Tag: General Liability Insurance

Seven Insurance Coverages Every Restaurant Should Carry

I am opening a restaurant, what Insurance do I really need? This is a question insurance agents get asked a lot. Not just from restaurant owners, but from all small business owners. The answer to this question is like many things in life; It depends. The answer to this question will be different if you are a Painter, a Dry Cleaner, or even an Artisan Contractor.

 

There are many variables that go in to running a restaurant and those variables bring on completely different risks.

First and foremost the restaurant owner needs to determine what class code their business will be in. To find this out you will need the help of an experienced insurance agent. It is very important to be open and honest with the agent about what your restaurant will and will not be doing. For example, if you are a bar that stays open until 2 AM you will be in a different class code than a diner that is open from 6 AM until 2 PM. The risks are different, so the businesses are classified different. Furthermore, if you are not honest with your agent about serving alcohol they may leave out Liquor Liability Coverage. If an incident occurs without coverage it may be a loss so large it forces you to close permanently.

So once a business is classified correctly there are seven main coverages every restaurant should carry. Some restaurants will need all of these coverages and more. Some restaurants will need only a few coverages. Again, that is where the help of an experienced commercial insurance agent is important. This list is a great starting point for protecting any restaurant.

 

  • General Liability
  • Liquor Liability
  • Commercial Property
  • Hired and Non-owned Auto
  • Commercial Crime
  • Workers’ Compensation
  • Umbrella Policy

 

General Liability

General Liability (GL) is often referred to as the first line of defense in any good business insurance policy. A GL policy protects a business against liability claims for bodily injury and property damage as a result of normal business operations. It also covers some types of advertising liability. This can be as simple as someone slipping and falling on the way to the bathroom to another business claiming you stole their advertising slogan. There are exclusions in every policy and not every carrier has the same exclusions. Reading your policy and consulting with your agent are important.

 

Liquor Liability

Liquor Liability is designed for businesses that sell or serve alcohol. If you do not plan on selling alcohol this is not necessary for your business. In many states, business are required by law to carry this coverage. Liquor liability covers liquor related instances including bodily injury, mental anguish, psychological damage, assault, intoxicated employees and property damage.

 

Commercial Property

Regardless of whether you own or rent the facility your restaurant is located, property insurance is an essential part of protecting your restaurant from disaster. Commercial Property Insurance covers losses and damages to a companies property including buildings and permanent fixtures, inventory, furniture, equipment, personal property, signage, fences, and even landscaping.

 

Hired and Non-Owned Auto

One risk that many restaurant owners forget about is when their employees are using their personal cars for business purposes. This is where Hired and Non-owned Auto Coverage is necessary.  Many restaurant owners think if they do not offer delivery services they do not need Commercial Auto Coverage. That is not always the case. Hired and Non-owned Auto Coverage kicks in when your employees use their own vehicle or a rented vehicle not owned by the the company. The employee could be using their vehicle for something as simple as going to get change at the bank. Regardless of how small the activity may seem, when the employee is using any vehicle to do business activity you are liable.

 

Commercial Crime

In today’s day and age the risk for credit and debit card fraud is very high at a Restaurant. You and your customers are putting a lot of faith in the people you hire to not steal their personal credit card numbers. For this reason it is necessary to carry Commercial Crime Insurance. This coverage provides coverage for criminal acts committed by you or your employees. These can include employee dishonesty, forgery, computer fraud , funds transfer fraud, kidnap, ransom, extortion and money laundering. Depending upon the policy it will pay to defend you at trial and some fines or judgments awarded by a court of law.

 

Workers’ Compensation

 Workers’ Compensation Insurance offers coverage similar to General Liability. Workers Comp is designed for your employees instead of third parties. Work Comp Coverage is frequently referred to as the “exclusive remedy”. This means employees give up some rights to sue for injuries occurring on the job in exchange for guaranteed benefits like lost wages and coverage of medical costs. Employers gain the piece of mind that they will not be sued for most accidents occurring on the job unless the business is intentionally negligent.

 

Umbrella Policy

An Umbrella Insurance Policy is a great way to provide an added layer of protection to your business. The coverage is a policy that goes over the top of other insurance policies for a rainy day. Basically, the Umbrella Policy will provided higher limits of coverage when a large claim occurs. Think about the size of a potential claim if your restaurant caught on fire while people were inside. This could easily lead to you reaching the limits for General Liability and Commercial Property Coverage. This type of situation could easily exceed a typical $1,000,000 occurrence limit for those underlying policies. This is when the Umbrella policy would kick to provide additional coverage over and beyond those limits.

 

In most cases these policies can be bundled together under a Business Owner’s Policy (BOP). Most insurance carriers like to offer policies in a bundle because it brings them more business and allows them to get better prices for the business owner. It also ensures business owner’s are completely covered with no gaps in their coverage. So when you go out looking for your restaurant’s insurance policy these are seven insurance policies to consider when protecting your restaurant.

What are the main benefits of a Business Owner’s Policy (BOP)?

