Restaurant Insurance – Part 10 Liquor Liability

This is the final installment of our 10 part series on buying restaurant insurance for NC and SC restaurants. This installment covers the often overlooked but almost always needed protection for liquor liability. Now if your restaurant doesn’t sell any alcohol, then you will not need to purchase this protection. But if you do sell alcohol, then this is a coverage that you can’t afford to do without. Skipping this protection could force you to sell your restaurant and lose most of what you have worked for all of your life. Yeah, it’s that important.

Liquor liability protects your restaurant against 3^rd party claims for those injured by an inebriated person who consumed some or all of their alcohol at your restaurant prior to the loss. The loss most often comes in the form of a car accident. Hold on you say, you would never serve someone who is drunk, or let a drunk leave your bar with his car keys in hand. But the liability issue doesn’t work that way. Here’s a real world example. One of our clients had a claim several years ago that cost their insurance company over $750,000 and that was less than 1/3 of the total damages. You see, they had served a customer a couple of drinks with dinner. This customer left their restaurant about 8:30 pm and then visited two bars before finally killing another person in an auto accident around 2 am. This customer was not drunk when he left our client’s restaurant, but because they had served him alcohol, our client was dragged into the lawsuit and forced to defend themselves and ultimately forced to share in the damages.

Hopefully now I have your attention and you understand how important it is to have this protection. Now let’s talk about buying this coverage. There are two ways liquor liability insurance is sold. One is as a standalone policy and the other is ad an add on to your businessowners or package policy for your restaurant. Stand alone policies are generally more expensive and are most often used for true bars and night clubs as opposed to restaurants. If you own a restaurant and your liquor liability is a standalone policy, then this should be an immediate red flag that you need to evaluate your current policy and your insurance agent as you may not be using a true restaurant insurance specialist.

Rates for liquor liability vary widely from one insurance company to the next and also from one program to the next offered by the same company. There are several factors that can drive your liquor liability rate. First of all is the ratio of alcohol sales to food sales. Get this ratio above 30% and you are going to start falling out of the most preferred rate plans. Get above 50% and you may find yourself kicked out of the businessowners add on coverage and be forced to purchase a standalone liquor liability policy. Another factor is the type of alcohol that you sell in your establishment. If you sell only beer and wine and no hard liquor, then you should have a reduced rate. If you are selling no hard liquor at all, then you need to check with your agent to be sure that he or she knows this and that this is reflected in your rate. Past claims will also play a big part in what rate you pay and whether or not you are able to add this protection to your businessowners policy or if you have to purchase a standalone policy. The last factor that can impact your rate is the type of safety training and safety programs that you are running in your restaurant to help prevent a liquor liability claim from happening.

One last tip that should be mentioned relates to bar and grill and tavern type restaurants. Often these types of restaurants are discriminated against in their liquor liability rate and get classified as night clubs. This is often unfair and you should know that there are a few programs out there that recognize this and have special rates for bar and grill type establishments that don’t treat them as night clubs. For more information on the bar and grill liquor liability issue, please read my blog on this topic by clicking here.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping restaurant owners with their insurance needs. We understand the importance of using an insurance specialist for your industry and we work hard to fill that need for our clients. Our specialty with restaurant owners is so broad that we can usually help you with every type of policy that you buy for your business and for your family, including your family auto insurance, your home insurance and your life insurance and retirement planning. We also understand that not all restaurants have the same insurance needs and as such we have developed 5 different restaurant insurance programs so that you aren’t subsidizing add on coverages that you don’t need. 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 taveren insurance program and a special insurance program for catering companies. If we can help you with your restaurant insurance in either North Carolina or South Carolina, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantStore.com.

The source information for this article was pulled from other articles which can be found in their entirety at www.RetaurantInsuranceGuy.com.

Restaurant Insurance – Does Your Umbrella Policy Cover Liquor Liability?

If your restaurant sells alcohol, then you should carry liquor liability coverage. And some restaurant insurance programs may even throw this coverage into the package policy for an additional charge. But purchasing this coverage as part of a package, or more importantly as a stand-alone policy could leave you with a gap in coverage that you don’t know you have. And if ever there was a need for high limits of protection it would be in the liquor liability coverage area. So how do you figure this one out?

First of all, a brief word or two about liquor liability coverage. If you sell alcohol and you don’t have it or don’t know if you have it find out now. This is one area of risk that can wipe you out and being without coverage just doesn’t make any sense. Also, if this coverage is tossed in to your package policy for free or for a very low cost, be suspicious. Check carefully to make sure that the limit of coverage here is the same as your liability limit as often the throw in protection will be for a very low limit of coverage. And believe me, if your client walks out of your establishment and has a terrible accident that kills young children or a family, the size of that claim is going to put you under without protection.

Now, the more savvy restaurant owners out there understand this and they also understand the need for high limits of liability protection. That is why they purchase a commercial umbrella policy to give higher limits of coverage above their business auto, their general liability and their workers compensation policies. But what few take the time to discover is whether or not their liquor liability insurance is also included in the umbrella protection. This is important because as I said before, the liquor liability claim can be huge and as I see it, there are 3 ways that your liquor liability protection may not be included in your umbrella limit. Here they are:

First of all, if your liquor liability policy is a stand-alone policy, then you want to make sure that it is listed as an underlying policy on your umbrella declarations sheet. If not, then your umbrella is not going to cover over the liquor liability policy. Secondly, if the liquor liability protection is an add on coverage in your package policy but for a lower limit than your stated liability limits, then the umbrella policy may not cover over the liquor liability as the underlying limit may not be high enough to qualify for umbrella protection. And last of all, your umbrella policy may simply have an exclusion that states that it does not apply to liquor liability claims. Any of these situations could leave you thinking you have umbrella protection when you don’t.

Your best approach is to hire an agent that specializes in restaurant insurance to help you navigate the complexities of this issue. If you don’t purchase your insurance from an agent who handles many, many restaurant clients, then you are probably taking an unnecessary risk with your livelihood.

At Clinard Insurance Group, in Winston Salem, NC, we have the expertise to help restaurant owners with their insurance needs. We have developed specialized restaurant insurance programs for several different types of restaurants, including Fine Dining Insurance, Casual Dining Insurance, Fast Food Insurance, and Bar & Grill Insurance as well as Catering insurance. Give us a call, toll free at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

Much of the source information or this article can be found in articles located at The Restaurant Answer Guy blog site.