Los Angeles is the center of attention for many Chinese individuals in the United States. Many come to Los Angeles to open up a restaurant where a variety of food exists, including Hong Kong style restaurants, hot pot restaurants, bakeries, boba tea shops, and more!
The biggest challenge for a new restaurant owner is the unfamiliarity of the rules and regulations of the U.S. food and beverage industry. This article analyzes a few points to pay attention to from an insurance point of view, including the location, leasing, security, and employment.
Make sure there is a fire extinguishing system in the location
Choosing a location that attracts customers is a given, but use good judgment. If you’re going to take over an existing restaurant, look for the fire extinguishing system in the kitchen. If it’s not there, then you’ll need to spend money on installing it. Without it, you won’t be able to buy commercial insurance and without that, you can’t open your restaurant.
The U.S. Fire Department regulations require a UL300 Standard (Fire Testing of Fire Extinguishing Systems for Protection of Commercial Cooking Equipment) which is a fire test method intended for the protection of commercial cooking areas.
Understand the contents of your lease before signing
When leasing a space, insurance should already be included in the costs. Regardless of what kind of business you do, before you sign the lease you must understand the contents of the lease and what kind of insurance is covered.
Some landlords only require tenants to buy an aggregate limit of $2 million and a per-occurrence limit of $1 million for general liability insurance. $2 million aggregate limit means that during the lifetime of a policy, the insurer will pay up to $2 million to cover claims and $1 million occurrence means that while the policy is active, the insurer will pay up to $1 million to cover any single claim.
If the site is located in a shopping center, landlords will require restaurant owners to buy umbrella insurance, commercial auto insurance, workers’ compensation, etc. Just to reiterate, make sure you really understand the contract before signing because you don’t want to sign it then find out later that you can’t follow through with the contract.
Buy enough commercial insurance to protect your investment
Many businesses want to save money and buy general liability insurance just to satisfy the landlord’s requirements. If a fire were to occur, the landlord would have the general liability insurance to cover fire damage. However, the business owner would be the ones paying for any other damages done to the property.
More and more restaurants want to make their restaurants stand out so they are willing to spend more on these improvements. Don’t forget to buy commercial insurance for your property and enough of it so that it cover any damages that may occur in the future.
After the restaurant owner submits the application, the insurance company will do a quick safety inspection on the restaurant. They might tell you to update your fire extinguisher or to add signs to remind your employees to wash their hands. They do all of this to prevent any accidents from occurring in the future.
Workers’ compensation; educate your employees on safety in the workplace
Workers’ compensation insurance costs more in the restaurant industry than it does in a general industry. It is more common for workers to get injured in the restaurant such as spraining their wrist when carrying dishes or stubbing their toe when throwing out the garbage. These are also reasons that explain why the workers’ comp insurance premiums are increasing.
To avoid the rising premium costs, we recommend that those in the restaurant industry should take precautions such as educating their staff on safety in the workplace.
Employers should educate their staff on how to maintain a safe working environment, protecting themselves and preventing accidents. Employers should also provide employees with safety gear such as non-slip shoes, gloves, and more. If you do get into an accident, you can see a doctor at a nearby Urgent Care, which is included in the workers’ comp insurance.
Save money on commercial insurance
Get all the discounts you qualify for. Some insurance companies and associations offer a 5% premium discount for participating. However, participating in the association can cost more than $100.
Choosing the right insurance is one of the biggest things to consider when opening a restaurant. Commercial and workers’ comp insurance expert Kenny Chang says that some mainstream insurance companies in the U.S. offer some pretty good insurance, especially when it comes to customer service quality and the time it takes to process claims.
If you are a restaurant owner and would like professional help from commercial insurance experts, you can call us at 1-800-681-8288 three months before your insurance expires and we can help you compare prices and help you choose the best insurance plan for your restaurant.