The Importance of Products/Completed Operations Coverage in the Hospitality Industry

Posted on: November 20, 2019 by RMS Hospitality

It’s a restaurant owner’s worst nightmare: someone eats at their establishment, a day or two goes by, and they have a reaction to something they ate and/or drank. All the customer has to do is trace it back to the time they spent at that eatery and then file a costly claim for food poisoning.

For restaurant and hospitality clients, if they don’t have the right products/completed operations coverage in their hospitality insurance programs, they could be open to expensive fines and a major coverage gap.

Explaining Products/Completed Operations Insurance

Buying this kind of coverage transfers the risks and liabilities related with a finished product, such as a blue plate special, the lobster tail, or a new drink on the menu, to a third party. Even after a restaurant or bar is done serving a customer, it’s important to have this kind of coverage to protect their operation from major claims.

Completed operations insurance covers a client’s liability for injuries or illnesses to a third party after they have left a restaurant. And food that consumers eat at a restaurant may not necessarily qualify as a product under certain liability policies unless an endorsement is attached.

Importance of Products/Completed Operations Insurance

This kind of insurance helps restaurant owners and others in the hospitality industry settle claims while also staying away from the probability of having to shutter their operations due to an expensive lawsuit. The coverage ensures reasonable compensation for damages or injuries, or illnesses, resulting from a finished product.

In a food poisoning case in Connecticut, a dozen office workers fell ill after a catered lunch was provided. While there were no long-term complications for the consumers, and thankfully so, there were long-term issues for the restaurant, which was found liable for the illnesses and had to pay out $370,000 in a settlement.

How It Works

This kind of hospitality insurance programs insurance may help settle punitive damages assessed by a court. An insurance company, such as RMS Hospitality Group, supplies the client with legal defense and pays for any settlements or judgments that come from claims related to the covered completed work. The extent of coverage may address certain defects in the ingredients used to cook with or a possible mechanical issue in the kitchen’s appliances or other internal system issues.

About RMS Hospitality Group

At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom-tailored solutions to meet any venue’s specific needs. For more information, contact our knowledgeable experts today at (888) 359-8390.

Posted in: blog Hospitality Insurance

COVID-19 Update:

At RMS and associated firms, business continues as usual. Our staff is remote-capable and available to handle all partners, brokers, and insureds at the present time. Contact us today!