Operator guide

The coverages restaurants forget

There's a handful of coverages restaurants leave off — until the day they desperately need them. None of these are exotic. They're just the ones nobody talks about until it's too late, and the ones a generalist tends to skip.

Spoilage

The walk-in compressor dies on a Friday night of a long weekend. Nobody's back in the building until Tuesday. You've lost your entire protein inventory and a week of prep.

Standard property coverage often responds to the equipment damage, not the food inside it. Spoilage coverage is what pays for the inventory — and the meaningful detail is the trigger. Some forms only respond if the failure came from a covered peril or an off-premises power outage; better ones include mechanical breakdown and on-premises power interruption. If your spoilage limit was set when you opened one location, it almost certainly hasn't kept up with what's sitting in your coolers now.

Equipment breakdown

The hood system fails during service. A compressor burns out. The electrical panel arcs. These are mechanical and electrical failures, not fire or storm — and standard property policies typically exclude them.

Equipment breakdown coverage fills that hole, and it usually covers more than the equipment: the resulting business income loss and often the spoiled product too. Given the density of expensive mechanical equipment in a restaurant, it's one of the highest-value line items on the policy and one of the most frequently missing.

None of them are exotic. They're just the ones nobody talks about until it's too late — and the ones a generalist tends to leave off.

Employment practices liability (EPLI)

This is the one I'd argue is most underrated, and it's a numbers game. You run an industry with high turnover, a young workforce, tip credits, scheduling disputes, and a lot of people in close quarters under pressure. That combination produces claims — wrongful termination, discrimination, harassment, retaliation.

Your general liability policy does not cover these. EPLI is a separate policy, and the thing operators underestimate is defense cost. Even a claim you ultimately win can run into real money before it's resolved, and most of these resolve on economics rather than merits.

Two things to check: whether wage-and-hour defense is included at all — it's commonly excluded or offered only as a small sublimit, and wage-and-hour claims are among the most common in this industry — and whether defense costs erode your limit.

Sewer and drain backup

Water backing up through floor drains into the kitchen. Standard property forms typically exclude sewer and drain backup, so it needs to be added. For a basement prep kitchen or a building with older infrastructure, this is not a remote scenario — and it closes you immediately, because the health department will not negotiate.

Food contamination and communicable disease

Sometimes called food-borne illness coverage. This responds when a health department orders you closed after a suspected outbreak or an employee tests positive for a communicable condition. Better forms cover the income loss while closed, the cost of replacing contaminated stock, employee medical testing, and sometimes public relations expense to repair the damage — which for a restaurant is often the part that actually determines whether you recover.

Employee dishonesty

Cash business, high turnover, comps and voids, inventory that walks. Theft by employees is excluded under standard property coverage. A crime or fidelity coverage part handles it. Most operators who've been at it a while have a story here.

Outdoor property, signs, and the patio

Your monument sign, the patio furniture, umbrellas, heaters, landscaping, fencing. Signs are often covered only up to a low sublimit unless specifically scheduled, and outdoor property tends to have tight limits. If you built a patio program that now drives real revenue, it's worth confirming that investment is actually on the policy.

Utility service interruption

Power goes out at the substation, not at your building. You're closed for two days, with no physical damage to your property at all. Many policies won't respond to that without a utility service interruption endorsement — and the version that includes overhead transmission lines is the one that matters, because that's what actually goes down in a storm.

How to check in one pass

Pull your declarations page and the schedule of endorsements. Go down this list and mark each one present, absent, or unclear. You'll usually end up with a few in each column, and the "unclear" pile is the interesting one — that's where sublimits and trigger language hide.

Then ask what each missing one costs. Several of these are inexpensive relative to what they do. The reason they're not on your policy usually isn't price — it's that nobody who understood your business was in the room when it was built.