A Business Owner’s Policy is a tailored insurance package for businesses in a particular industry. The package can be adjusted to fit the needs of each individual business, but they come in common packages specific to each industry. Insurance companies have found certain coverage’s common to each industry and attempt to get business owner’s as fully covered as possible. Most include General Liability, Professional Liability and Business Property Insurance. With a business owner’s policy insurance companies can make sure there are no gaps in coverage and make sure the business is not carrying too much or unnecessary coverage. Carrying a BOP benefits a business owner in three main ways.

Pricing is the main benefit that first attracts business owner’s to carrying a Business Owner’s Policy. Insurance companies are more likely to give businesses a break on price if they are selling that business multiple policies. Business Owner’s may be able to call around and get a better price on each individual policy, but that is time spent not working. With the help of a good insurance agent a business owner can allow the agent to shop the policy around to many insurance carriers. This allows the agent to negotiate the best price and the most complete coverage. For this reason it is important to choose an insurance agent who has relationships with many insurance providers, not just a select few. Many agencies work exclusively with just a few carriers and this does not allow the agent to shop around your policy if you are in a tough classification code or have a negative claims history.

Ensuring there are No Gaps in Coverage is the next benefit of a BOP. Shopping around for each individual policy takes lots of valuable time for business owner’s. In most cases it does not save the business as much as getting a quantity discount by combining coverage’s. A more important benefit of a BOP is making certain there are no gap’s in coverage. When businesses shop their policies around a la carte it can cause there to be grey area’s between exclusion’s that are not covered.  If all policies are bought from one carrier the insurance provider can guarantee you are fully insured.

For instance, businesses that get a general liability policy from one insurance carrier and a professional liability policy from another carrier may have an exclusion in both policies that make the occurrence not covered. This is where insurance has many grey areas. When an incident occurs the business will more than likely have to wait longer while the insurance companies determine who is liable for the incident or if anyone is liable for the occurrence at all. If you have a BOP with just one carrier typically there is General Liability, Professional Liability and an Umbrella Policy. In this case the insurance company just determines which policy is in effect and processes your claim.

Certificates are the final way businesses benefit from BOP’s. Certificates are needed when businesses are involved in projects they are contracted on. A certificate is legally required before work can start on that project. If you work on many projects with different general contractor’s than you will need this certificate for every general contractor you work with. If you have a BOP that is one phone call only.  For example, many artisan contractors do work for several general contractors. Take an electrician as an example. For each general contractor an electrician does a project for they need a certificate proving insurance coverage. If each coverage is with a different carrier that is an additional call the electrician has to make. If that electrician has a BOP they call one agent and can get a certificate for all of their policies.

Again, these are three of the many benefits of having a Business Owner’s Policy. The next time your business is up for renewal it is probably best for you to bring up a BOP with your agent. Insurance carriers are typically more aggressive with discounts when they are getting more of your business.

 

Umbrella Insurance

Umbrella Insurance is a type of liability coverage you may have seen before. It may have been a part of your contract requirements or as an additional coverage option on your policy. Umbrella Insurance is a source of protection that sits over the limits of any of your qualifying underlying policies. These could be policies like general liability, commercial auto liability, and employers liability. Umbrella insurance policies can also protect from exclusions and gaps that exist in your primary liability insurance. The covered causes of loss that are not normally included in primary policies are subject to a self-insured retention (SIR). This is the responsibility of the insured to pay. An SIR in the amount of $10,000 is the most common. The coverage of an umbrella policy is triggered when the limits of the underlying insurance have been exhausted. The umbrella liability policy has a critical requirement. You must maintain the policies listed in the schedule of underlying insurance. They must be kept in force, without alteration of terms and conditions, during the term of the umbrella liability policy.

Umbrella Insurance

Now that you have the basic understanding of what an umbrella policy is, lets look at why it can be important. The area I am going to focus on is in regards to lawsuits. Lawsuits seem to be more common place than they were 20 years ago. They could be from a slip and fall, or giving out a wrong phone number resulting in a large number of calls to another business. Lets look at an example:

A repairman arrives at your location to fix the phones, computers, system, HVAC, etc. It is a rainy day outside. He makes a few trips in and out of the building. On one of the trips he slips and falls in a hallway. The repairman claims that he had no warning about water in the hallway. From the fall he has a back injury along with a broken arm and neck stiffness. The injury requires a few surgeries to help the ailing back and it is determined he will always have an issue. This issue will affect his ability to work and his way of life. The repairman files a lawsuit against your company for not having the hallway marked notifying of the wet conditions. The case goes all the way to trial and a jury rewards the individual $1.5 million. The problem with that amount of money is your general liability policy has a $1 million per occurrence max on it. This leaves you exposed for the remaining $500,000.00. Thankfully your business had an umbrella policy that will then provide coverage over the excess amount. This will take care of the $500,000.00 difference. If your business had NOT had an umbrella policy then your business would have been on the hook for the $500,000.00.

