Insurance — what Ohio actually requires, and what your landlord demands instead

Ask what insurance a restaurant needs and you will get a list of eight things. Only a short part of that list is law. The rest is contract — and knowing which is which is worth money, because one set is fixed and the other is negotiable.

Required by law

Workers’ compensation, from your first employee — and only from the state.

This is the Ohio-specific fact that surprises people who have operated elsewhere. The statute requires every private employer to pay into the state insurance fund, and the only alternative is qualifying as a self-insuring employer — which takes demonstrated financial ability, generally two years of operation in Ohio, assets in the state and a surety bond.⁴ A new restaurant is not going to clear that, so treat the state fund as the only door. There is no shopping around on the coverage itself.

One employee is the trigger — Ohio defines an employer as anyone with one or more employees in service.⁵ And the exposure if you have no coverage is worse than an uninsured loss: the injured worker is paid from the statutory surplus fund and the state pursues you on a liquidated claim, while you lose the fellow servant, assumption of risk and contributory negligence defenses.⁶⁷ The full treatment is in workers’ compensation in Ohio.

Two consequences:

If a broker offers you “Ohio workers’ comp” from a private insurer, ask precisely what they are selling. It is usually employer’s liability, or a stop-gap endorsement covering suits the state fund does not — genuinely useful, and not the same product.

Your premium is still manageable, through group rating, safety programs and claims management. That is where a third-party administrator earns their fee. Ask about it before you accept the base rate as fixed.

BWC also runs a payroll true-up after each policy year — reporting your actual payroll against the estimate you were rated on. Confirm the current deadline with BWC directly: the date appears to have moved in recent years and we were unable to verify it against a primary source, so we would rather send you to them than print a date you plan around.²

Unemployment insurance. Handled through the Ohio Department of Job and Family Services once you have employees.³

Commercial auto, if the business owns vehicles used in it. Ohio’s financial responsibility rules apply to business vehicles as they do to any other.

That is close to the whole legal list.

Not required by law — required by whoever you signed with

Everything below is demanded by contract, not by statute. Which is exactly why the limits are negotiable.

General liability. Your lease will require it, with a limit the landlord picks and you as named insured plus them as additional insured. So will a commissary agreement, a food hall operator, an event organizer and most municipalities issuing an outdoor permit.

Property and contents. Your equipment, your build-out, your inventory — and the line with the most ways to be quietly underinsured. It gets its own section below.

Business interruption. The one operators skip and later wish they had not. Ask specifically what triggers it, because “the building was fine but the utility failed” and “we were closed by an order” are different triggers and not all policies carry both.

Equipment breakdown. A dead walk-in compressor on a Friday is a spoilage claim plus a closure, and it is not automatically covered by property.

Liquor liability, if you serve. Not a state mandate as a general licensing condition — but see below, because the exposure is statutory even when the insurance is not.

Employment practices liability. Wage-and-hour and harassment claims are the most common serious exposure a restaurant has that is not a slip or a fire.

Cyber, if you take cards — which you do. Related: your PCI obligations are covered in POS, Wi-Fi, phones and delivery apps.

Property, in more detail — where kitchens end up underinsured

Property is the line people assume is simple because the asset list is visible. It is where the biggest surprises live, and almost all of them are decisions made when the policy was written rather than when the loss happened.

Replacement cost or actual cash value. The single most consequential choice on the schedule. Actual cash value pays depreciated value — a twelve-year-old walk-in settles as a twelve-year-old walk-in, and you replace it with a new one at new-one prices. Replacement cost pays to replace. Kitchen equipment depreciates on paper far faster than it stops working, so ACV on a working line is the version of this policy most likely to leave a gap you cannot close after a fire. Ask which one you have. Ask in writing.

The code-upgrade problem, which is the same problem as grandfathering. If a loss forces you to rebuild, you rebuild to today’s code — not the code the kitchen was built to. A standard property policy pays to restore what was there; the additional cost of complying with current requirements is typically a separate coverage, usually sold as ordinance or law coverage. This is the exact mechanism described in hood replacement and the grandfathering that is not what you think it is and in buying an existing restaurant: an older kitchen carries a latent cost that appears the moment something forces it to be brought current. A fire is one of those moments. Ask whether the policy pays the delta.

