Restaurant package insurance policy provides comprehensive risk coverage but it is also crucial to map the scope of coverage. To know the
scope of coverage, one must be aware of the list of exclusions and restrictions in the terms of policy. The common exclusions under the policy are employee dishonesty, earthquake damage, willful negligence and consequential loss of any kind.
Following are the exclusions under a restaurant package insurance policy:
1. Punitive Damages
Any loss occurred due to non-compliance with statutory or government requirement. Any kind of penalties or fines imposed on restaurant owner because of some unlawful practice is not triggered under the restaurant package insurance policy.
2. Error and Omission in restaurant package insurance policy
The loss incurred due to the negligent act, errors or omission and oversight might invite lawsuits. Your customers can sue you against any loss incurred by them due to your negligence but such loss is not covered under the base policy. One needs to buy error and omission insurance coverage as an extension to cover such acts. Mistakes happen in every business and severe mistakes lead to lawsuits and cost incurred in litigation is hefty so it is beneficial to include error or omission insurance in your package policy.
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3. Employment Practices Liability
Employee-related lawsuits are not covered under restaurant package policy. Your employees can sue you against harassment and discrimination. Such lawsuits can cause the financial and reputational crisis. In cases of employment practices liability lawsuits, all the repercussions will be borne by the restaurant owner even if he has purchased restaurant package policy
4. Workmen Compensation
A standard restaurant package policy does not cover unexpected expenses incurred due to lawsuits and settlements because of workplace injuries. It is pivotal to ensure the Restaurateurs against their liability toward employees under the Fatal Accidents Act 1855 / Workman Compensation Act 1923 and under common law in respect of accidental death or injury sustained arising out of and in the course of employment. Your workers can meet with an accident at the workplace which makes you and your business liable for the financial repercussions.
5. Liquor Liability Lawsuits
A restaurant serving liquor services to its customers has the high risk of third-party lawsuits. Under a standard commercial general liability policy, intoxication and consumption of liquor are the exclusions. In order to make your business secure, buy liquor liability insurance coverage by paying an additional premium amount.
Apart from standard exclusions, claims get rejected in case of non-disclosure of important information or providing incorrect information while buying the policy, dishonesty or any kind of unlawful practice. A claim is not paid if the policy is not renewed within the grace period. So, it is crucial to renewing your policy on time.
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There are a few exclusions such as employment practices liability, error and omission and liquor liability which can be covered by paying an additional premium amount. Add-on cover can be purchased with a restaurant package policy in order to get total cover for your business.
Case Study on Restaurant Package Insurance Policy:
Recently, Delhi government has banned hookah which caused a great distress for restaurant and pub owner serving hookah. Their license got cancelled. During such a scenario, a pub owner continued the unlawful practice of serving hookah. As he was violating the law, the police issued a notice and imposed a hefty fine on the restaurant owner. The restaurant owner had the misconception that the restaurant package policy will protect his business during contingencies. But punitive damages are not covered under the policy which ultimately makes him liable to bear the loss. Hence, all the loss will be borne by the restaurant owner in such case.
Therefore, It is important to read the list of exclusions carefully and understand the scope of coverage. While filing the claim under the restaurant package policy, it becomes important for the insured to know whether such an event is covered in the policy or not.