Liquor Liability for Restaurants is something that should be addressed more when it comes to Business Insurance. Many restaurants feel they don't serve enough liquor to warrant this coverage. Meaning, they're not a bar, so it's really not a high priority. The reality is, it's very important and your exposure for a claim/loss is probably bigger than you think. It only takes one claim to put a restaurant out of business and a Liquor Liability claim could be that claim. Below are just a few reasons why you might want to consider Liquor Liability Insurance for your restaurant.
It only takes one drink.
That's it. It only takes serving one drink to be brought into a law suit. What do I mean by one drink? Let's say someone has been drinking all day. Yes, people day drink, especially when it's great patio weather here in Austin, Texas. This person has been drinking all day at a bar and decides they don't want bar food for dinner. The consensus among the group is to check out that new hip restaurant downtown. They decide at this restaurant to only have one for dinner before they have to drive home. Take in mind these folks are veteran day drinkers, so the server doesn't pick up on the fact they've been drinking all day. Simply thinking they're just a happy jovial group that doesn't get out much. Nevertheless, they are served one drink, finish dinner and call it a day. On the way home the driver gets into an accident and injures multiple family. Bodily injury and property damage is close to $1M. The driver only has minimum limits on their auto, which will cover about $60k (take into consideration this number varies by state). Where do you think the lawyers are going to go to get the remainder of that money (after Under Insured coverage is exhausted)? History will show it will be the last person that sold them alcohol, the restaurant. Doesn't matter if it was one drink or ten drinks, they are liable. Don't think you're liable? Well, you still have to defend yourself in court and that cost you and your business a lot of time and money.
Intoxicated people do stupid things sometimes.
Let's say an intoxicated person gets out of control and assaults or injures a patron at your restaurant. Liquor Liability, in most cases (check your policy), will pick up this exposure. If we look at the definition of each, we can see that these things can happen when alcohol is involved. According to FindLaw.com, Battery is "the intentional touching of, or application of force to, the body of another person, in a harmful or offensive manner, and without the victim’s consent". Assault is "An intentional attempt or threat to inflict injury on another person". The bottom line, you can have controls in place to prevent Assault & Battery, but some situations might be too difficult to control, especially on a busy day.
We don't serve liquor, only beer and wine.
Believe it or not, people have told me this when I mention Liquor Liability to them. If you serve beer and/or wine, you still need Liquor Liability Insurance for your restaurant.
As you can see, Liquor Liability for Restaurants is a must when it comes to Business Insurance. If you have any questions about this coverage, please let me know. Never assume that Liquor Liability and Assault & Battery are included in your policy. Also worth noting, both have a limit, so if you put your policy in force some time ago, you should review your limits with your agent. If you would like a quote, I have included a Liquor Liability Insurance application here. If you have any questions about this coverage, or any other type of Business Insurance, please feel free to contact me.
Commercial Insurance Agent
Every restaurant is unique, and it's not just the food that makes it unique, it's also the atmosphere. Think about some of the most popular restaurants you've frequented. Property is one of the most overlooked coverages when it comes to Restaurant Insurance. This is because sometimes it's the ambiance that can add value to the restaurant experience. Here's a breakdown of Property Insurance for Restaurants:
Tenant Improvements and Betterments also known as your build-out, if you're leasing. If you own the building, this would be Building Insurance.
Business Person Property: Equipment, furniture, and stock would fall under this coverage. Business Personal Property (Also known as BPP) coverage can provide coverage for fire, theft, smoke, vandalism and other perils. Make sure to review the coverage limits as needed.
Business Income: Provides income if a restaurant is temporarily out of business due to a covered peril. Maybe it's a fire, smoke, or even vandalism, think about all the costs you have even though you don't have revenues coming in. Rent, loan payments, wages, taxes can all continue to accrue during a closure. There's also Business Income for cloud service interruption now. This coverage helps pay for lost business income if you need to suspend or slow business operations because of an unplanned and unannounced interruption in your cloud service.
Temperature Change and Spoilage: Your refrigeration system suffers a mechanical breakdown which causes all perishable products to spoil. This coverage helps cover the cost to replace the lost stock. Some restaurant policies will have a sub-limit for this type of exposure. If it's listed as a covered peril, make sure you understand the limit and if a deductible applies. For example, I've seen policies that automatically include $5,000. That might not be enough.
Food Contamination: Provides coverage for lost income if your operations are suspended by a public health authority due to the discovery of food contamination.
Signage: Sign coverage is usually included on a Businessowners Policy (BOP), but is limited to a certain amount. I highly recommend having a discussion with your insurance company or agent about this coverage.
Fine Art: If you have fine art in your restaurant, you need to make sure it's valued properly on the policy. This could mean providing appraisals. There could be a limit on the policy for this coverage. For example $2,500. This might not be enough. Fine art can get tricky to insure. Make sure you're aware of your limits and deductible.
This is just a starting point when it comes to Property Insurance for Restaurants. I highly recommend making sure you review the coverage limits for each of these. Also understand what perils are covered and if a deductible applies. If you have questions, please feel free to contact me. I am happy to help.
Commercial Insurance Agent
The cost of insurance always seems to come up and sometimes it's difficult to give an estimate. Restaurant Insurance Cost can vary depending on several factors. Here is a list of 5 factors that can impact what you will pay for Business Insurance.
1. Gross Sales
The higher the gross sales, typically the higher the General Liability premium will be. It makes sense if you think about it, the more people you serve, the more you will pay for insurance. Not sure what you're gross sales will be? That's OK. Insurance companies typically go off estimates and will calculate the actual premium by doing a premium audit at the end of the policy period.
2. Property Coverage
How much property coverage do you have? You'll want to break this down for your agent by equipment, business personal property, tenant improvements/betterment's or building coverage. The more coverage you have, the more premium you'll pay. You might consider different deductible options to reduce the premium.
3. Loss History
Have there been any previous losses claims/losses? This can have a big impact on premium and also the number of insurance companies willing to write your restaurant.
4. Are You Selling Liquor
If you plan on selling liquor, are you going to want Liquor Liability? It's not required, however, it is highly recommended. This coverage can increase premium significantly. Also, what kind of drink specials are you going to have? Some insurance companies shy away from certain happy hour establishments or college bars that serve food.
5. Years in Business
Have you been in business more than 3 years? Some insurance companies won't write restaurants if they've been in business less than 3 years, so this can impact how many insurance companies will provide you with a quote.
Hopefully this list was helpful. There are many more factors that can have an impact on Restaurant Insurance Cost. The range for premium can vary. I've had a small restaurant with sales of $80,000 and $30,000 in property coverage pay around $100 per month; and a larger establishment with sales of $1.5M and $600,000 in property coverage pay around $1,000 per month. Let me know if you have any questions about Restaurant Insurance Costs or any other type of Business Insurance. If you would like a quote, I'll just need the Restaurant Insurance Application below.
Commercial Insurance Agent