Bar Insurance Policy Information
Bar Insurance. If you own or run a bar or other drinking establishment, then you know it's a lucrative business to be in - but also one that has its fair share of liabilities with which to contend.
The liquor regulations and laws in various states make it extremely difficult for bars to become chain operations, which means that the bar industry is mainly made up of new and established small businesses.
Bars serve alcoholic beverages by the bottle, glass or pitcher which are consumed on the premises. They are generally open late into the night. Many offer incidental food items, such as snacks or sandwiches, but the predominant operation is the sale of alcoholic beverages. The bar may feature contests, music or other live entertainment, or promotions such as "happy hour" with discounts available during non-peak hours. A cover charge or minimum drink purchase requirement may be imposed at peak times. Some bars have small dance floors.
This makes it even more important to protect the bar's assets from liability claims with bar insurance.
Bar insurance protects your establishment from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.
How Much Does Bar Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small bars ranges from $97 to $119 per month based on location, seating capacity, hours open, drink prices, payroll, sales and experience.
Protecting the Bar and Its Employees
As the owner of a small bar-related business or even a large nightclub, buying and maintaining the proper level of bar insurance coverage is paramount to your success and protects both you and your employees as well as your patrons. Because you serve alcohol, and alcohol leads to erratic behavior, it's crucial to keep your insurance level at an appropriate amount so that you can mitigate any damage or claims of liability.
Some of the best policy types to consider for your bar includes coverage for your employees. Consider:
- Unemployment insurance. This coverage is usually required by law. It is included as a component of your state taxes. When you set up your bar or club with the Department of Labor and Industry your UI taxes will be owed.
- Disability insurance. This type of coverage is optional in.
- Medical payment protection. Most bars hire a staff of fewer than 50 individuals, thus not triggering state and federal laws to provide medical coverage. If more than 50 people work for you, then you must provide coverage. Either way, medical insurance is a good perk for employees.
Cover Your Bar or Tavern from Liability Risks
Potential lawsuits can put a real damper on the success of your bar business. When someone files a liability claim against your company, even if it is not a suit merited by the court, it can leave you responsible for a ton of legal costs that eat into your business' bottom line. Bar insurance can protect you from financial damage if a claim is decided against you and also pay for legal fees and associated court costs.
Some types of bar insurance liability protection include:
- General liability coverage. This coverage pays claims for covered bodily injuries or damage to property in or outside your bar, such as in the parking lot or dumpster area. Consider a separate rider policy if the bar offers any additional hazards to patrons, such as a mechanically operated bull. Be aware that some policies exclude coverage for intoxicated patrons. For that, liquor liability coverage is important.
- Liquor liability insurance. This insurance kicks in if there is damage resulting from the consumption of liquor or other alcohol at your bar. When some drinks to excess and then causes damage or harm, this protection can be invaluable.
- Assault-and-battery coverage. If your bar is home to a brawl, then you might be held liable, since it can be argued that you failed to keep patrons safe. This insurance coverage covers bodily and property damage resulting from physical altercations.
- Valet insurance. If you offer valet service, then this coverage pays for damage to cars in your business' care.
Protection for Your Bar's Assets and Property
Beyond the bar insurance coverage types discussed above, your bar may also need:
- Building coverage. If you own the building in which you do business, when this bar insurance coverage pays claims resulting from perils such as falling objects, severe weather, fire, theft, and vandalism.
- Content policy. Secure your bar's furnishings and equipment such as speaker systems, computers, and pool tables with this type of policy.
- Equipment breakdown policies. If a mechanical failure or power surge causes failure of equipment, then this coverage helps you pay for repair fees and associated lost income.
- Lost income policies. If you need to close the bar due to a covered peril, lost income coverage provides income continuation for a closed period of time to keep your business afloat.
- Flood insurance. If your bar is located in a flood zone, you may need additional coverage for flood damage and loss occurring due to high water. This coverage provides those benefits.
Nightclub's & Bar's Risks & Exposures
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. 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 must 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. 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 due to bouncers escorting a patron out of the premises. Any bouncer activity should be documented and witnessed in case of future lawsuits.
Liquor liability exposure can be very high in states that hold bars 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 must be trained in recognizing signs of intoxication. A procedure should be in place to deny service to 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, cooking equipment, and heating and air conditioning systems. All wiring should be current, up to code, and well maintained. Cooking will likely 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, most bars continue to permit customer and employee smoking.
