Bars, Taverns, Restaurants, Nightclubs (Property and Liability) Insurance

You want to own a bar, tavern, restaurant, or nightclub. You want to work in the entertainment industry, and you want to be the boss. You have the money to make your dream a reality, but what else do you need?

You need more than cash. You have to find an established building or a site on which you can construct your business. You must acquire the proper licenses, hire staff, create a budget (and stick to it), and you have to train people you trust to carry out your plans. You need to do all this and more, especially if you want to stay in business for years to come.

One of the most commonly overlooked needs for new business owners is insurance. Sure, you know you need it, but how much? What will it cost? What kind of losses, damages, and accidents do you need to anticipate? Are multiple lines of insurance really necessary?

You can't operate your bar, tavern, restaurant, or nightclub without insurance. Most states will require you to at least have basic policies in place. Many won't allow you to open your doors without workers' compensation and general liability insurance, but these alone won't be sufficient. You need more, but what do you need? Which types of insurance can you not live without?

Types of Insurance
General Liability

This will protect you against lawsuits brought by customers and vendors. If one of your customers falls in the bathroom and claims the floors were wet and dangerous, you'll be covered. When a vendor argues that you failed to live up to the promises of a contract, you will be protected by general liability insurance. Bodily injury and property damage are the main reasons why you need this insurance, and are why many states require you to show proof that you have this in place before you'll be able to obtain a license to operate.

Liquor Liability Insurance

You must have this if you want to serve alcoholic beverages. General liability will cover some of the costs associated with liquor related claims, but won't be sufficient if you operate a bar, tavern, nightclub or a similar establishment that serves large quantities of liquor to patrons. You don't want to be on the hook for medical bills if your bartender is accused of serving too much liquor to a visitor. You also don't want to be responsible if one of your customers is later arrested for a DUI. These expenses could bankrupt you if you don't carry the proper insurance.

Workers' Compensation Insurance

You can't legally run a business without workers' compensation insurance. If you have employees and you aren't exempted, you'll need it, so make sure you have one in place before you open your doors. Work Comp covers work related injuries. If one of your employees is injured while he/she performs an activity within the course and scope of their employment, then their medical costs and possibly disability payments will be taken care of by workers' compensation insurance.

Banquet, Event, and Party Insurance

Are you planning on hosting banquets, events, and/or parties at your business? If you are, you need to protect against losses that are unique to these activities. When you have dozens or even hundreds of people in one place, drinking and dancing, dangers

Property Insurance

You can't avoid all accidents, especially if you run a bar, tavern, restaurant, or nightclub. Your employees aren't perfect, and they may inadvertently damage your property. When this happens, you don't want to have to foot the bill for repairs, especially if you have to replace plumbing or electrical systems.

Food Contamination and Spoilage Insurance

If you're planning on serving food, you need to prepare for spoilage. You're going to lose money on food. Even if you buy the freshest ingredients, some of it will go bad, there's nothing you can do to prevent this. You will also have slow periods, where you buy more than you're able to sell. Food contamination and spoilage insurance will cover the costs associated with throwing out food and drinks. These losses can add up fast if you don't have insurance.

Loss of Income Insurance

When disaster strikes and you have to shut down your business momentarily, you want to make sure you're not going to lose out on income. After all, you'll still be expected to pay your bills. Loss of income insurance will pay you if you suffer a covered loss and you aren't getting paid while the repairs are being completed. This could save you from bankruptcy, so seriously consider it.

Equipment Insurance.

Commercial ovens, grills, refrigerators, kegs, and sound systems are expensive. You won't always have cash sitting around to replace these critical pieces of equipment. Even if you do have the money, you don't want to hinder your cash flow, even during the busiest times of the year. Equipment insurance will cover damages to equipment and will help you replace and repair in as affordable and efficient way as possible. Restaurant owners should especially look into equipment insurance. Small bars and taverns may be able to get away without it, but nightclubs, particularly those with expensive lights, speakers, and audio equipment must look into insurance. If they don't and their property is damaged, they may have to shut down temporarily or permanently until they can pay to repair or replace them.

Commercial Auto Insurance.

Restaurants who deliver food need commercial auto insurance. Most of the time, you will be required to pay for losses when your employee is involved in a crash. Insurance is also a must for business owners who run a party bus or catering company. If you're planning to take your business on the road, don't do so without looking into all of your risks and insurance options.

Assault and Battery Insurance.

It's no surprise that alcohol and fights go hand in hand. When some people drink, they get angry. If a fight breaks out in your establishment, patrons could destroy your property or injure bystanders. Your employees may also cause damage, and you'll likely be asked to pay for injuries your employees inflict on customers. If you own a restaurant, this may not be necessary, but bar, tavern, and nightclub owners would be wise to invest in this coverage.

Fire Insurance.

