Risk Management for Bars, Taverns, Restaurants and Nightclubs

Bars, taverns, restaurants and nightclubs face unusual risks. If you own or work at one of these establishments, understand your risks and the risk management insurance you need.

Potential Risks for Bars, Taverns, Restaurants and Nightclubs

While every business is slightly different, there are common risks bars, taverns, restaurants and nightclubs face. They include:

  • Liability if guests or employees fall, slip or are injured
  • Liquor Liability if a guest drinks too much and causes an accident or other liability
  • Food Contamination
  • Fire Hazards
  • Increased Pollution Liability Regulations
  • Theft
  • Assault and Battery

Why Purchase Risk Management Insurance?

Because the risks are high for your bar, tavern, restaurant or nightclub, you need insurance. It covers any injuries, illnesses or liabilities that occur on your property. It also protects your personal assets if you are sued.

How to Purchase Risk Management for Bars, Taverns, Restaurants and Nightclubs

Contact your insurance agent for information on purchasing insurance for your establishment. Qualified businesses include:

  • Neighborhood bars, pubs and taverns
  • Restaurants with high-percentage alcohol sales
  • Craft brewpubs
  • Sports bars
  • Nightclubs and discotheques
  • Wine bars
  • Cocktail lounges
  • Comedy clubs
  • Fraternal Organizations

To ensure you get adequate coverage for your needs, discuss details about your specific establishment with your insurance agent. Factors like how long your employees have worked in the industry and the types of guests you serve can affect the type of insurance you purchase and your insurance premiums.

Ways to Decrease Your Risks

To reduce your risks, protect your staff and patrons, and potentially lower your insurance premiums, follow a few steps.

    1. Enroll managers, servers, door hosts, bouncers and all employees in regular training courses that help them learn techniques that reduce risks. Potential trainings address legal responsibilities when serving alcohol, how to recognize and prevent intoxication and food safety.
    1. Hire experienced staff. Experienced staff are less likely to engage in risky behavior and some insurance companies give lower rates to establishments with staff who have over three years of experience.
    1. Card everyone. This step ensures you don’t serve any minors.
    1. Limit free drink giveaways so you don’t encourage intoxication.
    1. Establish protocols for handling inebriated guests. Your employees should know to call a cab or take other protocols if someone has had drank too much.
    1. Be vigilant about reducing risks. Keep the floor clean, follow safe food guidelines, make repairs right away, ensure there’s adequate outdoor lighting and take other steps to reduce risks around your establishment.

When you understand risk management for bars, taverns, restaurants and nightclubs, you can take the necessary steps to protect your employees and patrons. Talk to your insurance agent for more ideas on managing and reducing your risks.

Social Media: High Risks for Lawsuits

Most everyone knows that the use of social media has grown by leaps and bounds during the past decade. What many people don’t realize are the unique risks associated with social networking. Anyone using Facebook, MySpace, LinkedIn, or other social networking sites should exercise extreme caution in what they decide to say online.

As an example, in 2009 a teenager in New York sued some of her classmates and their parents, accusing the classmates of bullying and humiliating her in a Facebook Forum. Whether or not the allegations are true, the teenagers and their parents require legal resources to pay for the possible judgments against them.

Many people believe a standard Homeowners insurance policy will cover them in such a situation. In fact, it probably will not provide the necessary coverage. A standard policy covers bodily injury or property damage done to someone else. It defines bodily injury as sickness, harm or disease, and it defines property damage as destruction of or injury to physical property.

Neither definition includes publishing or saying something that injures another person’s reputation. Hence, the policy is not likely to cover a Facebook post. In other words, the policy is unlikely to cover the act of making someone else feel miserable due to social networking.

A good source to consider for additional coverage is a Personal Umbrella policy. This kind of policy provides additional insurance in circumstances where a loss has depleted the amounts of Liability insurance offered under a Homeowners policy. Umbrella policies usually have a deductible of $250 to $500; but have the potential to protect the policyholder from financial devastation.

As you become more exposed to risk through social networking, choose your words carefully on any social networking site. Additionally, speak with our insurance professionals to see if an Umbrella policy is a good match for your insurance needs in an increasingly risky world.

Avoiding Road Rage and Aggressive Driving

Basic decency during driving can seem hard to come by these days. “Road rage” refers to the ability of perfectly sane people to become angry maniacs when behind the wheel of a car. On average, at least fifteen hundred people including men, women and children are killed or injured each year in America due to aggressive driving. Aggressive driving such as tailgating, cutting off other vehicles, and giving the one-finger salute are unfortunately quite common in the United States.

In fact, the problem of discourtesy when driving is responsible for as much as thirty percent of all traffic collisions. Drivers routinely ignore the basic rules of driving, engaging in overtly aggressive behaviors even to the point of murder. One of the most important situations where discourtesy results in injuries or death to other drivers is in right-of-way situations. Whenever two vehicles are driving along a path that puts them at odds with one another, the problem of right-of-way becomes boiled down to who goes first.

