What Insurance do Bars, Taverns and Restaurants need?

Bars, Taverns and Restaurants

Small Businesses in the Bars, Taverns and Restaurant Industry have many different risks that are unique to this industry. The difference between a dive bar and a four star restaurant are as different as a beauty salon and a gun club. There are different classification codes for different types of insurance coverage depending upon the operations of your business. This is because the risks of a coffee shop, is different from the risks of a cafe or a wine bar. Which classification code the business is classified in is a large part of what determines how much they pay for commercial insurance. This may determine whether the business wants to offer a certain type of food or service depending upon how much it will impact what the business pays for commercial insurance.

Overhead picture of a Restaurant.

Alcohol Consumption

Most states determine if a business is a restaurant (not a bar or tavern) if it makes a certain percentage of its revenue from food and not from alcohol sales. The typical amount to be determined a restaurant is less than 50%. If the business makes more than 50% of its revenue from alcohol sales it is a riskier business and is thus places in a riskier classification code. This causes the business to be charged a higher premium for commercial insurance. The next main factor that impacts a restaurants rate for commercial insurance is whether the restaurant offers alcohol or not at all. If the business does not offer alcohol at all, they obviously eliminate the risk of intoxicated customers. This lowers the most costly risk a bar tavern or restaurant faces. Also, an additional factor in the amount of premium is if the business does offer alcohol, whether or not the business offers hard alcohol or just beer and wine. Hard alcohol causes intoxication at a faster rate, because of this the business is more likely to have problems related to alcohol consumption.

Picture of a bar or tavern.

Hours of Operation

Aside from alcohol consumption the next largest risk that faces Bars, Taverns and Restaurant is the hours of operation. There is much less risk in a diner open from 6:00 AM – 1:00 PM, compared to a bar that serves no food and stays open until 2:00 AM 7 days a week. The latter might carry a few more risks that might turn in to insurance claims. Because of this risk the business is going to pay more in premium for their commercial insurance. Limiting these risks before they turn in to insurance claims can save your business immensely over the long term.

Picture of a table with breakfast food and a laptop.

Types of Coverage for Bars, Taverns and Restaurant

Most insurance carriers have business owner’s packages designed specifically for Bars, Taverns and Restaurants. Here are some common coverages you will find included in those packages.

General Liability
Liquor Liability
Commercial Property
Business Personal Property
Workers Compensation
Business Income and Expense Coverage
Commercial Crime Coverage
Umbrella Coverage

General Liability Insurance covers a business for common slips and falls that happen on the property, Liquor Liability is required by law in most states and the amount of coverage is usually determined by the amount and type of alcohol a restaurant serves. Commercial Property Insurance covers damages to the building and most fixtures attached to the building. Workers’ Compensation is required by law in nearly every state and is coverage to prevent lawsuits for injuries that occur to your employees as part of normal business operations. Business Income and Expense Coverage is an addition to a Commercial Property Policy and will cover your business for loss of revenue due to being closed after damage to your premises. Commercial Crime Coverage will cover your business for crimes committed by your employees while acting on behalf of the company. Umbrella Coverage is designed to extend the limits of existing policies when those limits have been met. It is important to note that Umbrella Policies only kick in on top of other existing policies. If the cause of the damage is not a covered peril than the Umbrella Policy will not be activated.

Below is a list of all the classification codes that might be included as a Restaurant, Bar or Tavern.

Business ISO General Liability:

Code: 16920- Restaurant- alcohol sales >75%- Table service, dance floor
Code: 16921- Restaurant- alcohol sales >75%- No table service, but dance floor
Code: 16930- Restaurant- alcohol sales >75%- Table service, no dance floor
Code: 16931- Restaurant- alcohol sales >75%- No table service, no dance floor
Code: 16940- Restaurant- alcohol sales >75%- Bar service only, with dance floor
Code: 16941- Restaurant- alcohol sales >75%- Bar service only, no dance floor

NCCI Class Codes:

9082 – Traditional Restaurant.
9083 – Fast Food Restaurant
9058 – Restaurants owned or operated in a hotel.
9084 – Restaurant who receives more than 50% of their revenue from the sale of alcohol.

