The 5 Biggest Restaurant Insurance Claims of 2025 — And What to Do Before It’s Your Turn

Running a restaurant means managing risk every single day — from the moment your kitchen fires up to the last table of the night. But even experienced operators are often shocked by what their policy actually covers when a real claim hits. And more often than not, they’re shocked by what it doesn’t.

At GIBB Insurance Services, we’ve spent over 20 years working with restaurant and food service businesses across Texas. We’ve seen what happens when coverage is right — and when it isn’t. Below are the five claims hitting restaurant owners hardest in 2025, so you can learn from someone else’s worst day instead of your own.

Claim #1: Kitchen Fires & Smoke Damage

A grease fire can go from a flare-up to a full shutdown in minutes. The claim that follows isn’t just about the fire — it’s everything after.

Grease build-up in hood and duct systems is the leading cause of restaurant fires. One missed cleaning cycle. One flare-up on a busy Friday night. Now you’re dealing with fire damage, smoke damage through the entire building, and a kitchen that can’t operate. Your carrier asked you for how often you clean your equipment. There is clean for inspections and then, there is really clean.

You had insurance. You could still be holding the bag.

The lesson: Hood cleaning logs aren’t just a safety requirement — they’re a coverage requirement.

Claim #2: Foodborne Illness & Contamination

One sick employee. One temperature slip during a rush. One outbreak traced back to your kitchen — and suddenly you have multiple lawsuits, at the same time.

Norovirus. Salmonella. E. coli. These outbreaks happen in high-pressure, high-volume kitchens where ready-to-eat food touches bare hands, temperature controls slip, or a sick employee comes in because they can’t afford to miss a shift. The reputational damage outlasts the lawsuit.

Your general liability may respond — but contamination coverage varies wildly by policy. Some carry sublimits. Some have exclusions that effectively cancel the benefit when you need it most.

The lesson: Most restaurant owners assume their GL covers contamination. Many find out at claim time that it doesn’t — or that the sublimit is a fraction of the actual exposure. We read the actual policy language, not just the declarations page.

Claim #3: Equipment Breakdown & Spoilage

Your walk-in compressor fails at midnight on a Friday. By Saturday morning, you’ve lost thousands in inventory — and a full weekend of reservations is on the books.

Equipment never breaks on a slow Tuesday. It breaks at the worst possible moment. Walk-in fails overnight. POS crashes at noon on Saturday. Hood suppression trips mid-dinner service. Utility outage compromises your cold storage chain. These aren’t rare scenarios — they’re the rhythm of the industry.

Equipment breakdown and spoilage coverage is what keeps these moments from becoming financial disasters. But they’re endorsements — add-ons to your base policy — that quietly disappear at renewal without anyone noticing, until Friday night turns into a very bad phone call.

The lesson: Equipment breakdown and spoilage are among the first line items trimmed when a premium comes back high. We check for these endorsements on every restaurant policy review, because they’re the ones most likely to vanish without the owner knowing.

Claim #4: Cyber & Payment Card Breaches

Restaurants are one of the top targets for cybercriminals in the country. Not banks. Not tech companies. Restaurants.

High card volume, lean IT controls, and outdated POS software make restaurants an attractive and accessible target. Criminals exploit this through POS malware, phishing attacks, and credential stuffing on online ordering platforms. A breach triggers breach notification requirements to every affected customer, PCI compliance assessments and fines, forensic investigation costs, and system downtime — all at once.

Cyber liability coverage was nearly unheard of in restaurant policies five years ago. In 2025, it is not optional. If your standard BOP doesn’t include it — and many still don’t — you have a real, uninsured gap.

The lesson: You don’t have to be a large operation to be a target. You just have to take credit cards. Ask your agent whether cyber is included in your policy or excluded, and what the sublimit is if it is included.

Claim #5: Employment Practices Liability

The biggest employment claims hitting restaurants right now aren’t about tip pooling. They’re racial discrimination, sexual harassment, and wrongful termination. And most restaurant owners have zero coverage for any of it.

The restaurant environment is fast, high-pressure, and informal. That informality creates legal exposure most owners never see coming. A comment that crosses a line. A termination without proper documentation. A complaint that wasn’t handled correctly. Even if you did nothing wrong — you still have to defend yourself, and legal fees alone can run six figures before a courtroom is ever involved.

Your general liability policy covers none of this. Not one dollar.

EPLI — Employment Practices Liability Insurance — is a separate coverage entirely. Most restaurant owners don’t carry it because they didn’t know it existed or assumed it was only for large companies. It isn’t. A two-location restaurant carries the same legal exposure as a twenty-location chain.

The lesson: If you manage employees — and you do — you need EPLI. Full stop.

What These Five Claims Have in Common

Most of the restaurant owners caught in these situations weren’t reckless. They had insurance. They just had the wrong insurance — or the right insurance with limits and endorsements that had quietly eroded at renewal without anyone flagging it.

The patterns we see most often:

• Coverage limits set at opening and never updated to reflect current revenue, buildout, or equipment value
• Contamination and spoilage endorsements trimmed to lower premium and never restored
• Cyber liability absent from a BOP that was written before it became a standard need
• EPLI never offered because the agent didn’t specialize in restaurants
• General liability doing too much heavy lifting across exposures it was never designed to cover

One More Thing — For Multi-Location Operators

If you own more than one restaurant, we recently added a carrier to our portfolio that is specifically built for restaurant groups. They can write multiple locations under a single policy at rates many other standard market cannot compete with. We are actively placing accounts with them right now.

If you want to be among the first to see what that looks like for your operation, reach out directly.

Is Your Restaurant Covered the Way You Think It Is?

That’s the question worth sitting with after reading this.

If you’re not completely sure — or you haven’t had a formal policy review in the last 12 months — that conversation needs to happen before a claim does, not after.

GIBB Insurance Services works exclusively with restaurant and food service businesses. We’re an independent agency, which means we shop multiple carriers to find coverage that actually fits your operation.

📞 Call or text: 214-324-3660 🌐 

Frequently Asked Questions

What is the most common restaurant insurance claim? Kitchen fires, slip and fall incidents, and employee injuries are consistently the top three. In 2025, foodborne illness outbreaks and cyber breaches have climbed significantly on that list.

Does general liability cover foodborne illness claims? It depends on your policy. Some GL policies include contamination coverage; many have sublimits or exclusions that significantly reduce what actually pays out. The only way to know is to read the policy language — not just the declarations page.

What is EPLI and do restaurants need it? EPLI stands for Employment Practices Liability Insurance. It covers claims of discrimination, harassment, wrongful termination, and related employment disputes. Restaurants need it regardless of size. Your GL policy does not cover these claims.

Do restaurants need cyber insurance? Yes. Restaurants process high volumes of card transactions with relatively low IT infrastructure, making them a frequent target for payment card breaches and POS malware. Standard BOPs often exclude or sublimit cyber coverage.

What does equipment breakdown coverage include? It covers mechanical or electrical failure of covered equipment — walk-in coolers, HVAC, POS systems, commercial kitchen equipment — and often includes spoilage of perishable inventory. It is typically an endorsement, not a base policy inclusion.

How often should a restaurant owner review their insurance? At minimum, annually at renewal. Any time you add a location, expand your square footage, add alcohol service, or significantly increase revenue, your coverage should be reviewed — not just renewed.

GIBB Insurance Services, LLC is an independent insurance agency based in Dallas, Texas, specializing in restaurant and food service insurance. Over 28 years protecting the food service industry.