Many of us have a favorite watering hole that we frequent from time to time with friends to enjoy alcoholic beverages. Whether it’s to watch the game, catch up with friends or simply have a drink with colleagues after work, they are the societal go-to 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 losing paying a hefty fine or losing your business! Let’s take a deeper look.
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
Risks associated with serving alcohol
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
What are some Bar Insurance policy options?
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:
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, insurance may be able to 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. Generally speaking, anyone who sells or distributes alcohol should have liquor liability insurance. This includes businesses that sell alcohol daily, such as bars, clubs, restaurants, or grocery stores. Taverns, caterers, breweries, and liquor stores should also all have liquor liability insurance.
Lawsuits related to liquor liability are filed each day. It’s increasingly common for victims and their families to file suits against bars and pubs for their role in over-serving a customer who is then involved in an alcohol-related accident.
2. Commercial General Liability (CGL)
Investing in a Commercial General Liability (CGL) insurance policy can prove extremely useful in your establishment. With the amount of food and beverages flowing constantly through your establishment, spills are inevitable. Of course, the possibility of this is extended when alcohol is involved. In the event that a customer slips on a spill, your restaurant can face a liability lawsuit. Cover those potentially-expensive settlements and legal fees with a comprehensive general liability policy.
Suitable for: Slip-and-fall accidents, damaged customer property and product liability insurance.
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. Obtaining a commercial property insurance policy covers damage costs in the event of a fire, explosion or criminal activity. Additionally, it will take care of 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 the comfort of your guests, your bar or pub depends on functioning equipment. Should you experience equipment breakdowns, such as HVAC system failures, beer taps clogging up, a refrigerator leak or cooking appliance malfunction, it can be costly. You may even experience business interruption or a prolonged closure. What’s more, equipment breakdown can even lead to major property damage should an appliance start a fire.
5. Food & Product Liability Insurance
If your 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
As a business that may deal with personal customer information, protecting yourself in a case where data is breached 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!
Suitable for: Data breach notification costs, fraud monitoring services and cyber extortion payments.
Other Bar Insurance options
7. Food Contamination Insurance
When food spoils as a result of an event, like a power outage or long-term closure, it cannot be served to guests. Thanks to the natural bacteria and parasites that develop due to food contamination, potentially thousands of dollars in food will be wasted. Rather than facing the devastating loss yourself, charges can be covered by a food contamination policy. 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 serving alcohol to offer a selection of items to eat while enjoying a beverage. It helps to slow down the absorption and consumption of the alcohol.
8. Business Interruption Insurance
In the event your restaurant or bar needs to close its doors as a result of an unexpected event, such as a fire or more relevantly, the COVID-19 pandemic, your revenue can be completely or partially subsidized with 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, worker’s compensation insurance is essential. This type of 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.
Suitable for: Employee medical expenses, missed wages and legal costs.
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 products such as kegs or other products. 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 with an experienced lawyer, as well as the cost to retain a lawyer.
What is the cost of Bar Insurance?
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 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
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!
