Restaurant Insurance – Part 8 The Umbrella Policy

This is part 8 of our 10 part series on insuring your restaurant. This article deals with a policy that is only purchased by about 20% of restaurant owners. That is the commercial umbrella policy.

The commercial umbrella policy is a liability policy that adds an extra layer of protection over and above your underlying liability policies, such as your general liability insurance, your workers compensation insurance and your commercial auto insurance. This policy provides a quick, convenient and usually inexpensive way to increase your overall liability protection on all of your underlying policies at once.

The commercial umbrella policy will have underlying limits requirements for your above mentioned underlying liability policies. In some cases it is cheaper to raise the underlying limits of your other policies and in other cases it is cheaper to keep them low and add the umbrella policy. You should take the time to go over this in detail with your agent so that you can make the choice that is best for your restaurant. Once your policy is issued, always check to make sure that all of your underlying policies are listed on the declarations page of your umbrella policy so that you know it is adding additional liability protection to all of your policies.

Most every commercial umbrella policy will have a self insured retention listed on the declarations page of the policy. This self insured retention acts like a deductible but it is a bit trickier than the deductibles that you are used to. Policy forms vary, so check with your agent to see if the self insured retention applies to all claims that are filed against your policy, or just to those where the umbrella policy provides the first dollar of protection. That is possible because of the wording of the umbrella policies, in some cases there may be additional protection provided by the umbrella policy that is not provided by any of the underlying policies.

One last thing to take a look at is whether defense dollars (money paid to attorneys to defend your case) are included in the total policy limit or are outside the limit and therefore unlimited unless noted otherwise. This could dramatically change the outcome for you if most of your claim was defense costs to fight the claim.

The commercial umbrella policy is a unique policy that is not used often by most restaurant owners. But every restaurant owner should take a close look at the umbrella policy to see if it provides protection or benefits that they need to be properly insured.

At Clinard Insurance Group, in Winston Salem, NC we make it a part of our job to help insurance consumers out there become informed consumers. We specialize in insuring restaurants and we have programs to help our restaurant owners with every policy they purchase on their restaurant and for their personal needs. We are truly a one stop shop. We have created special niche programs for 5 different types of restaurants. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a tavern and bar and grill insurance program and a special program for caterers insurance. If we can help you with your restaurant insurance needs, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

The source data for this article can be found in articles at www.RestaurantInsuranceGuy.com.

Restaurant Insurance – Part 7 – Workers Compensation Insurance

Workers compensation insurance is an integral part to any NC restaurant insurance program. But, due to the relatively low cost of this protection for restaurant owners, it is often overlooked. This 7^th part in our 10 part series takes a closer look at workers compensation and highlights several key elements of this policy that a restaurant owner needs to understand in order to best protect his business, his workers and his cash flow.

First of all, this discussion will be directed to and focused on North Carolina workers compensation insurance for restaurants. Some of what you may learn here will apply in other states but for the sake of this discussion, we are focusing on NC rules and regulations.

The first question that a restaurant owner might ask would be if he or she even needs to buy work comp insurance for their restaurant. The answer is an unqualified yes. But here are the rules. In NC, you are only required to purchase work comp insurance on your business if you have 3 or more employees. Also, you can choose to include or exclude corporate officers and owners. But here’s the catch. Not being required to purchase the policy is not the same thing as avoiding the exposure. If you don’t purchase the policy, you will still be required to pay all claims. Without the policy you are just deciding to pay all the claims yourself out of your own pocket. This is almost universally a bad idea.

The insurance policy itself is a statutory based policy. This means that the policy follows the NC work comp statutes which spell out what is covered and to what extent. The workers compensation rules and rates in NC are controlled by the NC Rate Bureau. The claims process is handled by the NC Industrial Commission.

Your actual workers compensation costs will be based on your payroll. Each classification of worker will have its own rate. To get your policy started you will estimate what your payroll will be for the year for each different classification that applies to your restaurant. At the end of the policy year, the insurance company will perform an audit of your payroll and an adjustment to the final premium will be made. If you had overestimated your payroll then you would be due a refund and if you had underestimated it, you will owe an additional premium. Under estimating is risky and can leave you with a bad cash flow situation that I call the audit trap. To understand the audit trap better, read my blog here.

Another aspect of your workers compensation policy to consider is that over time, most workers compensation policies are experience rated. This is done when the NC Rate Bureau assigns you an experience modification factor. This factor modifies your rate either up or down, depending on your past loss experience. This is a strong incentive for you to manage your risks and minimize your claims. To learn more about how this works, visit my blog on this by clicking here.

One more point that I would make to restaurant owners who are setting up their workers compensation insurance is that they take the time to consider using a mono line workers compensation company for this policy. Recently we have seen a rise in these companies which write only workers compensation insurance. Often their expertise and specialization allows them to provide better back to work programs as well as more effective loss control programs. They are also more likely to offer a pay as you go program for your billing.

