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Bars and Taverns: Insure Responsibly

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Bar and nightclub owners across North America play host to countless bachelorette parties, happy hours and trivia competitions. In fact, the nightlife industry contributes more than $20 billion in annual sales in the U.S. alone according to the National Restaurant Association. While the owners of these establishments provide patrons with late-night memories on the dance floor, they also face a mix of risks that can turn their hot-spot cold.

Location, Location, Location—Manhattan, Long Island, or Singapore (Sling)

Is the pub located in the heart of Manhattan or in a small neighborhood out in Long Island?  Whether it is one of many along a downtown strip, or a solo establishment off the beaten path, location is one of the most telling ways a retail broker or agent can assess the bar’s risk exposure.

According to Tyson Peel, National Property and Casualty Manager, at Burns & Wilcox Canada, location can inform the underwriter about overcrowding and underage exposures. “A bar located close to a major sports venue like Wrigley Field in Chicago or the Air Canada Centre in Toronto has very different risks than a bar in a residential neighborhood or a small farm town.”

In addition to the neighborhood, Jessalynn Suda, Assistant Director, Special Risk Division, at Burns & Wilcox, stresses that brokers and agents should not overlook the interior design of the building. Questions to consider include: How big is the dance floor? How many TVs are there? Is there space for live entertainment or a DJ?

“A large dance floor indicates that it could be a nightclub, which increases the risk exposure because it will be darker and dancing presents an increased trip and fall exposure,” explains Suda.

Ownership Experience—Shift Change

While construction, rehabbing and re-concepting have their own headaches, according to Suda, it is easier to write a complete application for an existing venue, as there are fewer unknowns.

The biggest question becomes the experience of the new venture’s owner. “The owner’s experience operating a bar or restaurant is an important question. If the owner is new to the industry, it is in the owner’s best interest to hire a general manager who understands the nuances of running a bar,” says Suda. An experienced general manager will bring an understanding of how to successfully manage staffing, inventory and dealing with difficult patrons.

New ownership also provides the opportunity to learn from the previous owner’s mistakes. Together with their retail broker or agent, the insured can review past claims and make a plan to prevent similar issues. Suda cites simple improvements such as adding traction to slippery steps, increased server training to deter overconsumption or installing security cameras.

Exclusions—Prevent a ‘Bottoms Up’ Situation

Do not let the good times be overshadowed by vulnerabilities. Whether they call it a pub, club, tavern, hangout, joint, bar or watering hole, Peel encourages retail brokers and agents to ask the right questions and before closing becomes permanent.

Food poisoning, slips and falls, overserving and, according to Suda, assault and battery are risk exposures for bars and trigger points for business failure if the right coverage is not in place.

An endorsement for equipment breakdown is something that retail brokers and agents should discuss with their clients. This endorsement will cover spoilage during a power outage or replacement of equipment to get the bar back in business. General Liability coverage will usually include food poisoning and assault and battery. Since some companies have exclusions against assault and battery, retail brokers and agents must be diligent to secure appropriate and full coverage.

Closing Time

Whether clients have decades of experience or are just beginning their career behind the bar, it is important for retail brokers and agents to make them aware of the exposures that are inherent and sometimes unique in the restaurant industry. “One of the more interesting exposures I have encountered was for a bar with a bucking-bronco ride,” said Peel, “but even a regular sports bar needs thorough planning and consideration to protect the owner and patrons.”

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