Increased insurance rates are one of the many pain points resulting from the COVID-19 pandemic. Because of the pandemic, insurance companies have had to work in new risk factors such as increased liability concerns and COVID-19 related claims. This has led to many bars and restaurants facing higher insurance costs, putting additional financial strain on an already difficult economic situation. Despite these challenges, it is important for business owners to maintain adequate insurance coverage to protect their operations.
Finding specialized insurance coverage for restaurants and bars can be a challenge. These types of businesses often have unique insurance needs that can be difficult to find with a standard insurance policy. For example, restaurants and bars face specific risks such as food contamination, liquor liability and employee theft.
Additionally, many insurance providers may not have the expertise to fully understand the specific needs of bars and restaurants, leading to gaps in coverage or higher premiums. The search for sufficient insurance coverage can also be time-consuming, leaving owners with less time to focus on running their bar or restaurant. These pain points can lead to frustration and added stress for owners, making it difficult to find the coverage needed to protect operations.
What’s more, there are several nuances for bar and restaurant owners to consider when ensuring they have the correct coverage. While there’s often a risk of having coverage gaps, there’s also a chance owners could be paying for coverage they don’t need.
Read on for eight ways bar and restaurant owners can ensure they have the right coverage and where there might be opportunities to reduce insurance costs.
Tip #1: Evaluate Your Operations
Bar and restaurant owners should evaluate operations by considering factors that contribute to high insurance rates, such as certain entertainment offerings.
One factor to consider is the presence of a dance floor, which increases the likelihood of accidents and injuries. You should also evaluate the cost-benefit of having a dance floor or entertainment, considering if the revenue generated from such activities is worth the additional cost of insurance.
Additionally, ensure your bar or restaurant doesn’t host any drinking games, such as beer pong. It’s important to steer clear of activities that encourage unruly behavior, as underwriters will view it as a risk that will increase rates – or worse, they won’t insure your venue at all.
Tip #2: Take Stock of Your Menu
In a similar vein, you can lower insurance costs by taking stock of your menu and considering the liquor-to-food ratio. That’s because insurance rates are often influenced by the amount of alcohol served in comparison to food. A high liquor ratio with no food service may result in a higher insurance rate, as it increases the risk of intoxicated customers.
Offering simple and inexpensive food options can help reduce the risk of alcohol-related incidents and lower insurance rates. That’s because serving food and snacks encourages customers to sober up. If a bar only serves alcohol, even adding simple food items like chips can result in a lower insurance rate.
Additionally, monitoring drink specials is another way to help reduce insurance costs. Setting minimum prices for alcoholic drinks – for instance, no beer or wine under $4 and no mixed drinks under $5 – can discourage excessive drinking and help to maintain a safer environment.
Tip #3: Check Your Web Presence
It’s also important to check your restaurant’s web presence to ensure the information displayed publicly is accurate and favorable. Underwriters often use publicly available information, such as websites, social media and review sites, to help determine insurance rates.
For instance, if the information displayed appears to promote excessive drinking, such as all-night shots for $2, this can result in higher insurance rates or difficulty obtaining insurance. Therefore, it’s important to carefully monitor and control the information displayed about your business online. This may also include disabling the ability for guests to post photos on social media sites, and only allowing authorized individuals to post on the business website. By being mindful of your online presence, you can help ensure you’re judged fairly by underwriters.
Tip #4: Assess Your Business Hours
Your hours of operation are an important factor in determining insurance rates. If your restaurant is open late into the night and serving alcohol, insurance rates can be higher due to the increased risk of incidents. On the other hand, if a restaurant is open only until 10 p.m. and serves a good alcohol-to-food ratio, insurance rates will be lower. That’s why it’s important to consider the cost versus profit of late hours, and to assess whether it may be possible to reduce hours of operation in order to lower insurance costs.
Additionally, as discussed above, it’s crucial to make sure business hours are correct and up-to-date online. You don’t want to risk higher insurance costs for something as simple as incorrect business hours. If your business hours shift, make sure you know how to quickly make changes online – including your website, social media sites and your Google business page.
Tip #5: Ensure Your Team Has the Right Training
The right training for your team can help to reduce your insurance costs. Training programs such as Training for Intervention Procedures (TIPS) or Techniques of Alcohol Management (TAM) can be beneficial in helping the team understand the laws and regulations regarding alcohol service. And you can lower your premiums when insurance underwriters see these certifications.
Failure to provide proper training can lead to compliance issues that not only increase insurance costs but also induce penalties and put your business at risk of legal consequences. Therefore, investing in the right training for your team is not only important for lowering insurance costs but also for the overall success and sustainability of your business.
Tip #6: Drop Unnecessary Coverage
You can cut insurance costs by carefully evaluating coverage and dropping anything that is no longer necessary. For instance, if your restaurant doesn’t offer delivery services, there is no need to pay for insurance coverage for that.
It’s crucial to understand what coverage is truly necessary and what can be dropped, as paying for unnecessary coverage will increase overall costs. Additionally, it’s important to ensure that insurance policies align with the responsibilities of the business, such as avoiding paying for coverage for things like broken windows if it’s the building landlord’s responsibility.
Below are some other common coverages that you might not need:
- Hired Non-Owned
- Directors & Officers
- Equipment Breakdown
- Spoilage
- Glass Breakage
- Employee Dishonesty
- Cyber Liability
- Umbrella/Excess Liability
- Assault & Battery
- Inland Marine
- Auto
- Boiler & Machinery
- Crime
- Sign
By regularly reassessing your coverage and dropping unneeded items, you can significantly decrease insurance costs.
Tip #7: Document Your Complete Inventory
Completing inventory for your equipment and furnishings is an important step to shrinking your insurance costs. Work with your insurance partner to ensure that you have the correct documentation in place so that you’re certain everything in the space is properly covered.
This means conducting an inventory of everything, including all tables, TVs, kitchen equipment, plates, forks and other items. A proper inventory should include make/model numbers, serial numbers and a rough estimate of what each item is worth – complete with any receipts to prove it.
This is particularly important when purchasing a bar or restaurant. It’s common for the new owner to overlook doing an inventory, only to later realize they have an incorrect coverage amount. A well-documented inventory can provide the necessary proof of value when a claim is made. Failure to have a proper inventory can result in a lower payout in the event of a loss or damage.
Tip #8: Work with a Specialized Partner
From checking your web presence, to ensuring your team has the right training, to completing an inventory of your equipment and furnishings, there are many things you can do to reduce the cost of your insurance.