Fires are unpredictable. Restaurants are equipped with powerful grills, ovens, and friers. Fires can happen, and when they do you don't want to be without the proper insurance. Property and general liability insurance won't cover all losses associated with fires. Look into fire insurance if you own a restaurant. Nightclubs have also been the site of tragic fires over the years. If you host bands that use pyrotechnics, serve flaming drinks, or otherwise pose a fire risk, look into fire insurance.

Employment Practices Liability Insurance

Unfortunately, bars, taverns, restaurants, and nightclubs are frequent sites of discrimination and harassment. You treat your employees with respect, but you can't guarantee your employees, especially your managers will do the same. Make sure you have employment practices liability insurance to pay for litigation associated with claims of harassment and discrimination.

Disability Insurance.

In some states, including California, disability insurance is required. Disability insurance will cover your employees if they need time off work for a disability. If one of your workers has a mental or physical disability that renders them incapable of working, you need disability insurance to make sure they will continue to be able to receive pay until they get better.

Medical Insurance

If your business employs more than 50 full-time workers, you will be required to provide them with medical insurance. If you don't provide medical insurance, your business license could be suspended, you could be fined, and/or you could be forced to shut down your business because you can't afford to cover the costs.
Common Concerns

Owners of bars, taverns, restaurants, and nightclubs share common concerns. They're all in the entertainment business. They all sell food, drinks, or both, and they all need to insure themselves against risk. If you're serving alcohol at your establishment, you must have the proper insurance to protect against loss. Alcohol impairs judgment and behavior, so you have to protect yourself in the event that customers consume too much and get out of hand.

Unique Concerns
Bars and Taverns

Don't open a bar or tavern until you understand all of the risks involved. Yes, you thought about drunk fights, minors, and customers who insist on driving home. This is a start, but there are many other concerns you need to worry about. Drunk fights aren't just a nuisance, they can lead to potentially devastating lawsuits by patrons and witnesses. As a business owner, you're legally responsible for keeping your clients safe. They're on your property and they depend on you to be protected from people who want to do them harm. Besides bouncers and security staff, make sure you have insurance in place to pay for your legal expenses.

Restaurants.

Unlike bars, taverns, and nightclubs, fights aren't as common in most restaurants. If you serve alcohol or have a bar on site, you may be just as vulnerable as bars, but for the most part people are more likely to behave in a restaurant, especially if it's a family-friendly establishment. While you may not have to worry about fights, you'll have more than enough to concern yourself with. Restaurant owners who cater or deliver food need commercial auto. Restaurants also need to protect against food spoilage. This will happen, and you need to act to prevent these losses from bankrupting your business. You also have to watch out for food poisoning complaints. Many of these instances are trivial, but others can be very serious and could involve thousands of dollars of medical bills.

Nightclubs.

When people go to a nightclub, they want to let loose and have fun. They may drink too much, slip and fall, or start a fight. They also may injure themselves while dancing. You'll also likely to get to know the local Fire Marshall if you own a nightclub. You and your staff will have to keep track of the number of people inside your property and will be held legally liable if you don't provide customers with easy access and exits free of obstructions. If you provide valet parking services, you may find yourself on the wrong side of a claim for damage to an expensive vehicle. Bouncers and other security guards may also be more likely to be accused of using excessive force and causing injuries. Make sure you have all of the insurance you need before you open your nightclub.
The Future of Bar, Tavern, Restaurant, and Nightclub Insurance

In the past, bar, tavern, restaurant, and nightclub insurance was hard to find. Owners could buy general liability, property, and workers' compensation insurance, and some others, but it was difficult to purchase a policy that would cover more rare, less anticipated losses. Fires, property loss, and claims against you and your employees were paid out to a degree, but only up to an extent. More often than not, you, the owner, were expected to pay for damages and repairs.

Presently, more and more insurance carriers are offering policies specifically designed for bars, taverns, restaurants, and nightclubs. Underwriters are getting better at understanding the risks involved with operating these types of businesses. As they do, they are coming up with more ways to protect owners against losses. If you are thinking of owning a bar, tavern, restaurant or nightclub, call an insurance company and discuss your risks. Without much effort, you should be able to get in contact with someone who can walk you through your options and who can lay out the most common concerns associated with that specific industry. Also, don't be afraid to research on your own. Government officials, law enforcement, insurance agents, and owners like you can help. Network and don't hesitate to ask questions.

In the future, you can expect to find even more insurance options for your restaurant, bar, tavern, or nightclub. Risk is everywhere and this isn't likely to change in the coming years. Terrorist acts, extreme weather, and water and energy shortages may occur, and when they do you need to know you have the right policies in place to keep your doors open.

You can't predict what's going to happen to your business, but you can do something to prevent a minor loss from becoming a potentially business ending one. Don't overlook the significance of insurance. You need it, you can't operate without it. If you try, you may find yourself on the wrong side of the law and thousands of dollars in debt. You need to be serious and smart if you want to be a business owner now and in the future. You need the assurance that only insurance can provide.
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