Many of us have a favourite watering hole that we frequent with friends from time to time to enjoy alcoholic beverages. Whether it’s to watch the game, catch up with friends, or have a drink with colleagues after work, they are the go-to social destinations. However, as a bar and pub owner, you may face risks serving alcohol, including intoxicated customers and poor liquor serving practices. These risks can potentially lead to lawsuits or third-party liability claims. If one of your patrons is injured, injures someone else, or damages property after getting intoxicated in your establishment, you need to have comprehensive bar insurance coverage. Without it, you risk paying a hefty fine or losing your business!
What Is Bar Insurance?
Bar insurance is a specialized business insurance package designed to protect bars, pubs, taverns, nightclubs, and other establishments that may serve alcohol.
Bar Insurance will generally include Liquor Liability insurance, Commercial General Liability (CGL) insurance, Commercial Property insurance, Equipment Breakdown insurance, Product Liability insurance, and Cyber Liability insurance:
Why Is Commercial Bar Insurance Essential for Canadian Venues?
Bar owners in Canada face a unique set of liabilities due to the service of alcohol. Provincial regulations, such as Ontario’s Liquor Licence and Control Act, hold establishments accountable for the responsible service of liquor. If a customer becomes intoxicated at your venue and causes injury or property damage—even off-site—you could be held legally and financially responsible. Comprehensive bar insurance helps protect your business from the potentially devastating consequences of lawsuits, legal claims, and fines. Without it, a single incident could put your entire operation at risk.
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Who Needs Bar Insurance?
Your bar takes on risk every time a drink is served. Let’s face it, when alcohol is involved, accidents are more likely to occur. Bar insurance helps cover costs from expensive accidents, including customer injuries. Businesses that should consider bar insurance-style coverage are:
- Bars, pubs, and taverns
- Beer gardens
- Brewpubs
- Casinos
- Dancehalls
- Nightclubs
- Restaurants
- Sports bars
Bar Owners and Alcohol-Related Risks
Bar insurance is typically a package of various coverages that protect your unique liabilities, such as:
- Lawsuits from negligent service of alcohol
- Alcohol-related altercations and accidents
- Equipment failure
- Reputational risks
- Damage to your property or building
- Food contamination
- Food delivery accidents
Common Bar Risks and Real-Life Scenarios
Running a bar involves more than just serving drinks and entertaining patrons. Here are some common incidents that could lead to major claims or lawsuits if you don’t have the right insurance coverage:
- Slip-and-fall accident: A guest trips over a spilled drink and suffers a serious injury.
- DUI incident: A customer leaves intoxicated and causes a car accident. Your bar could be sued for over-serving.
- Kitchen fire: A cooking appliance malfunctions, causing a fire that damages your property and forces you to close.
- Data breach: Your payment system is hacked, and customer credit card data is compromised.
- Violence or altercations: Fights between patrons can result in injuries and liability claims.
These examples show how easily a routine night can turn into a financial and legal headache. That’s why proper insurance coverage isn’t just smart—it’s essential.
What Are Some Bar Insurance Policy Options?
Let’s take a closer look at some options for bar insurance.
1. Liquor Liability Insurance
Most bars serve alcoholic beverages to customers. So, in that case, you’ll need to make sure liquor liability insurance coverage is part of your policy. If a patron you serve gets too drunk and falls into an expensive plant outside the neighbouring restaurant, your insurance may cover the replacement costs. Alcohol or liquor liability insurance covers costs associated with negligent actions due to intoxication resulting from drinks served at your establishment. >
2. Commercial General Liability (CGL)
Investing in a Commercial General Liability (CGL) insurance policy can prove extremely useful in your establishment. With the constant flow of food and beverages through your establishment, spills are inevitable. Of course, the possibility of this is extended when alcohol is involved. If a customer slips on a spill, your restaurant could face a liability lawsuit. Cover those potentially expensive settlements and legal fees with a comprehensive general liability policy.
3. Commercial Property Insurance
Opening a bar costs tens of thousands of dollars. In the event of a natural disaster, fire or explosion, you can see your hard work literally go up in flames. Take away the constant impending financial stress with commercial property insurance. A commercial property bar insurance policy covers damage costs in the event of a fire, explosion, or criminal activity. Additionally, it will address specific risks your bar may face. Speak with your isure broker about your property’s specific risks and how you can get coverage for them instantly.
4. Equipment Breakdown Insurance
To ensure your guests’ comfort, your bar or pub depends on reliable equipment. Should you experience equipment breakdowns, such as HVAC system failures, beer taps clogging, a refrigerator leak, or a cooking appliance malfunction, they can be costly. You may even experience business interruption or a prolonged closure. What’s more, equipment breakdown can even cause major property damage if an appliance starts a fire.
5. Food & Product Liability Insurance
If you own or run a bar, pub, or nightclub, food and product liability can be a considerable concern. The potential for food poisoning, contamination, injury, spoilage and allergic reactions is ever-present, making continued guest safety a challenge. Say one of your guests becomes ill due to the food you serve. Or, they accidentally ingest a foreign object found in one of your menu items or vending machines. Your bar can face legal ramifications and suffer irreversible reputational damage.
