Restaurant and cafe insurance explained: the compulsory cover, the policies a lease and a landlord demand, what restaurants claim for, typical costs, and the conditions that void a claim
What insurance a UK restaurant or cafe needs: employers' liability by law, public and products liability for food, buildings, contents, stock and money, business interruption, equipment breakdown, deterioration of stock, legal expenses, cyber, typical premiums and the compliance conditions insurers enforce.
A restaurant carries the same two liabilities as any employer, a kitchen full of equipment that can fail or burn, a fridge full of stock that spoils when the power goes, and a trading position that a three-week closure can end. The law requires one policy. The lease, the landlord, the card processor and common sense require several more, and the difference between a restaurant that survives a kitchen fire and one that does not is usually the business interruption sum insured and whether the extraction was cleaned when the policy said it should be.
This guide covers each cover in turn, what restaurants and cafes actually claim for, what they pay, and the policy conditions that decide whether a claim is paid.
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Employers' liability: the one policy the law requires
If you employ anyone, including casual and part-time staff, the Employers' Liability (Compulsory Insurance) Act 1969 requires at least £5 million of employers' liability cover from an authorised insurer, and the certificate must be displayed or available to staff. Most policies carry £10 million. The fine for trading without it is up to £2,500 for every day you are uninsured, and £1,000 for failing to produce the certificate. It covers compensation and legal costs when an employee is injured or made ill by their work: the porter who slips on the fryer oil, the chef with dermatitis from the glasswash detergent. Family-only businesses with no other employees are exempt, but the moment you take on a Saturday worker you are not.
Public liability: not compulsory, not optional
Public liability cover pays compensation and legal costs when a member of the public is injured or their property damaged because of your business: the customer who slips on the wet floor, the allergic reaction, the food poisoning outbreak, the coat ruined by a spilled tray. There is no legal requirement to hold it, but no landlord will grant a lease, no council will grant a pavement licence and no brewery or pubco will sign a tenancy without it. £2 million is the floor most contracts ask for; £5 million is now common because a single serious injury claim can exceed £1 million. Check that food and drink supplied is covered (products liability) and that the policy extends to outside areas and events.
Buildings, contents, stock and money
If you own the building you insure it; if you lease it, the lease says who does, and most leases put the buildings insurance on the landlord with the premium recharged to you, so check rather than duplicate. Contents cover is for the fixtures, fittings and equipment you own, and the sum insured should be the replacement cost of everything from the range to the tills. Stock cover, including frozen food in the event of freezer breakdown, needs a realistic figure for the busiest week of the year. Money cover handles cash in the safe, in transit and in the tills, with separate limits for each, and business-hours and out-of-hours theft.
Business interruption: the cover that keeps you trading
A fire in the extraction that closes the kitchen for three months costs more in lost profit than in repairs. Business interruption cover replaces the gross profit you would have earned and pays the increased costs of working around the damage, for an indemnity period you choose. Twelve months is the minimum worth having; kitchen fit-outs and licensing rarely finish in six. Check the definition of gross profit matches your accounts, that the sum insured is not understated, and whether the policy includes cover for closure by a public authority, which is the clause that mattered in 2020 and is now often excluded or restricted.
The covers specific to a licensed venue
Loss of licence cover pays if the premises licence is revoked, suspended or not renewed for reasons beyond your control, protecting the value of the business. Legal expenses cover pays for employment tribunal defence, licensing hearings, HSE prosecutions and tax investigations, and comes with a helpline that is worth the premium on its own. Deterioration of stock covers frozen food lost to a breakdown or a power cut. Glass cover, for plate glass windows and fixed glass, is cheap. Equipment breakdown pays for the compressor rather than the food. Employment practices liability covers discrimination and unfair dismissal claims. Cyber cover is now worth considering for any venue holding customer data or taking bookings online.
What invalidates a claim
Insurers decline claims when a condition of the policy was not met, and the conditions track the compliance you should be doing anyway: a current fire risk assessment, an annual gas safety certificate, extraction cleaned to TR19 at the stated frequency, electrical installation tested, a working burglar alarm set at night, cash limits kept, and no undisclosed changes to the business. A fire claim declined because the canopy had not been cleaned in fourteen months is the classic hospitality case. Read the policy conditions, put each one on the compliance routine, and keep the certificates where you can produce them.
Renewal: shop it, declare it, diarise it
Hospitality insurance is placed by brokers who specialise in it, and their market knowledge is worth more than a comparison site for anything above a cafe. Get two quotes at each renewal, declare every material fact (a new fryer, later hours, live music, a claim you settled yourself), and check the sums insured have kept pace with your costs. Put the renewal date, the excess and the broker on the licence and certificate tracker so a lapse never happens by accident, and file the schedule and policy wording where the manager can find them on the night something happens.
What a restaurant or cafe pays
A small cafe with a couple of staff and a simple kitchen might pay £600 to £1,500 a year for a combined package with employers' and public liability, contents, stock and business interruption. A 60-cover restaurant with a full kitchen, alcohol licence and delivery trade is more often £2,500 to £6,000, and the premium rises with deep fat frying, solid fuel cooking, late hours and a claims history. Excesses of £250 to £500 are normal, with a higher excess on escape of water and on theft where the alarm was not set. Delivery drivers on your payroll need motor cover for hire and reward, which their personal policy does not provide.
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Common mistakes to avoid
Frequently asked questions
What insurance is legally required for a restaurant?
Only employers' liability insurance, at a minimum of £5 million, if you employ anyone. Everything else is required by your lease, your landlord or your contracts rather than by statute.
How much is restaurant insurance?
From around £600 a year for a small cafe to £6,000 or more for a full-service restaurant with alcohol, frying and late trading. Turnover, location, cooking methods, security and claims history drive the price.
Does restaurant insurance cover food poisoning and allergic reactions?
Public and products liability cover does, if the policy includes products liability for food supplied. Keep the allergen matrix, temperature records and training records that let the insurer defend the claim.
What is deterioration of stock cover?
Cover for frozen and chilled stock lost when a fridge or freezer breaks down or the power fails. It is a cheap extension that pays out more often than most.
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