General Liability Insurance for Restaurants in Texas: Coverage, Costs, and Requirements

Texas does not require restaurants to carry general liability insurance by state law. But in practice, nearly every restaurant that operates out of a leased space, hires employees, or serves alcohol needs it. Your landlord almost certainly requires it in your lease. If you have a TABC license and serve alcohol, your dram shop exposure makes GL coverage something you need to understand before a claim happens.

Quick Answer

Estimated GL premiums for Texas restaurants:

Restaurant Type / Revenue	Annual GL Premium Range
Fast casual, under $500K revenue	$1,200 to $2,500 per year
Full service, $500K to $2M revenue	$2,000 to $4,500 per year
Bar or restaurant with significant alcohol sales	$3,500 to $7,500 per year

Restaurants that serve alcohol, have outdoor seating, or operate in high-foot-traffic locations typically pay more. Prior claims, particularly slip-and-fall claims, also drive premiums up.

What GL Covers for Texas Restaurants

Bodily Injury

If a customer slips on a wet floor, trips over a step, or is burned by hot food or beverages, the resulting medical bills and lawsuit costs fall under the bodily injury coverage of your GL policy. Slip-and-fall claims are the most common GL claim type for restaurants nationally.

Coverage pays for:

• Medical expenses the injured person incurs
• Legal defense costs if they sue
• Settlements or judgments up to your policy limit

Property Damage

If a fire from your kitchen damages the neighboring unit in your strip mall, or a burst pipe in your space floods a neighboring business, property damage coverage handles the claim from the affected party.

Products Liability

Products liability covers food and beverage illness claims. If a customer becomes seriously ill after eating at your restaurant and attributes it to your food, the medical costs and lawsuit fall under products liability, which is included in most restaurant GL policies.

Dram Shop Liability in Texas

Texas has a dram shop law under the Texas Alcoholic Beverage Code, Chapter 2. Under this law, a restaurant or bar can be held liable if it serves alcohol to an obviously intoxicated person who then causes injury to a third party, or if it serves alcohol to a minor who causes injury.

If your restaurant has a TABC license and serves alcohol:

• Dram shop liability is a real exposure, not a theoretical one
• The liability can be substantial, particularly in cases involving drunk driving accidents
• Many standard GL policies include liquor liability coverage, but some exclude it or limit it. Verify your policy.

If alcohol represents more than 25% to 30% of your revenue, carriers may classify you more as a bar than a restaurant, which affects both GL rates and coverage terms.

Advertising Injury

Covers claims related to your marketing activity: libel, slander, copyright infringement, and unfair competition claims arising from advertising. Less common for restaurants but covered under most standard GL forms.

What GL Does NOT Cover

Employee injuries. Workers comp covers injured employees. GL does not. These are separate policies.

Your own property. Damage to your building, equipment, and inventory is covered under commercial property insurance or a BOP. GL covers third-party claims only.

Liquor liability if specifically excluded. Some carriers write restaurant GL without liquor liability included, particularly for establishments where alcohol is a significant revenue driver. If your policy excludes liquor liability, you need a standalone liquor liability policy or endorsement.

Employment practices. Claims from employees for harassment, discrimination, or wrongful termination fall under EPLI, not GL.

Texas Lease Requirements

Most Texas commercial landlords require tenants to carry general liability coverage with the landlord named as an additional insured. Common lease requirements:

• $1 million per occurrence
• $2 million aggregate
• Landlord named as additional insured

If your lease requires insurance and you are not covered, your landlord can void your lease. This is one of the practical reasons virtually every restaurant carries GL regardless of state mandates.

Getting a GL Quote in Texas

Carriers will ask for:

• Square footage and seating capacity
• Annual gross revenue
• Percentage of revenue from alcohol (if applicable)
• TABC license type
• Number of employees
• Outdoor seating or special events
• Prior claims for the past five years

Frequently Asked Questions

Does my Texas restaurant GL policy cover a customer who gets food poisoning?

Products liability, which is typically included in a restaurant GL policy, covers claims arising from food you prepare and serve. If a customer can prove they became ill from eating at your restaurant, the medical bills and any lawsuit costs fall under products liability. Keep records of food sourcing, storage temperatures, and handling procedures. Documented food safety practices matter in defending these claims.

What is Texas dram shop liability and does my GL cover it?

Texas dram shop law holds a restaurant or bar liable if it serves alcohol to a visibly intoxicated person or a minor who then causes injury to a third party. Most restaurant GL policies include liquor liability coverage that addresses this exposure. But some carriers exclude it, especially for establishments with high alcohol revenue. Review your policy's liquor liability section or ask your agent directly.

My TABC license requires liability insurance. What exactly do they require?

TABC does not set specific dollar minimums for GL coverage in all cases, but many TABC licensees are required to maintain liability insurance as a condition of their license type. The specific requirement depends on your permit type. Check your TABC permit documentation or call TABC at (512) 206-3333 to confirm what your specific license requires.

How much GL coverage does my restaurant actually need?

Most Texas restaurants carry $1 million per occurrence and $2 million aggregate as a baseline. Restaurants with higher revenue, alcohol sales, or outdoor events often carry $2 million per occurrence with a commercial umbrella policy on top. Your lease requirement is a floor, not a ceiling. Larger operations with more foot traffic carry more.

Does a BOP replace standalone GL for my restaurant?

A BOP bundles GL with commercial property, which can be more cost-effective than buying them separately. For a restaurant that leases space and has equipment and inventory to insure, a BOP often makes sense. For a restaurant in a ghost kitchen or shared space with no property to insure, a standalone GL policy may be sufficient and cheaper.

Disclaimer

This article is for informational purposes only and does not constitute insurance or legal advice. Coverage details and costs vary by carrier and individual circumstances. Consult a licensed insurance agent for guidance specific to your situation.

Sources

• Texas Alcoholic Beverage Commission
• Texas Alcoholic Beverage Code Chapter 2
• Texas Department of Insurance
• Insurance Information Institute