Insurance for Los Angeles restaurants, step by step

Short answer: Almost every Los Angeles restaurant with employees must carry workers' compensation; that part is the law. Beyond that, your landlord, lender and delivery partners will usually require general liability and property insurance, and if you serve alcohol you need liquor liability. The coverages that most often save a restaurant after a fire, a power outage or a lawsuit are the ones owners skip: business income, food spoilage, equipment breakdown, employment practices liability and enough liability limits for a busy dining room. This guide walks you through building the program in order.

This guide is general information for restaurants, cafes, bars, bakeries, food halls and ghost kitchens in Los Angeles County. Your lease, your licenses and your policy wording control.

Step 1: Start with what the law requires

Workers' compensation

Under California Labor Code §3700, employers must secure workers' compensation, either by buying insurance or by getting the state's consent to self-insure. In a restaurant this covers cooks, servers, dishwashers, hosts, bartenders and delivery staff, whether full-time or part-time. Burns, cuts, slips and lifting injuries are common. Payroll by job class drives the premium, so report it accurately. See Restaurant workers' comp insurance and the workers' comp guide for California small employers.

Commercial auto, if you own vehicles

If the business owns a catering van or delivery car, California's financial responsibility laws apply, and a personal auto policy usually won't cover business use. See the commercial auto and fleet guide.

Workplace safety program

Cal/OSHA requires every California employer to have a written Injury and Illness Prevention Program (8 CCR §3203). It isn't insurance, but insurers often ask about it, and a working program helps keep workers' comp claims and premiums down.

For a shorter summary of the rules, see California restaurant insurance requirements.

Step 2: Read your lease before you buy anything else

Restaurant leases in LA usually spell out insurance in detail. Pull out these items and give them to your agent:

• Required general liability limits per occurrence and aggregate.
• Whether the landlord must be an additional insured.
• Whether you must insure tenant improvements, the hood system, walk-ins and other build-out.
• Whether you must carry plate glass, business income or umbrella coverage.
• Any waiver of subrogation requirement.
• Notice requirements if your policy cancels.

Missing a lease requirement can put you in default even if nothing ever goes wrong.

Step 3: General liability and products liability

General liability (GL) covers claims that your business injured a customer or damaged someone's property: a guest slips on a wet floor, a hot plate burns a customer, a delivery driver trips on your loading dock. For restaurants, GL should include products and completed operations coverage for foodborne illness and foreign objects in food. Ask whether the policy has a separate limit for products.

Many restaurant GL policies also include assault and battery sub-limits or exclusions. If you run a bar or late-night venue, check this carefully; it can be a major gap.

Step 4: Liquor liability, if you serve alcohol

A standard GL policy usually excludes liability from selling or serving alcohol. If you hold an ABC license, buy liquor liability.

California law is more protective of sellers than many states. Under Business and Professions Code §25602, a licensee generally isn't liable for serving an adult who later injures someone. The key exception is in §25602.1: a licensed seller can be sued for selling or furnishing alcohol to an obviously intoxicated minor when that causes injury or death. Claims also come from assault, over-service allegations against staff and defense costs even in cases you win. Your landlord or event clients may also require liquor liability. See Dram shop and liquor liability laws by state.

Step 5: Property, equipment and spoilage

Your property policy should cover:

• Building or tenant improvements: the build-out you paid for, like the hood, walk-in, bar and flooring.
• Business personal property: ovens, fryers, refrigerators, POS systems, furniture, smallwares.
• Inventory: food, beverages and supplies.
• Food spoilage: losses when refrigeration fails. Check whether spoilage from a utility power outage is covered, not just from equipment breakdown.
• Equipment breakdown: sudden mechanical or electrical breakdown of walk-ins, compressors, ovens and HVAC.
• Signs, outdoor furniture and patio structures.

Ask whether the policy pays replacement cost and whether the limits reflect current equipment prices. Kitchen equipment and build-out often cost more to replace than owners expect.

