California Nightclub Insurance. If you own a nightclub, you likely know that it is a lucrative business that can be financially rewarding, but with those rewards comes a high level of risk. Because the investment you've made in your business is significant, it's important that you protect your business with the right type and level of business insurance.
A nightclub is primarily a place of entertainment for acts featuring comedians, magicians, or musicians. They are generally open late into the night. There is normally a cover charge or minimum purchase requirement. Liquor may or may not be served, but non-alcoholic beverages and food are generally available for on-premises consumption. There may be full restaurant service or just appetizers and snacks. There is likely to be a dance floor.
Even if your club is very small, you need California nightclub insurance coverage to stave off the financial distress that often follows a liability suit. Some policies that you must carry for your nightclub are required by state or federal law, while some other types may be required by the bank that loaned you money to purchase your club or the leasing agent who rents your club's space.
California nightclub insurance protects your establishment from lawsuits with rates as low as $67/mo. Get a fast quote and your certificate of insurance now.
Other coverage types are recommended but not required legally or contractually. Some of the most popular types of California nightclub insurance to consider include:
Beyond protecting yourself, your patrons, and your employees, California nightclub insurance to protect your business' assets and property is also important. Some of the most common and popular include:
Premises liability exposures are high due to public access to the premises and the serving of alcoholic beverages, which can impair motor abilities and increase the likelihood of trips, slips, or falls. Spilled drinks should be cleaned up promptly. Customers may become ill from ingesting contaminated food or beverages.
Cleanliness standards must be monitored. Floor coverings must be in good condition with no frayed or worn spots on carpet and no cracks or holes in flooring. Dance floors must be clean, smooth, and free of debris. Because lighting is normally subdued, any change of elevation should be carefully marked. All fire exits should be plainly visible from any part of the premises and kept unlocked from the inside during business hours. Dance floors should be in good condition with regular maintenance to provide a smooth surface to prevent falls.
Backup lighting should be automatically activated in the event of a power outage. Chairs, particularly bar stools, should be regularly checked for cracks and fatigue. Guests must not be permitted to climb on top of chairs, stools, bars, or tables. Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slip and falls.
Outdoor security and lighting must be consistent with the area. Customers may carry weapons onto the premises. Employees should be trained in dealing with unruly or impaired customers to prevent violence. Personal injury exposures include assault and battery, discrimination, and wrongful ejection from bouncers escorting a patron out of the premises.
Any bouncer activity should be documented and witnessed in case of future lawsuits. Contracts with entertainers should be clear as to responsibilities and rights of parties. As most musicians are subcontractors, that relationship should be established by contract including how the musician(s) is to be paid.
Liquor liability exposure can be very high in states that hold nightclubs liable for injuries resulting from alcohol consumption. The type and amount of alcohol served, and the type of clientele directly impact this exposure. Failure to comply with state and federal regulations can result in the loss of a liquor permit which will close the business.
There must be a set procedure to check ages of all who enter the establishment. All employees who serve liquor to customers must be trained in recognizing signs of intoxication. A procedure should be in place to deny serving underage or intoxicated patrons. Programs that encourage designated drivers or offer free taxi service can be useful.
Property exposures are from electrical wiring, refrigeration units, any cooking equipment, and heating and air conditioning systems. All wiring should be current, up to code, and well maintained. Cooking may be limited to microwave and toaster ovens. If there are grills and deep fat fryers, these must have automatic fire extinguishing protection, hoods, and filters. The kitchen must be kept clean and grease free to prevent fire spread. Filters should be changed frequently. Alcoholic beverages are susceptible to damage from heat and smoke. A small fire can become a total loss if the FDA condemns stock due to potential contamination.
Where legally permitted, nightclubs may permit customer and employee smoking. If there is smoking on premises, the proper disposal of cigarette butts as part of the closing procedure is vital to prevent fire from smoldering ashes or butts. Theft is a major concern due to the attractive nature of liquor and tobacco. Liquor should be stored in areas inaccessible to customers. If food is served, spoilage can result from power outages.
Business income with extended time period coverage should be purchased. While clientele tends to be fairly loyal, they may switch after a major loss due to the lag time between the re-opening and the return to full operations.
Equipment breakdown exposures can be high if operations are dependent on refrigeration equipment.
Workers compensation exposures come from slips, falls, cuts, puncture wounds, burns, foreign objects in the eye, hearing impairment from nose, heavy and awkward lifting, and interactions with rowdy customers. Bouncers should be well trained in dealing with intoxicated or belligerent patrons. Food and beverage handling can result in passing bacteria or viruses, resulting in illness. While smoking is prohibited in lounges in many states, others still permit this. In those states, workers can incur occupational disease from the ongoing inhalation of secondhand smoke.
As with all retail businesses, hold-ups are possible, so employees should be trained to respond in a prescribed manner. Cleaning workers can develop respiratory ailments or contact dermatitis from working with chemicals. The employees in many nightclubs tend to be minimum wage and turnover may be high. Company incentives to encourage long-term employment are positive signs of management control. Entertainers are exposed to various hazards based on the performance type.
If there are entertainers under a long-term contract, a review of their contracts and working conditions may be needed to determine whether they qualify as employees or subcontractors.
Crime exposures are from employee dishonesty and money and securities due to the considerable amounts of cash, alcohol, and tobacco products on the premises. Criminal background checks should be conducted on any employee handling money. If there is a substantial amount of cash receipts, cash drawers should be regularly stripped and moved to a safe away from the front.
Irregular bank drops during busy evenings can be helpful in preventing a large buildup of cash. Closing time is the most vulnerable time so security procedures should be in place to prevent holdups. There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements.
