Pub and restaurant insurance

Pubs, bars and restaurants sit in one of the more heavily rated corners of commercial insurance, and for good reason: a live kitchen, late-night trade, the public on your premises and thousands of pounds of chilled and frozen stock all share the same building. The policy is bought to keep the business trading after a fire, flood or freezer failure — not simply to satisfy a lender or a landlord. Where it goes wrong is almost always in the detail: a buildings sum insured pitched at what the property is worth rather than what it costs to rebuild, a business interruption period too short to cover a full kitchen strip-out and refit, or a warranty on frying and duct cleaning that quietly voids the very fire cover you thought you had. A policy placed properly, on the right market, is the difference between a claim paid and a business that never reopens.

Key covers for pubs and restaurants

• Buildings — the structure, cellar, kitchen, fixed extraction and landlord’s fixtures, insured on a full-rebuild basis including demolition, professional fees and debris removal. Vital where you own the freehold or hold a full-repairing lease.
• Contents, trade fixtures and fittings — kitchen equipment, refrigeration, bar fit-out, furniture, glassware, tills and EPOS. Usually insured on a reinstatement (new-for-old) basis, so the sum insured must reflect replacement cost, not book value.
• Stock, including frozen and chilled — food, wines, spirits and cellar stock. Frozen and chilled stock should be specifically declared so cover responds to a refrigeration breakdown as well as to fire, theft and flood.
• Business interruption — lost gross profit and increased working costs while you cannot trade after an insured event, with the indemnity period set long enough to cover rebuild, refit and the return of custom.
• Public and products liability — injury to customers on the premises and illness or harm caused by the food and drink you serve, typically arranged at £5m–£10m, subject to underwriter assessment.
• Employers’ liability — legally required once you employ staff, including bar, kitchen and casual or agency workers, at the statutory minimum of at least £5m.
• Loss of licence — the reduction in the value of the business, and interruption to trade, if the premises licence is lost other than through your own default. Central to a licensed-trade policy.
• Deterioration of stock — spoilage of frozen and chilled stock following breakdown of, or accidental damage to, refrigeration or a failure of the public power supply, subject to policy conditions.
• Money and assault — cash on the premises, in transit and in a bank night safe, plus assault cover for staff following a robbery, relevant to cash-heavy late-night trade.
• Glass, signs and frozen food extension — fixed glass, shopfronts, illuminated signs and specialist glazing, with add-ons commonly bolted on to a package for the trade.

What underwriters focus on

Licensed-trade risk is priced on how the building is put together, how the food is cooked and how the place actually trades — not just on turnover. Getting these facts in front of the right insurer, accurately, is where a specialist broker earns their place.

Construction and fire load. Underwriters look hard at the building. Traditional brick or stone with a slate roof rates very differently from timber-framed, thatched or composite-panel construction. Expanded-polystyrene (EPS) sandwich panels in kitchen and cold-room walls are a particular focus because of how they behave in a fire; flats or letting rooms above the trading area raise the exposure again.

Cooking and extraction. The kitchen is the single biggest fire driver. Deep-fat frying, chargrills, wood-fired ovens and flambé work all lift the rating, and insurers will expect the extraction canopy and ductwork to be professionally cleaned to a documented schedule. Undeclared or dirty ducting is one of the most common reasons a fire claim is disputed.

Trade profile and hours. The wet-to-dry split (alcohol versus food), late-night and after-midnight opening, live music, nightclub-style operation, functions and outside catering all change the risk. A gastropub trading to 11pm is a different animal from a late bar with a 3am licence and door staff, and it must be presented as such.

Sums insured and indemnity period. Underwriters increasingly test whether the buildings figure reflects true rebuild cost and whether the business interruption sum insured and indemnity period are realistic. A licensed premises can take well over twelve months to strip out, rebuild, refit and rebuild trade after a serious fire, and the indemnity period should reflect that.

Management, maintenance and claims history. Electrical inspection reports, gas safety, portable-appliance testing, an intruder and fire alarm, and the condition of wiring and fixed extraction all feed the price. Prior claims — escape of water, flat-roof leaks, minor kitchen fires, assault or theft — are read closely, as is whether the operator has learned from them.

