Restaurant Insurance – Part 5 Mechanical Breakdown

This is the fifth part in our 10 part series on North Carolina restaurant insurance. This section will deal with mechanical breakdown, what this means for you the restaurant owner and how and why you should consider this protection form when setting up your NC restaurant insurance program.

First of all, an explanation. What is mechanical breakdown coverage and when would you need it. Let’s use an example. Assume it’s the middle of July and temperatures have been hovering in the mid 90’s for weeks. One morning you come in to your restaurant and find it is 85 degrees inside. You call your landlord and he calls a technician to look at the air conditioning systems located on the roof of your restaurant. As it turns out, both units have failed and it will be a week before parts can be found and the units replaced. And yeah, no one is going to eat at your establishment until this problem is solved. Who can eat in 85 degree heat? What you have here is a classic case of a mechanical breakdown that is going to cost you money in terms of cash flow, lost sales, and possibly spoiled supplies.

Your standard restaurant insurance policy is not going to cover these losses. The only way to get this type of loss covered is to purchase mechanical breakdown coverage. This is added as an endorsement to your standard restaurant package or restaurant businessowners insurance policy. This is the kind of extra coverage that is often overlooked by agents who don’t specialize in insuring restaurants. If you are buying your insurance from an agent who isn’t a specialist in restaurants, then you might be taking risks you don’t even know about.

Now it is important to understand that in our example, the repair costs to the air conditioner will not be covered under the mechanical breakdown protection. (for a discussion on how you might get burned for the costs of maintaining your landlord’s air conditioners on the roof, please click here.) This endorsement is for the consequential losses that are caused by the failure of a piece of equipment. Also, don’t restrict your thinking just to air conditioners. This can also apply to coolers, freezers and other types of equipment, the loss of which would take your business down completely or partially for some time frame.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping restaurants all across North Carolina and South Carolina with their restaurant insurance needs. We understand that your business is unique and your insurance needs are complex and varied and for that you need a restaurant insurance specialist like us. We also know that not all restaurants are created equally and that they have different needs. That is why we have developed 5 uniquely different restaurant insurance programs to help you get just what you need and not have to buy coverages that don’t apply to your situation. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers. If you would like help with your restaurant insurance, please call us, toll free at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

The source information for this article was pulled from other articles which can be found at www.RestaurantInsuranceGuy.com.

Restaurant Insurance Part 4 of 10 – Spoilage Coverage

This 4^th part in a 10 part series deals with spoilage coverage and what you need to know when purchasing it. As you will see, there are a couple pitfalls here that you will want to avoid.

Spoilage protection is coverage that almost every restaurant owner should consider purchasing. Of course, like all insurance coverages, you should consider the need and weigh that against the costs, but in most cases spoilage protection is fairly inexpensive and could be a real help if you lose your cooler, especially if it goes out at a time when it is full of prepped work for a large function. But as I mentioned, there are a few pitfalls to avoid when purchasing this coverage.

Spoilage protection is coverage that is typically added to your businessowners policy. And while that is a great convenience, it leads to our first pitfall – coverage limits. Take a few minutes to calculate your worst case scenario with a loss of the use of your cooler and make sure you know how much money you stand to lose if this happens at the absolute worst time. Now, make sure that you have at least that much spoilage coverage on your policy. You see, with add on coverages like this, often times the insurance company that designed the program simply has a flat amount of protection, say $5000 or $10,000 worth that comes with the spoilage coverage. But it is very important that you take the time to evaluate what you need here and then make sure that you can add that amount of spoilage coverage to your policy.

So what is the other pitfall? Well, this one is a bit more insidious and will take more research on your part. You should take a moment to read over the policy wording on your spoilage coverage to understand what requirements are being put on you in order for the protection to trigger in the event of a claim. Many of these spoilage endorsement forms require that you have a refrigeration maintenance agreement in place and that your refrigeration units are inspected at defined regular intervals. Failure to do so could make this coverage void so you see how important it is to know what you are dealing with in this area.

All of this points out just how important it is for you, as a restaurant owner, to purchase your insurance from an agent that specializes in restaurant insurance. There are just too many small print items that can come back to bite you.