Right-of-way is always granted by the other driver, but the problem becomes exacerbated when drivers do not follow the rules concerning right-of-way. Unfortunately, being legally right does not mean being safe. Drivers who cede their right-of-way to the other driver might actually put themselves at risk.

Consider a common situation where, in congested traffic, a driver wants to be let in to the neighboring lane and the driver gives it to them. Before doing so, the driver must check for traffic coming from the rear. If there are two or more lanes going in the same direction, the driver also has to be aware of drivers passing him on the left, since the other driver could pass into that left lane.

Other drivers who are not aware of the first driver may not understand that they are yielding their right-of-way. Drivers must also remember to consider alternate routes. Sometimes avoiding left turns altogether can be the best choice. If a driver has missed a turn and needs to get back to the intersection, performing a U-turn might actually be very dangerous.

When you head it on the road today set an example, so that other drivers can be reassured that there is at least someone who is attempting to drive responsibly.

Why Should I Get Insurance That Isn’t Required?

State laws or lenders require people and businesses to buy certain types of insurance. Most states require Automobile Liability insurance on all registered vehicles. If the vehicles are financed, the lenders will require the owners to carry Collision and Fire coverage. Employers have to carry Workers Compensation in most states. Mortgage lenders require borrowers to insure their buildings against loss by fire and other perils. In certain areas at high risk of flooding, lenders might require them to buy Flood insurance as well.

However, many kinds of insurance are not required by anyone. In Texas, employers can opt out of buying Workers Compensation coverage. Although nearly all businesses use computer networks, no laws or lenders require them to buy insurance against damage to their systems or damages others might suffer because of a problem with their networks. State laws do not require employers to carry Employment Practices Liability coverage.

Lenders normally do not require people who live in low-risk flood zones to buy Flood coverage. No laws require businesses to buy Umbrella policies, which provide additional liability insurance above standard Liability and Auto policies. This begs a question: If an individual or business is not required to buy certain types of insurance, should they skip them?

The reasons for passing on non-mandatory insurance are compelling. Although the future occurrence of a loss is uncertain, the cost of an insurance premium is not. Insurance can cost significant amounts of money that many people would rather put to other uses.

Further, people might believe that they are unlikely to have some types of losses and therefore do not need insurance against them. Many businesses do not carry Cyber Liability insurance for this reason. People who do not live near bodies of water often do not even think about Flood insurance. Some types of insurance can also be difficult to get. In parts of the U.S. prone to earthquakes, the market for Earthquake coverage is very limited.

There are good reasons for buying insurance even if it’s not required. Many of these policies cover jury awards in injury and damage cases, and those awards can be substantial.

Consider the following awards that would likely be covered by Employment Practices Liability insurance: 

A jury awarded $934,000 in damages to a deaf man fired by the convenience store that employed him.

An Alabama man who was fired after complaining about his employer to the federal Equal Employment Opportunity Commission was awarded $314,000.

A jury ordered an employer to pay $900,000 to a Cleveland woman for discriminating against her because of her age.

Umbrella policies would come in handy is situations like these: 

A woman who suffered injuries when she fell in a store was awarded $3.2 million.

A jury awarded $11.7 million to an elevator mechanic who was injured while working on a construction site.

People and businesses who think they don’t need Flood insurance might want to reconsider. Floods can result from melting snow and water main breaks as well as rainfall. According to the Federal Emergency Management Agency, people outside of high-risk areas file over 20% of Flood insurance claims and receive one-third of disaster assistance for flooding. The agency estimates that as little as one inch of floodwater in a 2,000 square foot home can cause up to $21,000 in damage.

For these reasons, it is wise to at least consider buying insurance that no one requires. One of our professional insurance agents can answer questions and help you weigh the costs and benefits of buying extra coverage. Going without insurance can be a very costly mistake. Just because it’s not required doesn’t mean you shouldn’t buy it.

Where Did Our Data Go?

During recent months I’ve been reading a large number of lawsuits related to industrial espionage, sabotage, misappropriation, and theft. Most of these cases involve a current or former employee or some third party stealing valuable financial or other information.

In several recent decisions, courts have ruled that they lack criminal jurisdiction over theft of information by an employee who had access to a company’s data base. The courts essentially held that the misappropriation in question did not violate the National Stolen Property Act, the Economic Espionage Act, or the Computer Fraud and Abuse Act (CFAA).

In the case of US v. Nosal, Judge Kozinski, known for his left-of-center opinions, engaged in a display of semantic gymnastics to rule that the Computer Fraud and Abuse Act was nothing more than an anti-hacking statute and doesn’t apply to misappropriation. Essentially, he argued that employees who wasted time on Farmville, Facebook, New York Times, daily Sudoku, etc. would be in violation of the Act, which is too broad for the government to enforce. If you want to see some feathers fly in a scorching dissent, read the case.

Bottom line: Make sure to buy Cyber Liability insurance; it looks like you’re going to have a hard time getting protection from the courts, especially if you happen to be in the Ninth Circuit.