The recession may be over, but restaurants are still finding ittough to bring back customers in the numbers they saw during boomtimes. Many are turning to innovations to grow their business.While that can be a plus for their balance sheets, it can also openthe door to unexpected liabilities that their insurance policieswere not designed to cover.

All too often, the lack of appropriate coverage only becomesevident when a mishap occurs and a claim is filed. After someonehas already threatened to sue for damages is usually a bad time forrestaurant owners to discover they should have consulted with theirinsurance agent about their insurance needs before changing theirbusiness model.

Agents can head off this scenario and build a strongconsultative relationship with their restaurant customers by askingkey questions at renewal time. Here are some of the trends thatcould put restaurants at risk and the questions agents should asktheir restaurant customers :

1. Mobility. Has the restaurant added newservices, such as delivery of meals using hired driverswith their own cars?
2. Branch out businesses. Has the restaurantstarted a new line of business, such as catering?
3. Trendy foods. Has therestaurant introduced new menu offerings as part of thestrategy for attracting more customers, such as locallysourced foods, an emphasis on organic ingredients orassurances about non-allergenic ingredients?
4. Additional payment methods. Is the restaurantaccepting new methods of payment, such as online credit charges orsmartphone purchasing?

Armed with the answers to these kinds of questions, you canoffer your customers a menu of options that go beyond the coveragerequired for an on-site restaurant operation. Insurance carrierswith experience in the food services industry can work closely withyou to make sure your customers have the right “ingredients” intheir policies.

On the Road

When restaurant owners saw a steep drop-off in business severalyears ago, some decided that if the customers were not coming tothem, they would take the food to the customers. Delivery ofprepared meals moved beyond traditional pizza joints and began toshow up in a variety of restaurants.

Unfortunately, many restaurant owners forgot to take insuranceneeds into their calculations. They may not have been aware thattheir standard commercial auto coverage does not address theirliability for drivers they hire who use their own cars, the typicalarrangement for delivery services. They may not have known thatthey cannot buy insurance for someone else's car.

The first thing you can do as their agent is educate them about“hired and non-owned” auto coverage that will protect their companyif they become the deep-pocket target of someone injured by adelivery driver. You can also advise them to evaluate theirumbrella coverage to make sure they have adequate limits now thattheir business will involve more use of automobiles; jury awardsfor injuries from vehicle accidents have skyrocketed over the pastdecade.

Other recommendations you can offer your customers should focuson the people hired to make the deliveries. The restaurant shoulddevelop and follow hiring protocols, such as checking state drivingrecords to make sure the applicants do not have excessive ticketsfor speeding, arrests for drunken driving, at-fault accidents andother indicators of poor driving practices and skills. They willalso want to institute policies that address what can and cannot bedone during the course of deliveries, such rules regarding obeyingspeed limits, using cell phones, drinking on the job, carryingpassengers and other possible restrictions.

Anyone can make a mistake while driving, but if restaurantowners are forced to defend themselves against a lawsuit, they willwant to be able to argue they hired someone with a good drivingrecord and had driving standards in place that employees wererequired to follow.

In addition, the person hired to drive should be required tocarry insurance that not only has adequate liability limits, butalso does not exclude coverage for driving during the course ofconducting business. The restaurant should require the driver'spolicy include the restaurant as an additional insured. The drivershould prove the coverage is current and meets the restaurant'srequirements with a certificate of insurance.

Finally, the restaurant would also be well advised to use avehicle maintenance checklist that identifies problems such as baldtires, non-functioning headlights and burnt-out bulbs for turnsignals. An unsafe vehicle operating in their name can expose themto liability if they have not taken steps to perform regularinspections.

By making your restaurant customers aware that a deliveryservice, even one they are trying on a pilot basis, has to bemanaged carefully, you can help avoid any misunderstanding aboutwhere their coverage ends and their liability exposure begins.

Catering and Special Events

Some restaurants have opened up side businesses to provide foodfor off-site conferences, special events such as golf tournaments,weddings, bar mitzvahs and other private functions. This cateringservice may be something that is provided regularly or as aninfrequent, one-off occurrence. Either way, exposure to liabilityincreases across several dimensions.