Leasehold improvements are frequently a gap. The landlord insures the building; you insure what you installed in it. Both parties can assume the other did, and the assumption survives right up until a claim. Read the lease’s insurance clause alongside the policy rather than separately — the two documents have to agree about who owns the hood, the walk-in and the tile.

Coinsurance is a penalty for optimism. If your policy carries a coinsurance clause and you insured the contents for less than the required percentage of their value, the payout is reduced proportionally — including on a small partial loss, not just a total one. Undervaluing the schedule to hold the premium down does not buy a cheaper policy so much as a percentage haircut on every claim.

Spoilage is not one thing. A walk-in failure is potentially three claims: the equipment, the food inside it, and the closure while you replace it. Those can sit under equipment breakdown, spoilage or food contamination, and business income, respectively — and a policy can carry one without the others. Given that cooling and holding temperatures decide what you must legally discard, the food loss in a long outage is not discretionary; the code tells you to throw it out.

Flood is excluded, and Cleveland is not exempt from water. Standard property does not cover flood. Basement prep space, storm drainage and sewer backup are distinct perils with distinct endorsements, and sewer backup in particular is worth asking about by name.

Value the schedule honestly, then update it. The most common quiet failure is a policy written against the equipment list from the build-out, never revised after three years of additions. Every piece of used equipment you added is on your floor and not on your schedule.

The dram shop exposure, precisely

Worth reading carefully if you serve alcohol, because the standard is different depending on where the harm happens.¹

The off-premises bar is higher, and that is the whole argument for training and documentation. “Knowingly sold to a noticeably intoxicated person” is a question about what your staff observed and did. A refusal log, a training record and a house policy on cut-offs are what turn that from a swearing match into evidence.

The serving-age rules that sit alongside this are in minors in bars and serving ages.

So is it tiered by size?

Not by law. There is no Ohio statute setting insurance limits by square footage, seat count or revenue. If someone tells you “a place your size needs two million,” they are describing a market convention or a lease requirement, not a rule.

What actually sets your limits:

• Your lease. The most common source, and the number is a negotiating point.
• Your lender. SBA-backed loans in particular carry requirements, often including life insurance on the owner.
• Your commissary or host facility, if you operate inside one.
• Event organizers and municipalities, per event or per permit.

Because these are contractual, collect them before you shop. Walking into a broker with the actual certificate requirements from your lease, your lender and your commissary gets you one policy that satisfies all three. Buying first and reading the lease afterwards gets you an endorsement and a second bill.

Practical questions for a broker

1. Am I insured for delivery — my own drivers, and food handed to a third-party courier?
2. If I run more than one brand from this kitchen, is every one of them named? See ghost kitchens.
3. What exactly triggers business interruption, and does it include a closure ordered by a health district or a utility failure?
4. Are my leasehold improvements insured, by me or by the landlord? Get the answer from both sides.
5. Does anything change if I add a patio, a food truck or catering? Each is a different exposure and none is automatic.
6. What does my policy require me to have done — a hood cleaning interval, a suppression inspection, server training? Policies impose their own maintenance conditions, and failing one is how a covered loss becomes an uncovered one. Put those on your cleaning schedule.

That last one is the point most worth taking away. Insurers frequently require what the code merely recommends — and unlike an inspector, they check after the fire rather than before it.

The short version

1. Workers’ comp from the first employee, and only from the state fund unless you qualify to self-insure.⁴⁵
2. Unemployment insurance through ODJFS.³
3. Health insurance only above fifty full-time-equivalents, a federal threshold with no Ohio equivalent — the arithmetic is in its own guide.
4. Everything else is contract, not statute — which makes the limits negotiable.
5. Dram shop liability is negligence on the premises, and a knowing illegal sale off it.¹ Train and document accordingly.
6. Nothing is tiered by square footage in law. Collect your lease, lender and commissary requirements before you shop.
7. On property: check replacement cost versus actual cash value, and check whether code upgrades are covered. Those two answers decide what a fire actually costs you.
8. Ask what your policy requires you to maintain — and then actually schedule it.

We are not insurance brokers. Confirm workers’ compensation obligations with BWC,² employment obligations with ODJFS,³ and everything else with a licensed broker who has read your actual lease.