Restaurant, bar, and nightclub owners have to budget very carefully to ensure that their needs are met while they remain profitable. This is particularly true when we’re talking about the type and amount of insurance coverage these owners need to protect their establishments.
Too often, businesses end up with insurance they don’t actually need, or they find out too late that they never had the right type to begin with.
So, to get started, let’s take a look at some of the most common needs that owners face and then get into the types of insurance that provide the necessary protection.
How to Determine Your Needs
Before we start assigning a type of insurance for your business, it’s important to determine and define your exact needs.
In our “6 Insider Secrets,” we discuss a number of elements that could be costing you too much on your premiums. So, this is a good place to start.
- Use accurate revenue information. Your general liability and liquor liability premiums are based on your sales, so you need to make sure your sales are accurately recorded and your food-to-liquor ratio is properly reported. If these numbers are off by even a single percent, it could cost you thousands on your premiums.
- Work with a carrier that understands your business. Many programs are tailored to different types of businesses. You don’t want to get trapped in a program that is meant for nightclub insurance when you run a restaurant. If you were in such a situation, you could be overpaying on your premiums.
- Over reporting sales tax. While it’s true that your premiums are based on sales, it should not include sales tax. If it did, you could easily make it look like you have upwards of 7% more sales than you actually do.
- Properly classify the things you serve to the public. When you ring up anything that isn’t alcoholic, it has to be done separately. This will help categorize your business properly. So, a business could potentially change classifications (e.g., from bar insurance to pub insurance) based on a 1% difference in non-alcoholic sales revenue.
Understanding the Types of Insurance
There are several types of insurance that are needed in the food service industry. Of course, not every business will need every type of coverage, and no two businesses will need the exact same plan.
You may run a restaurant but still need liquor liability coverage if you sell alcoholic beverages. You may own a nightclub but have needs that can be covered by restaurant insurance. Let’s take a quick look at the most common types of nightclub, restaurant, and bar insurance.
- General liability – This protects your establishment against third-party claims of property damage, bodily injury, negligence, and libel.
- Liquor liability – If you manufacture, sell, distribute or sell alcohol, you need this type of insurance.
- Commercial property – Protect your real property, personal property, assets, and inventory against everything from damage to theft.
- Errors and omissions – If a customer makes a claim against your business for a financial loss, this type of insurance can provide the protection you need.
- Directors and officers – This coverage protects the directors and officers of a company (or the company itself) against potential losses from legal actions against them.
Take the Time to Examine the Details
Once you determine the type of insurance you need, it’s important to remember that not every policy is exactly the same. More than that, there are always exclusions written into different policies which you need to know about.
You don’t want to be caught in a situation in which you believe you have coverage but actually don’t.
For example, assault and battery is often excluded from a liquor liability policy. So, if there is an incident on your premises, you might be liable for damages – unless you make sure that you are covered for exactly this kind of circumstance.
You can work closely with the experts at Tabak Insurance Agency to make sure that whatever type of insurance you need, it will cover you in whatever situation you find yourself in.