Inland marine exposures include accounts receivable if the nightclub offers credit to customers, bailees customers for entertainers' equipment and customers' coat check, computers for tracking inventories and payrolls, and valuable papers and records for supplier and employee information. There must be checks and balances in place to ensure that any checked goods are released only to their rightful owner.
If entertainer's items are left overnight, the insured is responsible for their security. If the equipment is owned by the nightclub, musical instrument coverage will be needed. There may be a substantial amount of audio-video equipment and other electronic equipment for sound and lighting of the dance floor.
Business auto exposure is generally limited to hired and nonownership auto from employees using their vehicles to run errands. If the nightclub offers valet parking, garagekeepers coverage should be purchased to cover damage to customers' vehicles. MVRs and driving records should be obtained for any employee driving or parking customers' vehicles. If valet parking services are contracted to another firm, the nightclub should be named as additional insured on the contractor's policy.
The average nightclub insurance policy runs in the thousands per year, but the amount you'll pay depends on a number of factors including the size of your club, the number of patrons you usually serve, how long you've been in business, the total revenue of your club annually, and whether or not you offer live entertainment. Your club's history of claims and your personal credit history may effect the rates.
Work with an commercial agent to find the right level of California nightclub insurance coverage for your particular needs. An professional agent can help you retrieve quotes from multiple insurers to find a policy catered to your needs that is affordable and that fits well within your business' individual budget.
If you are an entrepreneur and you considering having your operations located in California, it's essential that you have a full understanding about the economy of the state, as well as the regulations and limits that are in place for commercial insurance.
If you are considering opening up a business in the Golden State, you first want to make sure that it is a sound location for your operations. That means that you should understand some key information related to the state's economy, as well as the types of insurance coverages that businesses are legally required to carry.
In terms of job creation, the state of California exceeds rate of job growth in the United States; however, as the state's metropolitan areas are reaching employment capacity, job growth is starting to slow. In 2017, the rate of growth was 2.1 percent, which is the slowest rate of growth since 2011; but it is still expected to increase by 1.8 percent by the end of 2018, and 1.2 percent by the end of 2019.
In the month of April, the unemployment rate in California dropped to 4.2 percent, which is a record low. This unemployment rate is expected to remain consistent for the rest of the calendar year; however, it's forecasted that the rate will start to increase in 2019.
The strongest labor market in the state is in the Bay Area, where the unemployment rate was 3.4 percent in 2017. Southern California follows, with an unemployment rate of 4.5 percent in 2017. In the Central Coast region, the rate was 5.4 percent and in the Central Valley, it was 6.6 percent. While the unemployment rate is considered high in these areas, they have decreased dramatically over the last 12 month period.
The industries that are expected to see the most growth in CA include:
The California Department of Insurance regulates insurance in the Golden State. In the state of CA, commercial liability insurance is not required; however, since the state does not cap rewards for liability law suits, business owners are wise to invest in this type of coverage. The amount of coverage recommended varies depending on the size of the business and in the industry.
Workers' compensation insurance is the only type of coverage that business owners are required to have. This applies to any organization that employs a salaried or hourly staff, even if that staff only consists of one employee. Furthermore, if an employee is injured or becomes ill as a result of work, business owners must pay for CA workers' comp benefits.
Learn about restaurants, bars, liquor stores commercial insurance coverages. See how small business food service insurance help protect against accidents, oversights and lawsuits resulting from business operations.
Bars, taverns, restaurants, cafeterias, and other eating and drinking places have significant insurance needs in three separate areas.
The first is property protection for physical damage to equipment, furnishings, building and supplies due to fire and other perils.
The second is premises liability coverage to protect customers due to slips, trips and falls on the premises, as well as for consumption of food products.
The final need is protection for employees due to frequent cuts, burns and other common employee injuries. Establishments that sell or serve liquor or other alcoholic beverages also need liquor liability coverage.
Slips and falls, along with customer illness due to being served tainted food or drink, are the primary liability exposures. The commercial general liability (CGL) is used to provide coverage for these exposures.
It is important to note that liquor liability coverage is excluded under the CGL form if a risk is in the business of serving alcoholic beverages. Many establishments in this category should therefore consider purchasing a separate liquor liability coverage form.
Restaurant kitchen equipment, inventory and dining room fixtures are common exposures for most eating and drinking places. Many of these establishments do not own the buildings they occupy but have long-term leases and have invested money in various improvements and betterments, including cooking equipment, dining room decorations and permanent fixtures.
There are major differences in the food service business and the very different exposures they present. There are many specific types of restaurants to cater to individual needs and tastes. There a several main commercial insurance classifications for food service.
Concessionaires: The most basic "eat on the run" type of restaurant is not classified as a restaurant at all but is referred to as a concessionaire. Class Code 11168: Concessionaires applies and the accompanying note states that all food and beverages must be sold through hawking or peddling. There can be no location to which customers walk up and purchase the food. This classification includes food sold at sporting events, exhibitions, and parks.
Caterers: Are very similar to restaurants with significant differences. The caterer prepares the meals at its own kitchen or commissary and then transports it to the locations where it will be served. Some final preparation may take place at the final location but the majority generally takes place at the caterer's location. The caterer's employees serve the meals and beverages and oversee the consumption of the food.
Restaurants: The way restaurants are categorized and classified uses the percentage of alcoholic beverage sales as the first criteria, followed by other features or operations.
Common to all of these categories is that entertainment-oriented venues such as nightclubs, cabarets, dance halls, discotheques, and comedy clubs must be separately classified and rated. This means that the sales that those entertainment activities generate must be broken out and rated separately from the sale or food and drink.
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