It’s the middle of the Saturday brunch rush. The docket machine is running hot, the coffee is flowing and your staff are expertly serving a crowd – until your barista slips on a spilled latte behind the counter. Or maybe you arrive at work early, only to find that the fridge failed overnight, leaving thousands of dollars’ worth of stock ruined.
Running a hospitality business can often be a daily juggling act – keeping orders moving, customers happy, and staff on track – but, as the scenarios above show, it can also come with some unique and unpredictable risks that can threaten your bottom line. And when the unexpected happens, you might find yourself wondering, “are we insured for that?”.
So, does your current insurance cover food spoilage? What if it had been a customer who had slipped over on that coffee? Is insurance legally required in the hospitality industry? And what exactly falls under the umbrella of hospitality insurance?
To help you make sense of it all – and help you avoid potential insurance mistakes – we’ve put together this guide to answer those questions. We also explore any compulsory insurance requirements for hospitality providers and explain what small business insurance could cover your hospitality business for.
What is hospitality insurance?
There isn’t a specific category of insurance called hospitality insurance – or restaurant insurance, cafe insurance or bar insurance for that matter – but there are a few different types of small business insurance that you might want, or need, to consider getting if you’re in the hospitality industry.1
“Hospitality is one of the highest-risk environments any small business can operate in,” says John Hart, National President of Restaurant and Catering Australia, the national body for hospitality businesses.
“Open flames, hot oil, slippery floors, perishable stock, customers eating and drinking at your premises, and every plate you send out carrying a food safety risk… One kitchen fire, one food poisoning outbreak or one customer slip and fall can end a business that’s taken a family 20 years to build.
“So, insurance isn’t another line item. It’s the foundation the whole business sits on and it’s what lets an operator open the doors each morning feeling confident that a single bad day doesn’t have the potential to wipe out everything they’ve worked for.”
What types of hospitality insurance are available?
A few different types of small business insurance are available to Australian hospitality businesses and they’re all designed to provide cover for different events and risks.
Workers compensation insurance
If you employ staff, you’re required to get workers compensation insurance.1 It’s a form of insurance payment to employees if they are injured or become sick due to their work, and it can cover their medical expenses as well as their wages while they’re unable to work.2
Public liability insurance
This covers your business if a customer gets injured or their property gets damaged and you or your business is found to be negligent.3
Product liability insurance
This covers you for a claim of injury or damage as a result of the failure of any of your products.3 “For example, if a customer gets sick from your food or has an allergic reaction,” says Hart.
Business interruption insurance
Business interruption insurance covers your operating costs if an unexpected event interrupts your business.1 “If a fire next door shuts you down for two weeks, this is what pays the wages, rent and loan repayments while you rebuild,” explains Hart.
Contents and equipment insurance
This cover could help you replace items your business relies on to keep running if they’re damaged by events such as storms or fire.1,3 “Kitchen fires are one of the most common claims in our sector,” says Hart. “And replacing a commercial kitchen can easily run into the six figures.”
Deterioration of stock insurance
If a fridge or freezer stops working, this insurance type covers your business for the loss of food stock you might have in cold storage.1
Burglary insurance
This insurance type covers losses, damages and associated costs from a break-in or theft from your hospitality business.1
Business vehicle insurance
If you own a food truck, coffee van or use some other type of vehicle for your hospitality business, you’ll need Compulsory Third Party (CTP) insurance.1 This covers injuries to people caused by your car in an accident and is a mandatory requirement before you can register a vehicle.4
You might also wish to consider additional car insurance to cover damage to your work vehicles – and to other people’s cars if you’re involved in an accident that’s your fault.4
Is hospitality industry insurance compulsory?
It depends on the type of insurance you’re talking about.
Workers compensation insurance is compulsory if your hospitality business employs staff,1 and CTP insurance is legally required to register any vehicle – including work ones.4
Beyond that, Hart says there’s very little that’s legally mandated nationally. “However, in practice, public liability insurance is effectively unavoidable,” he notes.
“Almost every council requires it before issuing a footpath trading permit, state liquor licensing authorities require it as a condition of holding a licence, and it’s written into virtually every commercial lease in the country.
“So, while no Commonwealth law makes public liability insurance mandatory for hospitality businesses in the way that workers compensation insurance is, the web of council permits, liquor licences and lease conditions means operating a hospitality business without it is essentially impossible. My advice is simple – treat it as mandatory and budget for it accordingly.”
Does hospitality liability insurance include workers compensation insurance?
No – public liability insurance and workers compensation insurance are separate types of insurance.1 Each state and territory has its own regulator that administers workers compensation insurance:2
- ACT: WorkSafe ACT
- NSW: State Insurance Regulatory Authority
- Qld: WorkSafe Queensland
- SA: ReturnToWorkSA
- Vic: WorkSafe Victoria
- WA: WorkCover WA
- Tas: WorkSafe Tasmania
- NT: NT WorkSafe2
What does Youi Small Business Insurance cover?