Hurricane Season is Upon us

15 Tips to get your Home and Office ready for Hurricane Season

Hurricane Season is upon us. August and September are typically the worst months for hurricanes in the United States, especially on the Atlantic Coast and Caribbean. 2017 was the worst year in a decade for Hurricane damage. Here are 15 tips to prepare your family and small business for this Hurricane Season.

Hurricane Preapredness is more important now than ever.

Plan ahead in order to be Prepared for Hurricane Season

If you wait until a hurricane forms out in the Atlantic to start thinking about what to do in the event of a natural disaster, it may be difficult to adequately prepare your family much less a small business. Preparing in advance for the day your area experiences a natural disaster is the best way to have your family and business prepared.

Create a Formal Plan

Creating a formal plan, putting it in writing, and communicating that plan to your family, friends, neighbors, and employees is the best way to deal with a natural disaster. Incorporating the key employees and advisors is a great way to get the most complete formal plan developed.

Protect Your Staff, First during Hurricane Season

If you and your staff are at work when a natural disaster strikes, it is always important to take care of the health and well-being of your staff, first and foremost. This is more a case for areas of the country that experience earthquakes or tornadoes. These natural disasters have much less warning, but hurricanes typically give the ability to know they are coming for a few days at the least. The strength and severity of the hurricane may be a surprise, but not the fact that they are on the way. No matter what the circumstances around a hurricane, when your community is faced with one, it is important to help your staff in any way possible.

Keep Communication Open with staff

On top of thinking about your staff first when a disaster strikes, it is equally important to design and implement an effective communication plan for your staff. Have as many forms of communication open as possible. Some staff may prefer to communicate via email or text, others may want a phone call. No matter what time of communication plan you decide on for your organization, practice it ahead of time. This will help the situation run smoothly when disaster actually strikes.

Create a Contact List

In a day and age when most people depend upon their mobile device for a majority of the information they need at any given moment. When a natural disaster strikes, cell phone reception is not always reliable. If this does occur after a hurricane, having a contact list in a safe place will come in handy when you are trying to get ahold of your family, friends, neighbors, and employees.

Hurricane Matthew Damage

Paperwork/Collection of Information

Buying a safe is advisable in the event of a natural disaster. It is important to safely store documents like birth certificates, social security cards, passports, the deed to your house, the title to your cars, the articles of incorporation etc. It is equally important to store a list of phone numbers to organizations like the local hospital, the local police, a printed list of your employees contact info, your insurance company, etc. Do not depend upon these numbers being stored in your phone. Many times when a natural disaster strikes, there is a period of time when cell service is bad or does not work at all.

Take Before and After Photos

Taking before and after photos are especially important for your home and office. It is important to document your key equipment and the property that your business owns. It might not be a bad idea to put these photos on file with your insurance agent and carrier. The more information you record photographically, the easier the claims process will be with your insurance company.

Designate a Safe Zone within your Home and Office

Designating a meeting location within your house or office and just outside of it is crucial to keeping track of your family and staff in the immediate aftermath of a disaster. If the place to meet is inside the building, make sure it is centralized and away from windows as much as possible.

Stockpile Emergency Supplies just for Hurricane Season

Emergency supplies may be critical in the hours and days immediately following a hurricane. These supplies should include batteries, bottled water, non-perishable food, a first aid kit, entertainment, deck of cards, maybe even a harmonica. There are infinite things that can and should be included in an emergency supply kit. Planning ahead is always the best way to create this kit and checking on it periodically will help to make sure everything is in operating order.

Purchase Backup Power

A back-up generator and solar chargers are beneficial when a disaster strikes. There will more than likely be a period of time when your family and business have to go without power. Having a back up plan for power will make your family and employees much more comfortable while dealing with the results of the natural disaster.

