Running a restaurant can be a fun and exciting venture. That is until someone gets sick or injured at your location. The best way to protect your business is by having the proper insurance in place and understanding the risks you may face in the restaurant industry.
Here’s some good news: Insurance for pandemic-proofing your restaurant is closer than you think!
Five Liabilities Every Restaurant or Bar Owner Should Know About
Owning a restaurant isn’t easy, and with all the potential liabilities associated with ownership, it’s essential to make sure you have the proper insurance. Here are the most common bar and restaurant liabilities according to NU Property and Casualty and how you can protect yourself and your business.
The most common type of liability claim stems from the over-service of alcohol to patrons who then get behind the wheel. There were 10,076 fatalities in 2013 from automobile accidents involving a driver with a blood alcohol content of 0.08 or higher, which accounted for 31% of the total traffic fatalities in the year.
Claims can also result from intoxicated patrons operating boats or snowmobiles after leaving the serving establishment. It’s not uncommon for an establishment to be named with other establishments in a lawsuit, even when the patron admits to having only one drink at an insured’s bar. To transfer the risk of over-service-related claims onto insurance, the dram shop owner needs to purchase a Liquor Liability policy with adequate limits in addition to a General Liability policy.
2. Activity hazards
Dram shop owners expect the occasional bar fight and a bloody nose. What might not be anticipated are broken ankles from falls off the mechanical bull. Head injuries from falls out of the shot chairs, or facial burns from the bartender’s flaming alcohol trick. Claims arising out of these types of activities may be covered under the premise liability portion of a General Liability policy or the Liquor Liability policy. Often, though, these types of risks are excluded.
To make sure all activities occurring in the bar are covered, the insured needs to carefully disclose them on the insurance application so the agent can secure appropriate coverage. Typically, the agent can add coverage for these activities by endorsement for an additional premium. First, your agent needs to be informed.
3. No exit zone
A lighted exit sign malfunctioning or an exit door being blocked or locked to prevent patrons from entering the bar is frequent.
This risk shouldn’t be underestimated. If there was ever a fire in a nightclub and patrons were unable to exit, the claims for bodily injuries and property damage might easily exceed the aggregate limits of a standard $2 million policy. This risk is easily avoided by proper maintenance of the premises and awareness of this potential for risk.
4. Flammable decorations
Like the no-exit-zone exposure, flammable decorations or patron injuries caused by servers accidentally spilling hot food or beverages can also be disastrous for establishments without adequate limits.
Burns are painful and cause disfigurement, so in addition to the special damages associated with the cost of acute and future medical treatment of burn injuries, damages awarded by juries for pain and suffering also tend to be high.
Bar and restaurant owners are wise to consider an insurance company that conducts loss control inspections as part of their underwriting process. Trained loss control professionals can’t prevent every risk scenario. But they can spot a significant number of potential problem areas. They will make recommendations for corrections that can stop a loss before it occurs.
Bar and restaurant owners should note that underwriting inspections are not comprehensive safety evaluations. And may want to consider using their local fire departments to inspect their establishment for hidden fire hazards.
Try as an owner will, underage patrons with convincing fake IDs will enter bars. Bar and restaurant owners should consider investing in ID scanners to help identify false documents. Since the responsibility for a patron engaging in underage drinking remains with the serving establishment. Even after the patron has left the premises.
Even with the best mitigation efforts, preventing loss isn’t always possible. Where best efforts fail, insurance policies customized to provide adequate coverage and sufficient limits. Affording the protection needed to give the dram shop owner peace-of-mind. So they can get back to the busy business of running their establishment.
The Bottom Line
As a small, independent business, we understand all of the hard work that goes into maintaining a business. We also know with common restaurant liabilities posing threats to owners across the country, it’s essential to protect yourself. Have a question about your policy? Don’t leave your business at risk, contact the insurance experts at Paradiso Insurance today!