Aaron and Mei own a seventy-seat restaurant in Seattle's Ballard neighborhood. They lease the space, spent heavily on the build-out, and employ twenty-two people. Their policy covered the building improvements and equipment, and they had never made a claim.
A grease fire at a restaurant two blocks away, which closed it for most of a year, made them wonder how their own coverage would hold up.
What they asked for
A walk-through of what would happen if their kitchen burned.
What the review found
The equipment and improvements were insured. The time was not. The policy's commercial property coverage included business income for a limited number of months. A serious kitchen fire in a leased Seattle restaurant means insurance adjusting, landlord repairs, permits, a new hood system, health department inspections, and custom fabrication. The real timeline was far longer than the coverage.
Payroll was not fully covered. The business income coverage limited payroll to a short window. Keeping the chef and managers on payroll through a long closure, so they did not take other jobs, was not provided.
Liquor liability was missing. The restaurant served wine and cocktails. Their general liability excluded claims arising from serving alcohol, and they had no liquor liability coverage at all.
No umbrella. A single alcohol-related crash, with a guest who had been overserved, could produce a claim far larger than their primary limits.
What we put in place
We rebuilt the business income coverage on an actual loss sustained basis for a period that reflects a realistic rebuild, with an extended period of indemnity after reopening, because regulars do not all come back the first week. We added ordinary payroll coverage for key staff for the full period and extra expense to fund a temporary pop-up or catering operation.
We updated the improvements and equipment values from their build-out invoices and added equipment breakdown and spoilage.
We added liquor liability alongside the general liability, and a commercial umbrella at $2 million over both. The umbrella carrier required the liquor liability to be in place as underlying coverage, which is typical.
Why it mattered
Eighteen months later, a fire started in the exhaust system after a Friday night service. No one was hurt, but the kitchen and part of the dining room were closed for most of the summer. Business income paid the rent, the loan, and the salaries of the chef and two managers throughout. When they reopened, the extended period covered the slow first months. Most of their staff came back.
If you run a restaurant
- Size business income to a realistic rebuild timeline, not a default
- Keep key staff on payroll coverage for the whole period
- Add an extended period of indemnity for the slow reopening
- If you serve alcohol, add liquor liability and an umbrella over it
More on restaurants and food businesses. Get a free policy review and we will walk through your own fire scenario.