California Restaurant Owners Face Dual Insurance Cost Increases
Restaurant owners in California are experiencing two simultaneous insurance cost increases this fall, according to Los Angeles-based insurance broker William Lemmon of Broadway Insurance Services. The first is a mandatory increase in workers' compensation rates that took effect on September 1, marking the second consecutive annual rise after years of declines. This rate hike affects businesses with high payroll-to-revenue ratios most directly—such as restaurants—which feel the impact immediately upon renewal. The second cost increase stems from rising commercial property insurance expenses passed through to tenants via triple-net (NNN) leases. Many restaurant operators are unaware that their lease agreements include clauses transferring these costs, leading them to pay for increased premiums twice: once on their own policies and again indirectly through CAM charges in the future. Lemmon advises restaurant owners to review employee classifications, document safety programs, shop around for competitive quotes, and scrutinize insurance pass-through language in leases. These steps can help mitigate rising costs during a critical renewal period.
Topics: California regulations commercial insurance restaurant industry workers' compensation