Tips to manage your restaurant’s physical damage risk

With the hospitality sector being one of the hardest hit industries by COVID-19, many restaurants are adjusting to a new normal as Canada emerges from the pandemic. This includes a new way of doing business and revisiting health and safety protocols, managing your business’ risks and revisiting your insurance policy.

The hospitality industry is constantly challenged to deliver exceptional service and quality food while also being profitable. Now that things are reopening, the pressure and exposure is heightened when you consider risks related to property damage.

Restaurants not only have to consider what happens if their property gets flooded, damaged by a fire, heavy winds or floods, but other physical damage perils, like a kitchen fire or equipment damage could cost your business thousands and result in downtime. It’s more important than ever to identify and manage your restaurant’s risks and get the right insurance coverage that suit your business’ unique needs. A comprehensive risk management plan can help reduce serious accidents or liability lawsuits that may even cost you & your business.

Physical damage – top 5 risk management tips

1.	Identify exposures
List what property exposures your restaurant potentially faces, including natural disasters, equipment failures, kitchen fires, food spoilage, customers, employees and third parties/vendors. Fire and water risks are most common as these are heightened due to things like open flames, fire due to build-up of grease laden vapours in exhaust systems, use of combustible items, complex HVAC systems, sewer backups and appliances connected to water lines.

2.	Maintain equipment
Restaurants are dependent on functioning equipment to service customers. If your equipment breaks down, it can be costly and even interrupt business or force you to close down for a prolonged period. Equipment breakdowns can also lead to major property damage if a leak or fire happens. Regular maintenance of equipment, including refrigeration units and heating equipment like scheduled contracted cleaning of these systems, is therefore critical to help manage these risks and avoid potential losses. 

3.	Train employees
Do all your restaurant employees know your health and safety protocols and what to do in the event something unforeseen happens? Protect your employees by conducting regular training as part of your risk avoidance plan. This includes work safety, other safety procedures, customer service, alcohol service, employee hygiene, health inspections, food storage, equipment and supplies, facilities and surfaces and safety equipment.

4.	Flood & Fire prevention
Since the potential for kitchen fires and water damage are elevated in the restaurant business, it’s critical to ensure your risk management plan particularly includes a detailed flood and fire prevention plan and recovery steps, in case of an accidental fire, water leak, or natural disaster happens.

5.	Get the right insurance 
Talk to your broker about a tailored insurance package to suit your restaurant’s unique needs. This may include additional coverages beyond commercial property insurance, including equipment breakdown, business interruption, inland marine and other liability coverages to ensure you are properly protected.

We are always happy to help you, hope these tips will help you. You can always contact us for any insurance related queries.