Top 10 Insurance Concerns for Bars & Restaurants

Assault & Battery To Patrons.

Assault & Battery Coverage for Bars and liquor selling firms, defined: Bodily injury and medical costs sustained by a patron during a physical altercation with another patron or a bar employee while at the establishment. Assault or Battery typically means harmful or offensive contact between two or more persons, including threats, sexual assault, abuse or molestation.

While the location, size, nature of onsite activities/games, security, and clientele of the bar either elevates or reduces the bar owner's ultimate risk of Assault- or Battery-related injuries to patrons, even the best run, most low-key establishment faces some risk of incident and subsequent Assault or Battery claim. Insurance carriers address this increased risk in a number of ways, including;

1. mandatory inspections of the premises by their personnel prior to policy acceptance;
2. careful underwriting of the bar through periodic review of area crime reports, past loss history, experience of the management, and other factors;
3. dramatically increased costs for both General Liability and Liquor Liability policies;
4. significant reduction in coverage limits for Assault- and Battery-related claims.

By far, the worst and understandably least expensive policies available will eliminate coverage for Assault and Battery (by policy exclusion) or reduce the limits available to a small fraction of the typical $1,000,000 policy - perhaps issuing a $25,000 "sublimit" for Assault and Battery coverage.

Assault and Battery is frequently broadly defined to include:

• Protection of persons or property at the premises
• Prevention or suppression of an Assault or Battery
• Negligent hiring or supervision of an employee with this context
• Failure to implement adequate security, monitoring or surveillance

Read Hill & Usher's Green & Gold about Assault and Battery

Liquor Liability Coverage.

Individual State laws along with court rulings in the state in which the alcohol is served or sold establish the legal climate for liquor liability claims; accordingly, the state legal environment will affect both insurance premium rates for liquor liability policies as well as the limits of coverage advisable to ensure adequate protection.

Arizona Laws. Arizona is considered a moderate legal climate for liquor liability lawsuits because the law does not impose broad strict liability on the seller for bodily injury and property damages that might arise after the sale, with exception for the sale of liquor to either minors or "obviously intoxicated" persons. AZ Revised Statute 4-312 limits the bar or restaurant's strict liability for those of the drinking age.

Find Title 4, the current Arizona statute here: http://www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=4

Because the Arizona statute imposes liability upon the bar or restaurant for the injuries caused by minors and/or "obviously intoxicated" persons served in the establishment, the need for Liquor Liability coverage is strong. Attorneys who represent liquor serving establishments would further advise limiting liability by establishing the company under a Limited Liability Company or Corporation to protect the personal assets of the owner.

Valuation of Property: Actual Cash Value (ACV) vs. Replacement Cost (RC).

Property insurance policies for bars and restaurants is commonly written on Actual Cash Value.

Business Income & Extra Expense

Wise restaurant and bar operators protect themselves and other stakeholders in the establishment by insuring buildings, contents and other property with limits sufficient to rebuild or replace damaged property. But what happens while that property is being replaced? Property damage can often be extensive, even total. Such loss can certainly shut down or greatly reduce business operations for a time. Would it be just a few weeks or would it be several months or more? How are lost profits and other ongoing expenses replaced during a shutdown? Such questions highlight the importance of Business Income and Extra Expense for restaurants.

Computers can be damaged or a complete loss. Paper and other records can be totally destroyed. Building rehabilitation and, in a worst-case scenario, full reconstruction take time - sometimes half a year or more, even if the original premises did not take that long to build. Don't forget to factor in the time to even get all the plans and permits ready.

How long would it take you to get your operation back up and running even under the best of circumstances and with plenty of funds set aside to cover all unforeseen expenses? Such unexpected interruption can cut deep into cash flow and savings.

Natural disasters (all too common) and terrorist events have proven to severely interrupt business income and personal earnings of millions of people. Sad as it is to even recall, there were thousands of restaurants and bars at and near ground zero in New York on that fateful day.

And in New Orleans when Hurricane Katrina hit, just think about all the various eating and drinking establishments that literally went under. Think of the people who owned the enterprises. Think of those who had to make the tough economic decisions to shutdown to never reopen again, anywhere. Did they all have flood insurance? Well, did they all have all-important Business Income Insurance?

Many additional eateries, pubs, bars, nightclubs ... faced surprise income interruptions during the California wildfires. These things (flood, fires, attacks, etc.) happen, and highly intelligent businesses make sure of their coverage adequacy and limits by consulting qualified insurance brokers and risk managers.

You can be sure that the largest and best run chains carry Business Income. Of course they can help spread their losses across other locations not directly hit by a disaster, large or small -- all the more reason for the smaller chains and single-location establishments to have full coverage.

And as we've seen, it doesn't matter which state you're in, disasters strike and accidents happen. Those smart enough to prepare by obtaining solid insurance coverage are able to budget their expenses and to position their business or businesses to ride out a period of little or no income to cover salaries and all other continuing expenses. They are able to continue paying bills and supporting their valuable and highly skilled and trained employees.

Because Business Income and Extra Expense can take on a number of formats, bar and restaurant owners should take great care when selecting limits, choosing coinsurance percentages, including/excluding payroll of non-management employees, and maximum periods during which coverage applies.

Workers Compensation for Active Owners

For latest rate information please click here (pdf)

Back Up of Sewers & Drains

Large Special Events

Non-Owned Auto Liability

Carrier Viability, Rating, and Claims Payment

Agency Services, Premium Financing and Client Advocacy in the event of a loss.