Fire Insurance Checklist for Restaurants and Pubs: How to Buy the Best Value?

Recent fires at restaurants and entertainment venues highlight that the damage extends beyond the building itself, including lost equipment, revenue, and customer responsibilities. Choosing the right fire insurance and other types of insurance for your business is therefore a crucial tool for rapid recovery in the event of unforeseen incidents.

A single fire can impact an entire business.

Restaurants, cafes, pubs, and bars face a higher fire risk than typical businesses due to the use of high-powered gas and electric stoves, exhaust systems, and various electrical appliances, as well as a high volume of customers at the same time. When a fire occurs, the damage extends beyond building repairs; it also includes lost interior space, equipment, raw materials, lost revenue, and potential claims from customers or third parties. Therefore, fire insurance is a crucial risk management tool that helps maintain business liquidity.

What should fire insurance cover?

Businesses should inspect all properties before determining insurance coverage. Coverage options to consider include:

• • For buildings and structures, the new construction value should be used as the basis for determining the insurance coverage.
  • Interior decoration of the shop, such as the bar counter, stage, lighting system, sound system, built-in furniture, and permanent decorations.
  • Kitchen appliances and equipment such as stoves, refrigerators, freezers, coffee makers, dishwashers, POS systems, and computers.
  • Raw materials and inventory, such as fresh food, beverages, spirits, and frozen products.
  • Shop signage and exterior property, if the policy covers additional coverage.
  • Cash available in-store, where additional insurance can be purchased as needed.

Don't just buy fire insurance.

Standard fire insurance policies typically cover fire, lightning, and explosions according to the policy terms. However, businesses should consider purchasing additional coverage tailored to the specific risks of their area, such as flooding, storms, earthquakes, smoke damage, water damage from firefighting, vehicle collisions, riots, or civil unrest (if necessary). Therefore, the choice of coverage should align with the nature of the business and its location; it's not necessary to purchase coverage for every risk if there's no likelihood of it occurring.

Shop tenants also need to have insurance.

Many people mistakenly believe that building owner's insurance covers everything, but generally, owner's policies only cover the building structure. Tenant's assets, such as shop decorations, kitchen equipment, electrical appliances, tables, chairs, and inventory, should be insured separately.

7 types of insurance that restaurants and pubs should have.

1. Fire insurance covers damage from fire and other perils specified in the policy.
2. All Risks property insurance provides coverage for various types of accidental damage, subject to exclusions as per the policy terms and conditions.
3. Public liability insurance covers cases where customers or third parties are injured or their property is damaged due to incidents within the store.
4. Product liability insurance is suitable for restaurants that may be sued for damages caused by food or beverages.
5. Business interruption insurance helps compensate for lost income and operating expenses if a business has to temporarily close due to a covered event.
6. Group accident insurance for employees helps create employee benefits and reduces the employer's expenses.
7. Cyber ​​insurance is suitable for businesses that use POS systems, online payment systems, food delivery apps, or membership systems.

5 Steps to Buying the Right Fire Insurance for Your Business

1. Conduct a comprehensive property survey, creating a list of buildings, furnishings, equipment, and inventory, and assess their current value.
2. Determine the appropriate insurance coverage. The replacement cost should be used to avoid under-insurance, which could result in reduced claims payments under the average clause.
3. Provide complete business information, such as business type, fire suppression system, gas usage, food preparation methods, and risk prevention measures.
4. Choose additional coverage to suit your location and type of business.
5. Read the policy terms and conditions before making a decision. Carefully review the exclusions, coverage limits, deductible, and claims procedures.

Checklist before renewing your insurance policy.

1. Review the insurance coverage annually to reflect current construction costs and property prices.
2. Always inform your insurance company when renovating your store or purchasing new equipment.
3. Check if the insurance policy covers interior decorations and the tenant's property.
4. Estimate the value of inventory to be as close to reality as possible.
5. Consider expanding coverage if your business model changes, such as expanding your space, adding a central kitchen, or becoming more digitally integrated.

Don't choose the cheapest premium, but choose the "appropriate coverage amount."

Often, insurance companies reduce premiums by understating the insured value. This can result in less than full compensation being paid in the event of damage, failing to meet the average clause principle. Therefore, accurately assessing the insured value to match the actual replacement value of the property is more important than choosing the policy with the lowest premium. Consider a simple premium calculation method where insurance companies multiply the premium rate by the insured value.

for example

A restaurant has a building value of 5 million baht, decorations of 2 million baht, kitchen equipment and supplies of 2 million baht, and inventory of 1 million baht, totaling 10 million baht insured capital. Assuming a premium rate of 0.15%, the estimated insurance premium would be...

If you choose to purchase additional coverage, such as flood insurance, business interruption insurance, or third-party liability insurance, the total premium will increase according to the coverage selected.

Note: This example is for illustrative purposes only. Actual premium rates depend on the individual insurance company's assessment, business type, sum insured, building type, fire protection measures, and policy terms and conditions.

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