As a restaurant, cafe, or food franchise owner in Indonesia, you’re likely familiar with various risks, from fires and equipment failures to operational disruptions. However, one often overlooked risk is third-party lawsuits: for example, customers tripping on slippery floors, food poisoning from faulty ingredients, or property damage caused by your service. This is why public liability insurance becomes very important.
In short: Public liability insurance protects your business from legal liability to third parties (not your employees) who suffer loss or injury as a result of your business activities.
But choosing a policy alone is not enough for an insurance broker, such as L&G Insurance Broker, is far more strategic than buying directly from an insurance company or through a single agent. Why? Because a broker like L&G will analyze your specific business risks, compare options from multiple insurance companies, and ultimately assist with the claims process, including disbursement, which is crucial when facing a lawsuit.
Therefore, this article will discuss why public liability insurance is mandatory for culinary businesses, how to choose the right policy, and why partnering with a broker like L&G is the safest way to protect your business. For a direct consultation, please contact us on WhatsApp 08118507773 or email halo@lngrisk.co.id for free consultation.
Why is the culinary business so vulnerable to third party lawsuits?
In the restaurant, cafe, or food franchise industry, there are several conditions that uniquely increase the risk of third-party lawsuits. Here are some real-life examples:
- Incidents in the physical area: Customers slip on slippery floors, trip over cables, or are hit by a suddenly closing door. While seemingly minor, these incidents can lead to medical bills, legal liability, and a damaged reputation.
- Food poisoning / food allergyFor example, if the food contains an ingredient that causes an undisclosed allergy, or if microbiological contamination occurs, this not only poses a health risk to the customer but can also lead to legal claims.
- Damage to third party propertyFor example, when a catering delivery is made, the client’s property is damaged due to negligence. Or when the interior of a rented cafe is damaged during an event, and the renter demands compensation.
- Business operations that interact with the public: Because restaurants/cafes serve the public, not just themselves, the potential for third-party claims increases compared to private businesses.
Therefore, having insurance that specifically covers legal liability to third parties is not just an option but a strategic necessity for the continuity of your business.
What is public liability insurance and what does it cover?
To avoid confusion, let’s outline the basic definition and scope of public liability insurance:
Short definition
Public liability insurance is a product that provides protection to policyholders against legal obligations to third parties who suffer physical injury or property damage due to the insured’s business activities.
General coverage
- Some of the things that are usually covered in this policy include:
- Injury or death of a third party (e.g., a customer or visitor) resulting from your business’s negligence.
- Damage to third-party property (e.g., visitors damaging their own property while on your premises, but the situation was caused by activities or conditions at your place of business).
- Legal fees and defense costs if you are sued by a third party.
- Compensation or damages that must be paid to a third party as a result of a legal decision or settlement agreement.
What may not be covered
Although the coverage is quite broad, this policy usually does not cover:
- Losses experienced by your employees (for this there is special insurance for labor/workers).
- Damage to your own property or assets that must be insured through a policy property.
- Claims arising from professional errors (professional indemnity) if any, for example incorrect nutritional consultation or food management.
- Incidents that are expressly excluded in the policy (e.g. corner neglect, racing, illegal activities) it is important to read the terms and conditions.
Knowing exactly what you are covered for and what you are not is crucial to avoid choosing the wrong policy and feeling “protected” when there is actually a clause that excludes your main risks.
Specific risks in restaurants, cafes & food franchises
Now let’s enrich our understanding by looking at the risks specific to your business because by understanding the risks, you can choose the right and relevant policy.
- Slippery or wet floorsFor example, if an outdoor or indoor area has just been cleaned, customers are rushing in and carrying food or drinks. If a customer slips, injury can occur.
- Kitchen equipment and visitors: Sometimes the kitchen is open, or customers can see the cooking/servicing area. If, for example, oil drips into a public area or cables are exposed, the potential for injury increases.
- Serving food with allergen ingredients: If allergens are not clearly stated or cross-contamination occurs, there is a risk of allergy or poisoning.
- Franchise with many branches: Risk is spread more widely; one incident at one branch can impact the reputation of the entire brand. You need a comprehensive policy, not just one location.
- Catering and offsite services: If your business has services outside of its main location, such as party catering or a food truck, then the risk at a third-party location increases.
- Damage to third party property: For example, when you are renovating a branch, the wall next door cracks; or during your event at a cafe, a client’s table is damaged.
- Visitors who consume then experience the impact: For example, in Indonesia there have been many reports that risk management in restaurants/cafes does not pay enough attention to this risk.
Understanding these risks will help you (and your broker) tailor a policy to “fit” your needs, rather than simply purchasing a generic policy that may be too expensive or provide too little coverage.
Why choose a broker like L&G instead of an agent or going directly to the insurance company?
