Here's the thing about restaurant insurance that catches most owners off guard: you're not just deciding what coverage you need—you're deciding how to buy it. Should you bundle everything into a Business Owner's Policy (BOP), or purchase general liability and property insurance separately? The answer affects both your wallet and your peace of mind when something goes wrong.
Most restaurant owners end up choosing a BOP, and for good reason. But it's not the right fit for everyone. Let's break down when bundling makes sense, when it doesn't, and how much money is actually on the line.
What You're Actually Comparing
A Business Owner's Policy isn't some mystery product—it's just three essential coverages packaged together. You get general liability (for customer injuries and property damage), commercial property insurance (for your equipment, inventory, and building improvements), and business interruption coverage (which pays your bills if a kitchen fire shuts you down for weeks).
Standalone policies give you these same protections, but you buy them separately. General liability covers the slip-and-fall lawsuits and food poisoning claims. Commercial property protects your kitchen equipment, furniture, and inventory when disaster strikes. You can add business interruption as an endorsement to your property policy if you want it.
The practical difference? With a BOP, you're dealing with one policy, one renewal date, one insurance company. With standalone policies, you're juggling multiple carriers, multiple renewal dates, and multiple sets of paperwork. That administrative simplicity matters more than you'd think when you're running a restaurant.
The Money Math: BOP vs Separate Policies
Let's talk numbers. A typical restaurant BOP costs between $180 and $251 per month, averaging around $2,160 to $3,010 annually. That covers your liability, property, and business interruption in one package.
Now compare that to buying separately. General liability averages $900 per year, though restaurant rates run higher—typically $500 to $2,500 annually depending on your risk profile. Commercial property insurance averages about $740 per year. Add those up and you're looking at roughly $1,640 to $3,240 before you even add business interruption coverage.
Here's where it gets interesting: most insurers discount BOPs by 15-25% compared to purchasing the same coverage separately. For the average restaurant, that translates to $500 to $1,500 in annual savings. You're getting the same protection for less money, with less hassle. It's not a close call for most operators.
But—and this is important—those savings only matter if you actually need all three coverages. If you're running a food truck with minimal property to protect, paying for bundled coverage you don't use isn't a bargain.
When a BOP Actually Makes Sense
BOPs work best for small to medium-sized restaurants with physical locations and standard risk profiles. The typical eligibility requirements are straightforward: fewer than 100 employees, under $5 million in annual revenue, and liquor sales that don't exceed 35-40% of total receipts.
Your restaurant is probably a good BOP candidate if you lease or own a commercial space, have significant kitchen equipment and inventory, and operate a traditional dine-in or fast-casual concept. Think pizzerias, cafes, family restaurants, quick-service spots. These businesses have real property to protect and can't afford to shut down for weeks without income replacement.
The business interruption coverage alone justifies a BOP for most brick-and-mortar restaurants. If a grease fire forces you to close for three weeks, your rent doesn't stop. Your loan payments don't pause. Your core staff still needs paychecks if you want them back when you reopen. Business interruption coverage handles those fixed expenses while you rebuild. Try pricing that coverage separately and you'll see why bundling makes sense.
BOPs also include some restaurant-friendly features you'd pay extra for with standalone policies. Many include spoilage coverage (typically $10,000 to $100,000) for when your walk-in freezer dies and ruins thousands of dollars of inventory. That's the kind of real-world protection that matters when you're operating on restaurant margins.
When Standalone Policies Work Better
Some restaurants don't fit the BOP mold, and that's fine. You should look at standalone policies or specialized restaurant packages if you own your building outright. BOPs typically cover tenant improvements and business personal property, but building coverage often requires a separate commercial property policy or a restaurant package program.
Bars and restaurants where liquor sales exceed 40% of revenue also fall outside standard BOP eligibility. The higher liquor liability exposure puts you in a different risk category, and you'll need a specialized restaurant package policy instead. Same goes if you run a substantial catering operation—not just dropping off trays, but full-service off-site events with your staff. That level of exposure requires custom coverage.
Mobile food businesses often fare better with standalone general liability. If you operate a food truck, pop-up kitchen, or farmers market stall, you don't have much property to protect and you're not worried about business interruption the same way. Why pay for bundled coverage you don't need? A solid general liability policy might be all you require, plus whatever coverage your truck itself needs.
Standalone policies also give you more flexibility to customize coverage limits. Maybe you need higher property limits because you invested heavily in custom equipment, or you want lower liability limits because your operation has minimal customer contact. With separate policies, you can dial each coverage up or down independently. BOPs offer less flexibility—you're working within the package parameters.
Coverage Gaps You Need to Know About
Neither a BOP nor standalone policies cover everything a restaurant needs. Workers' compensation is always separate—that's required by law in most states as soon as you hire employees, and no BOP includes it. Commercial auto insurance is also separate if you use vehicles for deliveries or catering.
Most BOPs exclude flood and earthquake damage. If you're in a flood zone or earthquake-prone area, you'll need separate coverage regardless of whether you bundle your other policies. Same with employment practices liability—if you want protection against discrimination or wrongful termination claims, that's typically an add-on or separate policy.
Cyber liability is becoming essential for restaurants that store customer payment data or run online ordering. BOPs generally don't include meaningful cyber coverage. You'll want a separate policy or endorsement, whether you bundle your other coverages or not.
Making Your Decision
Start by honestly assessing your property exposure. If you have significant equipment, inventory, or tenant improvements to protect, you need property coverage—and bundling it into a BOP almost certainly saves you money. If your physical assets are minimal, standalone general liability might be enough.
Next, check if you're BOP-eligible. Under 100 employees? Under $5 million revenue? Liquor sales under 40%? No building ownership? Then a BOP is probably your most cost-effective option. If you fall outside those parameters, you're looking at restaurant package policies or custom standalone coverage anyway.
Get quotes both ways before deciding. Ask for a BOP quote and quotes for standalone general liability and commercial property. Compare the total premium, deductibles, coverage limits, and any included extras like spoilage coverage. The right choice becomes obvious when you see the numbers side by side.
Remember that your needs will evolve. Many restaurants start with a BOP and graduate to specialized coverage as they grow, add locations, or expand into catering. Others start with standalone policies and consolidate into a BOP once their operation stabilizes. You're not locked into your initial choice forever—review your coverage annually and adjust as your business changes.
The bottom line: for most small to medium-sized restaurants with traditional operations, a BOP delivers better value than separate policies. You'll save money, simplify your insurance management, and get comprehensive protection designed specifically for restaurant risks. But if you're running a bar-heavy concept, own your building, or operate a mobile food business, standalone coverage might fit your needs better. Either way, make sure you're protected—the right insurance structure is whatever keeps you in business when things go wrong.
