How Your Commercial Insurance Covers Fires

If you own a restaurant and there’s a fire, your insurance can help cover a variety of losses, but it depends on the types of coverage included in your policy. Here’s how it typically works:

1. Property Insurance (Commercial Property Coverage)

This is the core coverage for fire damage.

Covers:

• Damage to the building (if you own it).
• Damage to contents: furniture, kitchen equipment, inventory, décor, etc.
• Cleanup and debris removal.
• Smoke and water damage from firefighting efforts.

Does NOT cover:

• Damage due to neglect or arson you commit.
• Upgrades required by new building codes (unless you have ordinance or law coverage).

2. Business Interruption Insurance (Business Income Coverage)

Covers:

• Lost income while your restaurant is closed for repairs.
• Ongoing expenses like rent, utilities, and employee wages.
• Temporary relocation costs if you set up elsewhere.

This is not always included — it may be an optional add-on (endorsement), so check your policy.

3. Equipment Breakdown Insurance (Optional)

Covers:

• Sudden and accidental breakdown of equipment like ovens, refrigerators, or HVAC systems — but only if caused by mechanical or electrical issues, not fire.
• This doesn’t cover fire damage, but could be relevant if your equipment fails during recovery.

4. Extra Expense Coverage (Optional/Included with Business Interruption)

Covers:

• Costs above and beyond normal operations to minimize downtime — e.g., renting kitchen space, expedited shipping of equipment, etc.

5. General Liability Insurance

Typically does NOT cover your own property damage, but:

Covers:

• Injuries to third parties (customers, vendors) during or after the fire.
• Legal costs if someone sues you because the fire harmed them (e.g., neighboring tenants or customers).

 Steps to Take After a Fire

1. Contact your insurer immediately.
2. Document all damage (photos, video, receipts).
3. Protect undamaged property from further loss (tarping, boarding up).
4. Work with an adjuster to evaluate the damage and start the claims process.
5. Keep records of all expenses during the recovery period.

 Important Tips

• Review your policy annually to ensure adequate coverage.
• Ensure your business interruption limits are realistic for a shutdown of 3-6 months or more.
• Consider adding ordinance & law coverage if your building is older.