At Clinard Insurance Group, in Winston Salem, NC, restaurants are our specialty. We insure many different types of restaurants all across North Carolina and South Carolina. We know that there are many different kinds of restaurants, each very different from the other and each with widely different needs in terms of risk management, marketing and protection. This is why we have created 5 uniquely different restaurant insurance programs. We have a fine dining insurance program, a casual dining restaurant insurance program, a fast food insurance program, a bar and grill and tavern insurance programand a special insurance program for caterers. If we can help you with your insurance needs or simply answer a question for you, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

The source information for this blog can be found at www.RestaurantInsuranceGuy.com.

Restaurant Insurance Basics – Part 3 of 10 – Business Income Insurance

Part 3 in our 10 part series discusses Business Income insurance and how to use it to correctly protect your loss of income after insured disasters.

Business Income, sometimes referred to as business interruption insurance is often overlooked when the restaurant owner sets up his or her restaurant insurance program. This is because with most businessowners policies, this coverage is now included automatically. This is of course a great convenience for those who might overlook this protection in the first place. But this automatic protection does not remove the need for you to take the time to understand this coverage and make sure that it will respond in the way you expect after a large loss.

Before this coverage was simplified and added into the businessowners policy coverage, it was sold separately under the name business interruption coverage. If you still have a package policy as opposed to the businessowners form, then you will probably need to add this coverage by endorsement. Either way, there are several different elements to this protection and you should understand each clearly.

Before I tackle the different elements of business income protection, it is important to note that business income coverage is a consequential loss form. That means, the losses that you incur which are to be covered by this part of your insurance policy have to be the consequence of an insured peril in the first place. For instance, if a fire burns your building down, then the fire loss is covered by the businessowners policy and so therefore, the business income coverage will apply. If, on the other hand, you have a flood loss to your restaurant, then that type of loss is not covered by the businessowners policy so you will not have protection for your lost income.

To understand these elements of this protection, I will focus on the most common form of policy, the businessowners policy. Bear in mind that these are generalities and you should discuss your specific form with your agent if you have difficulty understanding it. First of all, business income is usually defined as net profit or loss before income taxes that would have been earned or incurred if no physical loss or damage had occurred. So, we are talking about lost profits here. But what else should be considered? Well, the form usually also includes normal continuing operating expenses. These are expenses that will continue on even when you are shut down and out of business. They might include rent, electricity, water etcetera and most importantly payroll. If you can’t pay your employees while you are shut down, you might lose them. Often though, the coverage for payroll can be limited in both time and scope. Many common forms only include payroll for 60 days past the date of the physical loss that triggered the business income coverage. In addition, most forms exclude payroll for owners, executives, department managers and employees under contract. Also, you should check your policy form carefully to see if any of the following are included or excluded in the definition of payroll: employee benefits, fica payments you pay, union dues you pay, and workers compensation premiums you pay.

One additional element of this protection deals with extra expense. Extra expenses are those that you must bear in order to get your restaurant back in business more quickly. You may have to expedite shipments or rent another location to get in business while your old one is repaired. You should put together a firm and clear disaster plan for what you would do if your restaurant is destroyed by fire and then be sure that your business income protection will respond in a way that works well for your plan.

I think that the business income section of your policy is a place that points out just how important it is for you to deal with an agent and company that specializes in insuring restaurants. There is too much to lose here and you can’t fix it very easily after the big loss has occurred. Take the time to make sure you have hired the professionals that you need to make sure you don’t lose your livelihood in an accident that is compounded by poor disaster and risk management planning.

At Clinard Insurance Group in Winston Salem, NC, we want all insurance consumers become better informed buyers. Insuring and helping restaurants all across North Carolina and South Carolina is our specialty. We even have ways to help you gain and keep more customers. For one example of that type of program, visit our partners page. We also know that not all restaurants are the same. That’s why we have created 5 different restaurant insurance programs so that you can choose a program more tailored to your needs. We have a fine dining insurance program, a casual dining restaurant insurance program, a fast food insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers. If you need help or advice for your NC restaurant or your SC restaurant, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com. Don’t trust your livelihood to an agent that doesn’t specialize in restaurants. There is just no need to take that risk.

The source information for this article was pulled from other articles which can be found at www.RestaurantInsuranceGuy.com