Conduct Ongoing Maintenance of all necessary Power Equipment

Checking on the backup power to make sure it is in proper working order is highly advisable for your home and office. Also, it is wise to store the proper fuel the backup generator. If you decide to use solar as a source for backup power, the device should be tested about once a quarter.

Have a Plan for Windows and Doors during Hurricane Season

Windows and doors are important to take care of in the event of a hurricane. Even if the storm is a tropical storm or category I storm there is more than likely going to be a lot of flying debris as a result of the storm. In some way you should board up all windows and doors of any facility you own or rent. This activity takes minimal effort on your part and can save a lot of damage if done properly.

Keep Trees Trimmed

One thing many people forget in relation to hurricane season is to have the trees, shrubs, and landscaping up to date. Even in the case of the storm not being as strong as forecasted, there will still be extremely high winds. Those winds can do enormous damage to your property when they interact with overgrown tree limbs. Soem time during the month of July or August is a good time to have all the limbs on your property trimmed adequately.

Know the Location of all Power Boxes and Water Shut Off Valves before Hurricane Season

Before a storm is in the forecast, it is important to find the location of your properties water shut-off valve, power box, and surge protector. These are not parts of your property you have to deal with very frequently. For that reason, it is important to to periodically visit this part of your facility and make sure it is in proper working order. It is especially important to do this in the Summer Months prior to hurricane season.

Clean the Gutters before Hurricane Season

In addition to tree limbs and shrubs around your property, it is equally important to clean out the gutters on all properties prior to the late summer and early fall hurricane season. These gutters will be dealing with a large amount of water moving through them during the fall. If they are not cleaned it may result in further damage to the property.

What is a Ghost Policy?

Have you heard the term Ghost Policy?

It is typically referred to in regards to workers compensation insurance. A Ghost Insurance Policy is a term used to describe a specific type of workers’ compensation insurance policy. This type of policy is issued to individual business owners that have no direct coverage value. It can be a great policy for small contractors and subcontractors who have no employees or subcontractors.

Ghost Policy

What is a Ghost Policy?

A Ghost Policy is a minimum earned premium policy. A policy of this nature commonly costs between $750 and $1000 annually. This is depending on the state the policy is issued and several factors related to the industry the business operates. One major difference from a traditional workers comp policy is that a Ghost Insurance Policy has no payroll calculated into the premium. It also excludes all owners from the policy. This is where the term “Ghost”comes from. Now the premium will vary by carrier and includes the state expense constant, There are minimum premium amounts required to administer a policy.

Why might someone want a Ghost Policy?

While many business owners might think it is a waste of money to purchase this type of a policy, but it may be a preferable alternative to going without coverage for a number of reasons. A Ghost Policy enables a business owner to have a certificate of insurance issued. Many contracts require a certificate of insurance in order to secure financing and to do business legally in many states. In addition, a Ghost Insurance Policy can cost a fraction compared to a policy including the owner. Also, in most cases, a Ghost Policy provides employer liability protection in the event an employee is hired or a payment is made to an uninsured subcontractor. Uninsured Subcontractors are especially important to protect your self and your business from, even if you only interact with subcontractors infrequently. Trusting that a subcontractor is self insured is a good way to get your business in to a situation no business owner wants to be in.

Ghost policies don’t provide coverage, so why would I want one?

The biggest reason small contractor or subcontractors benefits from a Ghost Insurance Policy is to meet state legal requirements or to provide a certificate of insurance to another client or general contractor. Many other businesses, customers, and other contractors require an independent contractor to provide a certificate of insurance in order to enter into a contract with them. The fact that the business does not hire employees is inconsequential to them. They want to have a certificate of insurance in place to make sure they are not held liable for damages or bodily injury that occur within the contract. Many independent contractors do not employ any other people. These contractors want to prevent high workers compensation premiums just to cover themselves with traditional comp coverage. Unfortunately, in some states these contractors are required to show some proof of insurance coverage. In most instances, a Ghost Policy will help them meet these requirements the most cost effective way.