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 in bars and taverns due to the attractive nature of alcoholic beverages. 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 to other bars 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 noise, 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 bars 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 bars tend to be minimum wage and turnover may be high. Company incentives to encourage long-term employment are positive signs of management control.
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. Lottery ticket sales or other gambling devices present a major temptation to employees.
Because bars tend to have significant cash sales, cash drawers should be regularly stripped and moved to a safe away from the front of the store. Irregular drops during busy evenings are helpful in preventing a large buildup of cash. Closing time is the most vulnerable time so security procedures should be in place to prevent hold-ups. There must be a separation of duties between employees handling deposits and disbursements and reconciling bank statements.
Inland marine exposures include computers for tracking inventories and valuable papers and records for employee and supplier information.
Commercial auto exposure is generally limited to hired and non-owned from employees using their vehicles to run errands.
Commercial Insurance And Business Industry Classification
- SIC CODE: 5813 Drinking Places (Alcoholic Beverages)
- NAICS CODE: 722410 Drinking Places (Alcoholic Beverages)
- Suggested ISO General Liability Code(s): 16920, 16921, 16930, 16931, 16940, 16941
- Suggested Workers Compensation Code(s): 9084
The Cost of Bar Insurance
The type of business you own, the number of people who work for you, and the products you serve in the bar all factor into how much you pay for bar insurance. The location of your bar, your personal claims history, and other important factors also play a part. Work with your licensed commercial agent to find a mix of quotes from insurance companies. This can make it easy to spot the right policy for your specific needs.
Small Business Economic Data & Insurance Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. Maybe you want to contribute to the economic growth of your community. Whatever the reason is, if you're thinking about starting a small business, it's important to understand pertinent information relating to small businesses in the United States; namely economic information and insurance regulations. After all, if you want your small business to succeed, you have to understand the economic trends organizations of a similar size in your area.
Likewise, you want to ensure that your small business is well protected with the right business insurance and that you are in compliance with the rules and regulations that pertain to commercial insurance in your region.
Read up on economic statistics and insurance information that relates to small business owners in the United States.
Small Business Economic Data In The United States
Here's a look at some information that was compiled by the Small Business Association (SBA) regarding the economic data that pertains to small businesses in the United States:
- In 2015, small businesses in the United States employed an estimated 58.9 million American workers, or 47.5 percent of the nation's private workforce.
- Largest shares = fewer than 100 employees. The small businesses that employed 100 people or less had the largest share of employment amount small businesses.
- Employment increased by nearly 2 percent. In 2018, employment amongst small businesses increased by 1.8 percent, which is an increase of 1 percent from the prior year.
- Increase in proprietors. In 2016, the number of small business proprietors increased by 2.3 percent.
- In 2015, small businesses were responsible for creating 1.9 million net jobs. Organizations that employed 20 people or less had the largest gains, as they added an estimated 1.1 million net jobs.
- There were 5.7 million loans that were value less than $100,000 issued by lenders in the United States in 2016. These loans were issued under the Community Reinvestment Act.
- Small business owners that were self-employed at the incorporated businesses that they owned reported a median income of $50,347 in 2016.
- Small business owners that were self-employed at the unincorporated businesses that they owned reported a median income of $23,060 in 2016.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage. The SBA recommends the following insurance plans for small business owners:
- Commercial Property Insurance: In the case of an unplanned disaster - fire, flood, vandalism, theft, etc. - this type of coverage will help you avoid paying for the damage out of your own pocket. Even if you rent the property, you should still carry commercial property insurance.
- Commercial Liability Insurance: In the event that a legal situation arises - a negligence lawsuit, for example - commercial liability coverage will provide financial protection. It will cover the cost of legal defense fees, court fees, and even moneys that may be awarded.
- Commercial Auto Insurance: If you operate a vehicle for any activities that are related to your business - transporting and/or delivering goods, or meeting with clients - commercial auto insurance is legally required for businesses of all sizes, including small businesses.
Additional Resources For Food Service Insurance
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.
- Bagel Shop
- Beer Distributor
- Coffee Shop
- Concession Stand
- Farmers Market
- Grocery Store
- Liquor Liability
- Liquor Store
- Liquor Wholesaler
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.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income and Extra Expense, Spoilage, Equipment Breakdown, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Employee Benefits, Umbrella, Hired and Nonowned Auto & Workers Compensation.
Other commercial insurance policies to consider: Building, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Accounts Receivables, Bailees Customers, Fine Arts, Cyber Liability, Employment-related Practices, Environmental Impairment, Liquor Liability, Business Automobile Liability and Physical Damage, Garagekeepers and Stop Gap Liability.