Fire and hood systems

Kitchen fires are a leading cause of restaurant property losses. Insurers commonly require a UL 300-compliant hood suppression system with regular professional service, and cleaned exhaust ducts. Keep service records; you may be asked for them at renewal or after a claim.

Step 6: Business income and extra expense

If a fire, a covered water leak or a nearby fire forces you to close, business income coverage replaces lost net income and pays continuing expenses such as rent and key payroll, usually after a waiting period, for a set period. Extra expense pays costs to reopen faster, like renting equipment.

Ask about:

• Civil authority: coverage when authorities block access because of nearby damage.
• Dependent property: coverage if a key supplier or the anchor tenant next door has a loss.
• Utility service interruption: coverage when power or gas goes out because of damage away from your premises.
• Period of restoration and any extended period of indemnity after you reopen, since customers don't always return right away.

Step 7: Employment practices liability (EPLI)

Restaurants have high employee turnover and many hourly workers, and California employment law is detailed. EPLI covers claims of wrongful termination, discrimination, harassment and retaliation. Wage-and-hour claims are usually excluded or very limited, so ask how they're handled. Many restaurant claims in California involve wage-and-hour issues, so good payroll practices matter as much as insurance.

Step 8: Delivery, catering and events

• Third-party delivery apps: if a driver for an app delivers your food, the app's own coverage applies to the driver, not your restaurant. Check what your GL covers for food you send out.
• Your own drivers: if employees deliver in their own cars, you need hired and non-owned auto liability. Their personal auto policies may exclude delivery. See the rideshare and delivery driver insurance guide.
• Catering and events: off-premises catering and event booths may need certificates naming the venue as additional insured. Make sure your GL covers off-premises work.

Step 9: Cyber and payment card risk

Restaurants take cards and store customer data for online orders and reservations. A data breach can bring card-brand assessments, notification costs and lawsuits. California's breach law sets notice duties; see the cyber insurance guide for California small businesses.

Step 10: Umbrella

A busy restaurant can face a single claim larger than a GL or liquor liability limit. A commercial umbrella adds limits on top of GL, liquor (if scheduled), employer's liability and auto. See Commercial umbrella insurance.

Step 11: Build the program in order

Step 12: If you have a claim

1. Make the scene safe and get help for anyone hurt.
2. For fires, call 911 and do not restart cooking until the suppression system is serviced.
3. Photograph damage and spoiled inventory before discarding it, and keep a written list.
4. Report the claim promptly. California's fair claims rules set deadlines for insurers to respond.
5. Track lost sales and extra costs from the first day for the business income claim.
6. For employee injuries, give the employee a claim form (DWC-1) within one working day of learning of the injury, as required by California's workers' comp rules, and report to your insurer.

Questions to ask your agent

• Does my GL include products and completed operations, and what's the limit?
• Is assault and battery covered or excluded?
• Does spoilage cover utility outages?
• What's the business income waiting period and period of restoration?
• Is hired and non-owned auto included?
• Does EPLI include any wage-and-hour defense?
• Which of my lease requirements does this program meet, and which does it miss?

Key terms

• Additional insured: A party, often the landlord, given coverage under your liability policy.
• Waiver of subrogation: You agree your insurer won't pursue the other party after a loss.
• Business income: Lost net income and continuing expenses while closed.
• Spoilage: Loss of perishable stock when refrigeration fails.
• Liquor liability: Coverage for claims tied to serving alcohol.

Common mistakes

• Buying a policy before reading the lease.
• Assuming GL covers liquor claims.
• Low business personal property limits that don't reflect equipment costs.
• No spoilage coverage for power outages.
• Employees delivering in personal cars without hired and non-owned auto.
• Misclassifying payroll on the workers' comp policy.

Frequently asked questions

Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. Not legal, tax or financial advice, and not a coverage determination. Coverage depends on policy language and underwriting.