One area to examine is workers' compensation. Employees who aredelivering food, lifting trays and equipment from delivery vans andputting them in place at unfamiliar event locations may be moreexposed to back strains, slips and falls and other injuries. Youwill want to help your restaurant customers ensure that theirworkers' compensation coverage is not limited to activity withinthe four walls of the restaurant and that the limits are adequateto address exposure.

If alcohol is being served at the event, the restaurant shouldmake sure that all proper liquor liability controls are in place,with adequate training for staff about serving inebriated guestsand avoiding under-age drinking. If the restaurant's policy doesnot include off-premises liquor liability, additional coverageshould be added.

In addition, the precautionary measures that are advised fordelivery service also apply to catering and special event services.Employees who will be driving company vans should have good drivingrecords and be trained about company policies regarding safedriving.

For restaurants that cater on only an occasional basis, specialevent insurance may be the most economical solution, issued tocover the exact circumstances of each situation. For those who domultiple events each year, a policy can be put in place that coversall events, with the customer reporting in advance details aboutthe events as they are scheduled.

A critical step is to encourage customers to notify you aboutspecial events in advance so that you can help them arrange thebest coverage. By giving you the information you need to put thecarrier on notice, the restaurant owners can be assured that anycatering missteps are covered.

Keeping Up with Trends

Increasingly, high-end restaurants are interested indemonstrating to potential diners that they are in line with thelatest culinary trends. This includes offering locally grownproduce and specially raised meats, using organic ingredients andavoiding items that are allergens for some people.

While these trends are rooted in the desire to have fresh, pure,uncontaminated food that has traveled only a short distance fromfarm to plate, they introduce an element of risk if carefulcontrols are not put in place. Food-borne illness, such as areaction to salmonella on fresh spinach or e coli bacteriaon meat, is a problem, regardless of the source. National fooddistributors, however, typically have protocols in place to handlerecall situations and insurance coverage to address damages.

Restaurants that choose to buy locally should ensure thatgrowers have proper procedures in place to limit contamination anddeliver unspoiled food. They also ask produce and meat providers toshow proof of liability insurance with a highly rated insurancecarrier and require that the restaurant be added as an additionalinsured.

You may also explain to your customers about the advantages oftrade name restoration/food-borne illness policies. This type ofcoverage helps minimize the costs associated with crisis managementin the event of an incident that would damage the reputation of therestaurant. This could include covering expenses to set up a callcenter to deal with inquiries from restaurant customers, providingpublic relations expertise for responding to media requests, andcommunicating with regulators, community leaders and otherstakeholders.

If restaurants are offering foods that may be allergens for somecustomers—such as dishes fried in peanut oil—you can advise theowners to use cautionary signage. For example, menus can carry amessage that says some dishes contain peanuts, MSG, gluten or otheringredients people may be sensitive to.

Similarly, if the restaurant is providing uncooked food to beprepared at home, the items should be given to customers withstickers advising that they be refrigerated until use and thencooked at the proper temperature for the right amount of timebefore consumption.

Safeguarding Transactions

Another area that is evolving rapidly for restaurants is howconsumers pay for their meals. To encourage more business, somerestaurants now allow ordering and payment online. Others may havethe capability to allow people to pay with their smart phones inplace of a credit or debit card.

With increased exposure to ways for hackers to steal privateinformation, including account numbers for credit and debit cards,restaurants should consider purchasing cyber liability insurance.These policies typically cover the costs of dealing with thestate-by-state regulations that govern steps that must be taken inresponse to security breaches that expose people to identity theftand fraud.

The Recipe for Success

During the recession, restaurants lost millions of customers whowere cutting back on discretionary spending. Now many arerebuilding their businesses, sometimes by trying new techniques andoffering different services.

Agents who are tuned in to what those changes may mean can earnrestaurant owners' trust – and repeat business – by making sureinsurance coverage keeps pace with how the restaurants are actuallyoperating. By asking the right questions at renewal time, agentscan help restaurant owners identify all the right ingredients forcomplete coverage.