There are various ways to purchase insurance on the market: through a sole agent, directly with an insurance company, or through an independent broker. However, for a culinary business like yours, choosing a broker like L&G has significant advantages:
Broker advantages
- Specific risk analysisL&G brokers will examine your business, whether you operate as a franchise, have multiple branches, offer off-site catering, or are located in a mall or outdoor area; then recommend the appropriate policy.
- Access to multiple insurance companies & productsAs an independent broker, L&G can compare products from various companies, so you’re not locked into a single, possibly less-than-optimal option. For example, some companies may exclude off-site catering services, while a broker can find one that covers them.
- Negotiate better premiums & terms: Because brokers have relationships with many companies and understand the industry, they can help you get more competitive premiums with relevant coverage.
- Claim process assistance until disbursementOne of the most crucial things when an incident occurs and a claim is filed, a professional broker like L&G will help prepare the documents, liaise with the insurance company, and ensure the process runs smoothly until disbursement. A traditional agent or going directly to the insurance company might leave you on your own.
- Policy adjustments as business grows: If you open a new branch, add catering services, or expand your franchise to another city, your broker will help you adjust your policy to stay relevant, so you don’t risk being “leaked” in the future.
Why avoid just agents or companies directly?
- A sole agent usually represents one insurance company meaning your choices are limited.
- Buying directly from an insurance company may seem simple, but you’ll lose the “claims partner” who accompanies you. When a major claim arises, you may feel alone in navigating the complex process.
- The risk that your policy does not really fit your culinary industry when you buy without in-depth analysis, there could be a “gap” between the risks you face and the risks insured.
So, for restaurant/cafe/food franchise businesses, partnering with a broker like L&G is not an “additional cost” but a strategic investment that can save your business from major losses.
Steps to choosing the right public liability insurance policy
Here’s a practical guide you can use when discussing with a broker or choosing a policy through L&G:
- Identify your business activities
Is it just one location or across branches?
Are there off-site catering services, food trucks, off-site events?
Is your business located in a mall, outdoor area, or rental area with lots of public walking?
The answer to this question will determine a lot about your policy.
- Set realistic limits and deductibles
The greater your operational risk (e.g., high number of visitors, multiple branches), the higher the limit you should choose. The deductible (the amount you’re responsible for out-of-pocket) should also be realistic, not too low, which could skyrocket premiums.
- Pay attention to clauses and exceptions
Make sure the policy covers off-site activities, catering services, and franchise models. Ask if there are specific exclusions for the food/cafe industry, such as food poisoning, allergies, alcohol service (if applicable), or large events.
- Make sure there is claim assistance and broker support
This is a critical point: when incidents and third-party claims occur, you need a partner ready to help you handle the paperwork, negotiations, and disbursements. Brokers like L&G provide this.
- Periodic review
Review your policy annually (or whenever there’s a major business change, such as a new branch or service), don’t let yourself be “protected” by a policy that’s no longer suitable for your current business environment.
- Budgeting and integration with your risk management
Insurance premiums aren’t just a cost, but part of a risk strategy. Integrate them with safety standards: employee training, kitchen hygiene standards, floor and common area maintenance, and routine inspections. The better your risk management, the better positioned you are to command more competitive premiums.
Short case study: how public liability insurance prevented major losses
Let’s look at a real-life example (based on industry material) that shows how public liability insurance can save your business:
A cafe in Jakarta experienced an incident where a customer slipped on a freshly cleaned floor and walked in carrying a hot drink. The customer suffered minor injuries and filed a claim for damages, including medical expenses and compensation. Because the cafe had a public liability policy covering public areas and beverage services, the claim was covered, and the broker assisted with the process. As a result, the cafe was able to settle the claim without having to close the store or incur significant losses.
Another example: A seafood restaurant in Jakarta faced a lawsuit after several customers experienced allergic reactions after eating a meal (hidden peanuts). Because its policy covered food allergen risks and a broker assisted with the legal process, the financial burden and business reputation were manageable.
Both examples show that small incidents can escalate into major claims and you want to be protected from the start.
Conclusion
For restaurant, cafe, or food franchise owners, public liability insurance is no longer an optional option; it’s a crucial protection element of your business strategy. Even a small incident can lead to significant lawsuits, financial losses, and reputational damage.
Through a broker like L&G, you get not only the right policy but also a partner who guides you from selection to the claims process. Don’t leave your business vulnerable due to inadequate coverage or a complicated claims process.
I hope this article helps you understand the importance ofpublic liability insuranceand why going through a broker is the best move.Protectyour business today so you can focus on building your brand, serving customers, and growing without fear.risk unexpected.
Contact L&G Insurance Broker today!
For a FREE consultation regarding protecting your restaurant and cafe:
HOTLINE L&G 24 JAM: 08118507773 (PHONE – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