Common claims

Kitchen fire from a fryer or extraction duct. A blaze that starts in the frying range or in built-up grease in the canopy and ductwork spreads through the kitchen and forces closure. The buildings and contents sections respond to the damage; business interruption covers the lost gross profit while the kitchen is rebuilt and re-fitted — provided the duct-cleaning and frying conditions have been met.

Refrigeration failure spoiling stock. A cellar cooler or walk-in freezer fails overnight, or the power supply drops, and thousands of pounds of chilled and frozen stock has to be condemned. Deterioration of stock cover responds, subject to the maintenance and temperature-record conditions in the policy.

Customer slip or trip. A diner slips on a wet floor near the bar or misses a step and is injured, then brings a claim. Public liability responds to the compensation and legal costs, subject to the limit of indemnity and the policy terms around signage and floor maintenance.

Alleged food poisoning. A group falls ill after a service and alleges the food was to blame, with an environmental health investigation following. Products liability responds to defence costs and any award, and good temperature and cleaning records become central to how the claim is handled.

Storm, flood or escape of water. A burst pipe, a failed flat roof or a flood shuts the premises for weeks. Buildings cover meets the repair; business interruption covers the trading loss and the increased cost of working, again governed by the indemnity period you chose at inception.

The mistakes that cost you at claim

Underinsurance. This is the single biggest cause of a shortfall in the licensed trade. Buildings are too often insured for market value or purchase price rather than the cost to rebuild — a very different, and usually higher, figure once demolition, debris removal, professional fees and building-regulation upgrades are added. Heritage and listed premises push it higher still. If the sum insured is materially short, the insurer can apply average and cut the payout proportionately, even on a partial loss. Our free underinsurance check is a straightforward way to pressure-test your buildings, contents, stock and business interruption figures before a claim exposes them.

The wrong indemnity period. A twelve-month business interruption period is a common default and a common trap. A serious kitchen or building fire can take longer than a year to make good once you allow for insurer investigation, planning and listed-building consent, the rebuild, the refit and the slow return of trade. Twenty-four or thirty-six months is frequently more realistic for a pub or restaurant, and the gross-profit basis must be set correctly so the figure actually reflects the business.

Breached conditions and warranties. Licensed-trade policies carry conditions with teeth: professional extraction-duct cleaning to a stated frequency, frying-equipment thermostats and cut-outs, the intruder alarm set when closed, portable and fixed electrical testing, and safe overnight cash limits. Miss one that is relevant to the loss and the claim can be reduced or declined. These are not box-ticking — they are the terms on which the cover was granted.

Undeclared activities. The trade rarely stands still. Adding live music, a late licence, functions and weddings, letting rooms, outside catering or a new wood-fired oven all change the risk, and an insurer is entitled to a fair presentation of it under the Insurance Act 2015. Activities that were never declared can leave a gap exactly when you need to rely on the policy. Tell your broker when the business changes — not at renewal, and certainly not at claim.

Compliance and risk considerations

Insurance sits alongside a stack of legal duties in the licensed trade, and underwriters expect operators to be on top of them. Employers’ liability cover is a legal requirement under the Employers’ Liability (Compulsory Insurance) Act 1969 as soon as you employ staff, including casual, kitchen and agency workers, and the certificate must be displayed or available to them.

The Health and Safety at Work etc. Act 1974 places general duties on you towards staff and customers, from safe flooring and kitchen practice to manual handling and cellar work. Food safety obligations under the Food Safety Act 1990 and the Food Standards Agency regime cover hygiene, temperature control and traceability, and allergen information rules — including the requirement for full ingredient and allergen labelling on food prepacked for direct sale, often called Natasha’s Law — are increasingly relevant to any products liability exposure.

The premises licence itself sits under the Licensing Act 2003, which is why loss-of-licence cover matters, and gas appliances must be maintained and certified by a Gas Safe registered engineer. When you buy the policy, the Insurance Act 2015 duty of fair presentation requires you to disclose the material facts of the risk — construction, cooking methods, hours, claims and any unusual activity — fairly and accurately. Meeting that duty is the foundation of a policy that pays. This page is general information and not advice; the right structure for your business should be set with a broker against your own circumstances.

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