cover unemployment benefits for ex-employees until they find work

8. Specific peril insurance - Protects property from scenarios not covered by aforementioned general property insurance.

9. Advertising insurance - Protects your business against advertising injuries resulting from copyright infringement, publishing false claims or slanderous material, etc.

10.Life insurance - Your lease and loan agreement may require you to take out a hefty life insurance policy to protect the business in the event of your death or injury. Moreover, it is also beneficial to your family should such a personal tragedy occur.

Although you have the option to shop around for the best possible rates, it is advised that you engage an experienced commercial insurance broker who is conversant with the local laws and regulations, and also the potential problems with the business. He will be able to advise you on the mandatory requirements as well as what is recommended in the business.