While workers compensation insurance will rarely be the biggest ticket item in a restaurant owner’s insurance program, there are several areas in this policy where the restaurant owner can reduce risk and save money by using the right company and the right agent. At Clinard Insurance Group, in Winston Salem, NC we specialize in helping restaurants all across North Carolina and South Carolina. And since not every restaurant is the same and we don’t think you should have to pay for prepackaged coverages you don’t need or miss out on the coverages you do need, so we have created 5 different restaurant insurance programs for our NC and SC clients. We have a fine dining insurance program, a casual dining insurance program, a fast food insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers. If we can help you with your insurance needs, please feel free to visit us on the web at www.ClinardInsurance.com or call us, toll free, at 877-687-7557.

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

Restaurant Insurance – Part 6 – Business Auto Insurance

This is the 6^th part in a 10 part series on how to insure your restaurant. This article deals with auto insurance for your business and discusses a few of the pitfalls that restaurant owners need to wary of when setting up their restaurant insurance program.

Business Auto insurance is an easy one to overlook when you are setting up your restaurant and planning your insurance needs. Often the restaurant owner will tell me that he doesn’t have any cars in the company name, so why worry about business auto insurance. This seems reasonable on the surface. But the problem is that you don’t have to own any vehicles to get yourself into a world of hurt with an auto loss for your business.

Here’s the problem. At some point in time, and probably more often than you may at first imagine, someone, be it you or an employee of yours, is going to be out there running errands on behalf of the business. Let’s say your employee is taking a deposit to the bank and runs a red light and severely injures a mother and two children. Now, assume the costs of the injuries from this accident run in excess of $500,000. Well, you didn’t cause the accident so why should you worry? The problem will stem from the fact that it is unlikely that your employee who caused the accident will have high enough insurance limits on his or her personal auto policy to cover these losses. And since the errand was run on behalf of your restaurant, your corporation or partnership or LLC or whatever entity owns your restaurant can be held liable for the excess losses that are not covered by your employee’s personal auto insurance policy. And in this case, if your employee has only $100,000 of auto insurance bodily injury protection and no real assets to speak of, then your business is now the deep pocket in this event and that puts you on the hot seat.

So what do you do about this? The solution is wonderfully simple and also inexpensive. What you need is a business auto insurance coverage called nonowned auto coverage. If you do have a business auto policy because you have vehicles titled in the company name, then you can add this coverage to that policy. The cost is usually under $100 per year. While you are at it, you may as well add hired auto coverage as well since the cost of this coverage is also very low. In fact you may already have this coverage. To find out, take out your business auto policy and check the symbol showing beside the liability section. If you see a symbol 1, or a symbol 9, then you already have nonowned coverage. If you don’t have a business auto policy already, then most restaurant business owners policies will allow you to add both hired and nonowned auto insurance to that policy. If neither of these is possible, then you can simply purchase a standalone hired and nonowned auto policy, usually for under $250 per year.

There is also a second problem that occurs very often with restaurant owners. Often I see that the restaurant owner chooses to re-title all of the family cars in the name of the restaurant. While this is often a good tax strategy, it leaves the restaurant owner vulnerable to a coverage gap that I call the DOC trap. Basically this is a situation where all of the insurance protection is written in the name of the corporation or LLC and the individual family members don’t have a personal auto insurance policy with their names listed on the policy as named insureds. If you find yourself in this situation, and then you have an at fault accident, then the protected entity is the owner of the car, in this case the corporation. After the insurance company pays the claim on behalf of the corporation, they then own the claim as it were. This means that the insurance company has the right to subrogate this claim against you, the individual. With no personal auto policy in your name anywhere, you have nowhere to turn for your protection and now you are forced to pay this clam out of your pocket. The solution to this problem is to add DOC or (Drives Other Car) coverage to your commercial auto policy in the name of the restaurant. This endorsement will name each person who needs the coverage extended to them. The cost generally runs under $200 per person per year but without it you are out there riding without a spare so to speak. To learn more details about the DOC trap, visit my blog here.

There are so many different things that a restaurant owner has to worry about, just to keep the doors open. The last thing you need is a policy with holes in it that you only find out about after a loss. Take the proactive step of finding an agent who specializes in writing NC restaurant insurance. It’s just not worth the risk to do otherwise.

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 your business and we speak your language. That’s because I have owned 4 different restaurants myself in the past. We understand that not all restaurants are the same on they don’t all need the same coverages. To help prevent you from buying a package of coverages that includes things you don’t need, or one that leaves out important coverages you do need, we have developed 5 different restaurant insurance programs. We have a fine dining insurance program, a special insurance program for casual dining restaurants, one for fast food restaurants, a unique bar and grill and tavern insurance program and a caterers insurance program. If we can help you with your restaurant questions, 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 article can be found in articles located at www.RestaurantInsuranceGuy.com.