Have you ever wondered why the premium for your company fluctuates over time? You probably know why your motor car insurance premiums fluctuate: as you get older and become a less risky driver, your insurer faces less risk, which causes your rates to decrease. But unlike obvious criteria like age or gender, what drives pricing for pubs and restaurants isn’t quite that straightforward.

Every firm will undoubtedly confront a variety of distinct risks, and your carrier will evaluate each one and factor it into your premium. What exactly are these risks, and why do they have an effect on premium rates? We’ll look at a few typical factors that affect restaurant insurance costs below.


Storms & Catastrophes

Disasters caused by weather and climate in the Philippines cost between ₱300 million and $500 million in 2021 alone. Typhoons Rai and Jolina in 2021–2022 damaged areas in Eastern Samar, Marinduque, and the Southeast of Guiuan to the tune of more than 500 million pesos. 

The storm’s destruction resulted in claims being settled for well over a million pesos. In fact, 2021 marked the eighth year in a row that the Philippines saw at least 5-6 disasters, resulting in insured losses of more than a billion pesos.

No one should be surprised that rates have increased as insurance firms pay out significant claims as these weather- and climate-related calamities become more frequent. Due to the increased liabilities and risks brought on by storms and other weather-related events, insurers must raise their premiums.


Building replacement costs and inflation

The Consumer Price Index (CPI) increased by 8.5% in March 2022, which is the fastest rate since the 1980s. Building costs have increased as a result of rising construction costs. In fact, during the past year, the cost of the most basic building materials has increased by double-digit percentages. Therefore, if your restaurant sustains significant damage from a storm or fire, the cost to rebuild the structure would be significantly greater.

Although there are many confusing reasons contributing to the growth in construction costs, it does show how inflation affects insurance costs. In order to appropriately pay these higher costs, whether they are construction expenditures or costs for other products your company uses, insurers must increase premiums when inflation drives up prices. 

Construction material costs increased by 44.1 percent between December 2019 and December 2022, with certain lumber prices rising by 400% by the middle of the year. These have made underwriting losses much higher.

Due to shortages and pressure on the supply chain, the replacement cost of the structure would be significantly greater if you have inadequate insurance, and you might only be protected for a percentage of that cost. Construction prices for private residences have grown by an additional  ₱1 million in 2021, while expenditures for commercial firms have also climbed.



Simply explained, reinsurance is insurance for insurers. The risk is dispersed by insurers via reinsurance. This kind of cooperation ensures that no corporation is left to face the brunt of catastrophes like the derecho; yet, as weather events have become more frequent, reinsurance costs have risen as well, and this trend doesn’t appear to be reversing anytime soon. 

Policy rates rise as a result of the insurance firms’ increasing costs.


Public Inflation

The least tangible factor influencing insurance prices is social inflation. It’s a relatively recent phenomena, making it more challenging to anticipate, plan for, and defend against.

The costs related to this protracted litigation have increased as more and more cases across the nation result in larger rewards to plaintiffs. The size of court settlements, like natural disasters and hurricanes, can have an impact on insurance rates. 

Insurance companies are compelled to boost rates as a result of the social inflation risk, which is becoming more prevalent but unpredictable. what you can manage. Learn how to make your restaurant profitable and secure by browsing our risk management library.


Public Unrest

Social upheaval may really affect businesses and insurers alike, as we saw last year. The cost of social unrest claims to insurers in 2020 was between ₱ and ₱2 billion, making it the most expensive social unrest claim in the history of the nation.

Supply chain stress or storms, or even both, can have a comparable effect on insurance costs as societal upheaval. The risk to your property could rise if social disturbance grows more frequent, or your restaurant might not be able to function as intended.

Both of these situations could put your company at danger and raise your insurance costs.


Supply-Chain Stress

As we hinted at earlier, pressures on the supply chain also affect insurance costs. A bottleneck effect resulted from various manufacturers and industries having to slow down, halt, or stop output during the epidemic. This increased expenses and strained supply systems. Microchips have been a problem for automakers, raw materials have been a problem for constructors, and you have probably experienced the effects in your bar or restaurant.

It’s possible that the supply chain disruptions on a worldwide scale forced your company, like so many others, to quickly switch to new suppliers or employ more readily available ingredients locally. Selecting the proper insurance coverage for your livelihood is especially crucial if there is a delay in obtaining products or if you are not able to access them at all.



While there are many variables that affect the price of restaurant insurance, our team of insurance professionals is here to help you every step of the way by creating a policy that is specifically tailored to your needs.