Youi’s Small Business Insurance automatically includes public liability insurance and product liability insurance as standard.5 Business owners can choose from three levels of business liability cover – $5million, $10million and $20million.
There are also a few optional covers you can choose to add to a Small Business Insurance policy at Youi, for an additional cost. Some that might be useful in the hospitality industry include:
- Business items: This option covers loss or damage to your portable business items – maybe it’s the tools of the trade that you move from job to job for your catering business, or it might be the portable EFTPOS machine you rely on when serving customers at your monthly market stall.6
- Business property damage: Under this option, contents or stock in trade at your hospitality business – which might be furniture, kitchen equipment or the food that’s kept there – are covered for loss or damage caused by an accident or unforeseen event such as a fire, storm or flood or theft. Stock in trade is also covered while it’s in transit to or from your business, and refrigerated food is covered for deterioration.7,8
- Money: Your business cash is covered for loss or damage with this add-on, whether its cash kept at your premises, in transit, or stored in a safe or at an authorised person’s home.9
- Glass: There’s also the option to add cover for loss or damage to the glass you’re legally responsible for at your business premises,10 which may include your restaurant or cafe’s glass windows and storefronts, even if you’re leasing.11
Which type of cover would insure your business for what?
In the table below, we’ve outlined how our Small Business Insurance, including the optional add-ons that are available, would cover a few common hospitality scenarios if a claim is accepted.
| The event: | Covered by: |
| A customer injures themselves while they’re dining at your restaurant | Youi Small Business Insurance5 |
| Your cafe gets reported for causing an outbreak of food poisoning | Youi Small Business Insurance5 |
| Your premises get broken into and last night’s takings are stolen | Youi Small Business Insurance + Money cover9 |
| A power outage causes all your refrigerated food to go off | Youi Small Business Insurance + Business property damage cover7 |
| Someone tries to break into your restaurant by smashing the storefront | Youi Small Business Insurance + Glass cover10 |
| Your cafe gets flooded during a storm | Youi Small Business Insurance + Business property damage cover7,8 |
| You accidentally drop and break the laptop you rely on to run your catering business | Youi Small Business Insurance + Business items cover6 |
| A fire breaks out in the kitchen, damaging your equipment | Youi Small Business Insurance + Business property damage cover7,8 |
| Your main supplier’s warehouse is severely damaged, leaving you without stock so you have to close temporarily | Youi Small Business Insurance + Business interruption cover5 |
What level of hospitality insurance is best for your business?
While Hart says a bundled policy is often the most cost-effective starting point for smaller operators he also has a number of suggestions to help you find your feet if you’re unsure or new to the hospitality business.
“Industry associations are an excellent source of specialist support,” says Hart. “We represent the interests of 57,000 restaurant, cafe and catering businesses at Restaurant & Catering Australia, so we’re across the issues our members are facing day to day.
“For permit- and licensing-specific requirements, your local council and state liquor licensing authority will tell you exactly what cover levels they need before they’ll issue paperwork, and your landlord will spell out what the lease requires.
“What I’d strongly discourage is googling your way to a policy and hoping for the best – hospitality risk is too specific for that.”
If you’d like to learn more about what our Small Business Insurance does and doesn’t cover to see if it’s the right fit for your business, why not consider starting a quote online.
Or, if it’s policy renewal time and you’d like to review your insurance cover to see if one of our optional covers might provide you with the additional cover you’re looking for, you can also give us a call on 1300 262 317 to speak with a member of our dedicated Small Business Insurance team.
1 Source: Australian Government – Types of business insurance
2 Source: Australian Government Fair Work Ombudsman – Workers compensation
3 Source: Business Victoria – Find the right insurance, October 2022
4 Source: Moneysmart – Choosing car insurance
5 Exclusions, limits and additional fees may apply. For full details, see the Small Business Insurance PDS.
6 Business Items cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each item is $2,500 unless you have selected a specific amount and that amount is shown on your policy schedule under High Value Business Items, in which case the most we will pay for that item is the amount shown on your policy schedule.
7 Business Property Damage cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
8 Loss or damage caused by flood, storm or bushfire within the first 72 hours of your policy commencing is only covered in limited circumstances. For full details, see the PDS & Policy Wording.
9 Money cover is optional and an additional cost applies. Conditions, limits and exclusions apply. The most we will pay for each claim is the insured value for your business’s money. For full details, see the PDS & Policy Wording.
10 Glass cover is optional and an additional cost applies. Conditions, limits and exclusions apply. For full details, see the PDS & Policy Wording.
11 Source: Queensland Small Business Commissioner – Repairs and maintenance, 2026