6. Cyber Liability Insurance
A bar is a business that may deal with personal customer information. Therefore, protecting yourself in case of a data breach is essential. As a result, customers may take legal action. Even if sensitive information isn’t leaked, you will need to replace payment software, hardware, or conduct an investigation. Compounding your exposures, many bars or pubs offer guest Wi-Fi that, if improperly secured, can put you and your guests at risk of an attack. With cyber liability insurance, all these costs may be covered by your policy. It is perhaps one of the most important bar insurance options to consider!
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Other Bar Insurance Options
7. Food Contamination Insurance
A power outage, equipment failure, or prolonged closure can quickly spoil your food inventory and lead to significant losses. Food contamination insurance helps cover the cost of replacing spoiled food and protects your business from unexpected expenses. Even if food isn’t the main thing you serve, it can still be worth having. The last thing you want is to have your fridge completely emptied without any reimbursement. It’s always a good idea for establishments that serve alcohol to offer a selection of food to pair with beverages. It helps to slow down the absorption and consumption of alcohol.
8. Business Interruption Insurance
If your restaurant or bar needs to close its doors due to an unexpected event, such as a fire or flood, your revenue can be fully or partially covered by business interruption insurance. Depending on your specific policy coverage, business interruption insurance will cover your revenue, wages and management costs. Business interruption insurance is only active if it was purchased before the closure. And, as we have seen over the past few years, it’s never a bad idea to be extra prepared for anything that can happen unexpectedly.
9. Workers’ Compensation Insurance
If you have employees, workers’ compensation insurance is essential. This type of bar insurance provides coverage for medical expenses and lost wages if an employee is injured on the job. Workers’ compensation insurance can also protect your business from lawsuits related to workplace injuries.
10. Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) provides coverage for claims related to employment practices, such as discrimination or wrongful termination. If an employee files a lawsuit against your restaurant, your EPLI policy can help cover legal fees and other related expenses.
11. Crime Insurance
Crime can be a real problem for bars. Your employees, guests and vendors all have the opportunity to steal from you. To make matters worse, thieves can strike at any time, leaving you to recoup any lost funds or valuables. Thieves steal cash, supplies, and even equipment.
12. Commercial Automobile Insurance
Though not often, some bars may have a work vehicle. This can be used to pick up kegs and other items. This policy covers medical bills and property damage in an accident involving your bar’s vehicle. Most states require it for business-owned vehicles for:
- Injuries caused to another person
- Property damage caused by your vehicle
- Vehicle vandalism and other physical damage
13. Legal Expense Insurance
Legal expense coverage provides access to legal advice on a set of common business topics from an experienced lawyer, as well as coverage of the costs to retain a lawyer.
Bar Insurance: What is the Cost?
The best indicator of how much it will cost to add liquor liability and other bar-related coverages to your insurance policy is the percentage of your annual revenue from selling alcohol. The greater the percentage of your revenue attributed to alcohol sales, the higher your yearly premium will be. A small bar with a few workers will pay less for insurance than a large tavern.
Factors that affect the amount of bar insurance you need, and the rates you will be charged, include:
- Services offered, such as dining
- Business property and equipment
- Business revenue
- Types of insurance purchased
- Policy limits and deductibles
Do I Need Bar Insurance If I Rent My Space?
If you’re leasing your bar space, it’s easy to assume your landlord’s insurance covers you—but that’s not the case. A landlord’s commercial property insurance only covers the structure itself. You’re still responsible for:
- Damage to your equipment and inventory
- Injuries or accidents that occur on your premises
- Loss of income due to closure
- Liability for alcohol-related incidents
Even if you rent, you need your own tailored bar insurance policy to protect your business and livelihood.
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Bar Insurance: Frequently Asked Questions
Do Bars Need Liquor Liability Insurance in Canada?
Yes. Any business that serves, sells, or distributes alcohol should consider liquor liability insurance. If an intoxicated customer causes injury or property damage after being served alcohol at your establishment, your business could face legal action and financial liability.
What Does Bar Insurance Cover?
Bar insurance may cover:
- Liquor liability claims
- Customer injuries
- Property damage
- Equipment breakdown
- Food contamination
- Business interruption
- Cyber attacks
- Legal expenses
How Much Does Bar Insurance Cost?
The cost of bar insurance depends on factors such as annual revenue, alcohol sales, location, number of employees, policy limits, and the types of coverage selected.
Is Bar Insurance Required?
While specific coverages vary by province and business type, many landlords, lenders, and liquor licensing requirements may require businesses to carry liability insurance before operating.
Bar Insurance: Protecting Your Business Until Closing Time
Owning a bar comes with unique risks that go beyond just serving drinks. From liquor liability claims and customer injuries to property damage and cyber threats, a single incident can have serious financial consequences. If you operate a business that will be serving alcohol, you require very specific types of insurance coverage to suit your unique needs.
The proper Bar insurance policy can help protect both you and your business should any incidents occur. Let one of our isure representatives know in advance of your intention to open a bar, pub or tavern, and we will help you get the appropriate coverage. We’ll help make your business a safe success! Contact us or request a quote today!
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