The cost of adding an umbrella policy to your coverage is generally not that expensive. Hopefully you will never end up needing it, but over the course of time insurance claims happen. Whether you have been in business for 1 year or 75 years an incident will eventually occur. It is important to always consider how well your business is protected and make sure there are not any holes in your insurance coverage. If you have not thought about adding umbrella insurance, now may be the time to sit down with your agent to discuss the benefits it could provide your business.  In order to make an informed decision you need to think about if your business might ever be in a situation where you may need additional coverage on top of your existing liability coverage.  If you do need additional coverage then a Commercial Umbrella Policy might be right for you.

Safety Programs and Meetings

The importance of a Safety Programs and Meetings

Safety programs and meetings may seem like a time consuming task and they may seem like they do not make much of a difference until you have had a claim. Even the best run operations will eventually have some sort of work related injury occur. Whether it is a law firm who has a legal assistant injured in an auto accident or a construction worker who has a back strain occur on the job, something will generally happen the longer you are in business.

All carriers ask if you have a written safety program.  This DOES come into play when agents are generating your quote and analyzing your business. For instance, if your business has a written safety program and conducts weekly safety meetings on a variety of topics than an underwriter might understand if you are having a year where a couple injuries occur. If you do not have these policies in place, your business may end up having a claims total higher than your premium paid. This may cause your current carrier to cancel you for claims.  All of a sudden you can’t find an insurance carrier to cover your business.

I have had many clients in this exact situation.  If your business has a safety program in place, what we have been able to do is make a case to the carrier on your behalf by using examples of your safety program and meetings conducted. We do this so when the carrier reviews your business they will take into account all of the right things you are doing and chalk up the recent stretch of losses to more of an outlier than an actual reflection of the way you run your business. On the flip side if you are not having regular safety meetings or do not have a written safety program than it is much harder to convince an underwriter that these losses are a fluke. With no examples to give them on why they will not happen again most underwriters and carriers will decline to offer a quote. This is because on paper it looks like there are no supporting arguments showing there is a plan in place to minimize the exposure in the future.

Now that we have established the importance of safety programs and meetings and programs, lets look at an outline that can be used. Meetings don’t have to be long.  They can be quite quick and effective if you are prepared.

1. PLAN your meeting in advance by looking at topics you have encountered in your years of running the business, industry related issues, or ideas from your workforce.

2. Help your workforce see or understand what you are talking about through pictures and videos. Not everyone learns or is engaged the same way. Pictures and videos will allow you to show specific examples of the point you are hoping to make.

3. Tell your employees how to apply the information you have presented and see if they have any questions, thoughts or concerns.

4. Attendance should be required and not optional.

5. Document attendance so if it ever comes up you can show you are constantly training your employees on safety.

This is a simple guideline you can follow that will keep your team focused for the 10-30 minutes it may take to conduct safety meeting. Meetings don’t need to be long or cumbersome but they should be to the point and deliver your message in an efficient, effective manner.

Artisan Contractors

Why would an artisan contractor need data breach coverage?

Data breach (or cyber liability) coverage has been one of the hottest topics in the insurance industry over the past few years. Insurance companies and agents alike unanimously agree that this line of insurance coverage is becoming critical for small businesses to protect themselves, but the odd disconnect is that many businesses don’t see the value.

First, let’s start by explaining what data breach coverage is designed to protect. This policy is designed to cover data breach recovery costs such as notifying any person/business potentially affected, good-faith advertising, and repairing security of the system. The coverage is important because a business is held responsible for protecting the personal information it collects from someone else. Most states have already passed (or are passing) regulations for steps a business must take for their clients when a data breach occurs. These regulations typically require formal notification that a breach has occurred to all potentially impacted clients, and typically the business must offer credit monitoring services for those clients for 1 year. Those steps alone can amount to a huge expense.

Most artisan contractors feel like this risk doesn’t relate to them at all, and others don’t realize that they aren’t properly covered. A recent study found that 39 percent of business owners think that data breach coverage is a part of their general liability policy. This thinking is wrong. Occasionally, a business owners package (or BOP) policy will include some minimal data breach coverage, but the limits are so low that the coverage would likely only cover a portion of any claim that existed. Many artisan contractors buy GL-only policies instead of a BOP anyway, because they feel like the extra coverage’s aren’t important for their business … and cyber liability is one line of insurance that is still considered a “luxury” expense.

In fact, one of my clients who is an artisan contractor and does HVAC work expressed himself pretty clearly: “Don’t try to sell me something that has no impact on my business. I don’t keep much information on my clients, and I’m so small that nobody would want to take the time to hack my company.”

That’s when I brought up the Target data breach, which he knew about because he was one of the victims and had to get new credit cards issued because of the hack. What this artisan contractor didn’t realize was that the hackers used a third-party vendor, HVAC company Fazio Mechanical Services, to gain access to the Target system.

The Home Depot data breach also began via a hack of a third-party vendor. In fact, using a third-party vendor is becoming the most common method for as an access point for a larger hack. As an artisan contractor, this is becoming the new risk and larger companies are starting to take notice.

Many larger organizations are now requiring a sub contractor to carry a separate cyber liability policy, along with the more typical insurance requirements (workers compensation, general liability, umbrella, etc.).

Over the next few years, I think getting a data breach policy is not only a necessary way to protect your business, but it is also a great way to separate yourself from the competition.