Insuring for Restaurant Fires: The Leading Industry for This Risk

Risk Management,
By Matt Hene, Ironwood Insurance

​Restaurant life is fast paced and ever changing. In the midst of the chaos, one thing that can give restaurant owners peace of mind is knowing that they are adequately insured in the event of a fire. Restaurants experience more fire losses than any other type of business. Ovens, stovetops and open flames put restaurant kitchens at a high risk for fire loss. Employees that are hurried and distracted only serve to increase this risk. One loose shirt sleeve or poorly maintained exhaust hood can cause a fire that, within minutes, engulfs the restaurant in flames.
Even if flames are contained in a small area, smoke can travel throughout the building resulting in significant damage. Restoration and recovery efforts can mean that a restaurant has to close for days, weeks, months or even years. In addition to costs associated with building and equipment repair, restaurant closings can mean substantial loss of income for owners and employees. Purchasing adequate insurance coverage can help minimize the direct cost and expense to the owner.
The following items outline a few measures that can be put into place to reduce the risk of fire and the damage it causes: 

Purchase insurance policies that adequately protect against unexpected events: Restaurant owners should purchase property and liability policies that provide broad coverage and adequate limits. Some of these policies include commercial property, general liability and workers compensation coverage. Broad policy forms that include coverage for equipment breakdown, spoilage, sewer backup, utility interruption and extended periods of indemnity are recommended (although this is not an exhaustive list). 

Keep all equipment clean and well maintained: More than 61% of all restaurant fires are caused by cooking equipment; 21% of these fires are caused by equipment that has not been property maintained. Grease can accumulate quickly. It is critical that hoods and grease traps are cleaned frequently. Fryers must be broken down properly. Boilers and other equipment must be regularly inspected, repaired and replaced. 

Ensure that a sprinkler system is in place: Wet pipe sprinklers are key to containing a fire. Sprinklers can help reduce fire damage by more than 75%.      

Position fire extinguishers strategically: Fire extinguishers should be conveniently located throughout the restaurant. They should be regularly inspected and maintained. All employees should be trained in the proper use of these fire extinguishers.

Properly store chemicals and liquids: Flammable liquids such as cleaning supplies and liquor can accelerate a fire. Moving these items away from open flames and high temperatures is best practice.

​Make a plan: Employees should know what to do if a fire occurs. They should know where utility cut offs are located, how to exit the building safely and how to assist guests during an evacuation. Assign employees to specific tasks or duties to ensure that necessary actions take place and are not duplicated.  

All restaurant owners hope to avoid losses that require them to utilize their insurance coverage. However, anyone that has lived through a restaurant fire will testify that having adequate insurance coverage and limits in place can mean recovering from a fire or suffering detrimental financial loss, ultimately forcing you to close the restaurant altogether.
At Ironwood, our employees have extensive experience helping restaurant owners identify the best solution for their insurance needs. To find out more information on how to manage your restaurant’s unique risks, please visit ​