Finding the Right Insurance for Your Bar
(Because the perfect coverage is the most important thing to have on tap.)
Owning a bar, pub, saloon, taproom, cocktail lounge, social house or tavern can be a pretty lucrative gig (a great way to drink for free, too). But it can also be a lot of work to establish a local rapport that keeps the stools occupied.
This usually requires a large initial investment, and protecting it with the right bar insurance should be your number one priority.
Our independent insurance agents are here to help. They come with all the know-how and experience you need to protect your sudsy dreams. No more. And no less. No clue what you need, though? No problem, they’ll walk you through it all, and in plain English, too.
But first, we want to give you a little background into the world of bar ownership and the protection you need to keep your happy hours covered.
U.S. Bar and Tavern Industry Statistics
- There are around 63,000 bars, taverns and nightclubs in the country, as of 2017
- Of these, the largest 50 companies make up only 5% of the total revenue generated
- In 2017, bar and tavern food and drink sales totaled around $19.8 billion
- This is a 10% increase over 2010, when food and drink sales totaled about $17.7 billion
Bar Insurance Coverage for Your Property
Whether your bar’s niche is “simple dive” or “overpriced and uber-posh,” all it takes is for one little ol’ disaster to leave you with crippling repair costs. Which is why having the proper property protection is key. In most cases, property coverage is broken down into the following options:
- Building coverage: This is a must-have if you own the building where your establishment is housed or are obligated to insure it. It provides coverage to repair the structure of the building due to fire damage, severe weather, falling objects, vandalism and theft.
- Contents coverage: This provides protection for the property kept inside your bar, from tables to wall sconces to your supply of alcohol. It may be necessary to purchase separate coverage for specialty items like outdoor signs, artwork, and antiques because their value is hard to determine after damage has been done.
- Equipment breakdown coverage: If a power surge or mechanical failure causes equipment failure in your bar, this can affect your sales and even your ability to stay open. If you own a dance club and the electrical system shorts out, for example, you will likely need to close down until repairs can be made. Likewise, if your bar serves food and there is a failure to any of the covered equipment in your kitchen, this can seriously affect sales, and even require you to close temporarily. This coverage will compensate you for repair fees as well as lost income.
- Food spoilage coverage: If your bar includes a kitchen, an extended power outage could cause you to throw away a lot of food inventory. This insurance coverage will provide compensation to help you get those walk-in coolers and freezers re-stocked and ready to go.
- Loss of income coverage: If your bar is forced to close temporarily after a covered disastrous event, like a fire, this will help provide continuation of income so that you are able to pay required expenses and your employee wages. This coverage is usually limited to one year.
- Flood insurance: It is important to know that, in most cases, flood damage is excluded from your property coverage. If you are in an area that is even at a moderate risk for flooding, a business flood insurance policy may be an important investment. An agent in the Trusted Choice network can give you more information about flood insurance and help you secure a policy if this is a concern.
Bar Insurance Coverage for Your Liability Risks
An unfortunate truth about the world these days is that anybody can sue pretty much anybody they want for any reason. And when you run your own business, especially a place that serves alcohol, the risk of being held legally responsible is much higher. Liability insurance can protect you from any potential lawsuits that may be filed against your establishment. There are a number of different types of liability coverage you can go with. And in each case, your coverage will provide help for your legal defense and court costs.
- General liability insurance: This provides coverage for bodily injuries and property damages if a customer is injured in your bar or its outside property, like the parking lot. You may need to purchase a separate rider if your bar offers hazardous entertainment features such as mechanical bulls or a live shark petting zoo. Oftentimes, bar insurance policies exclude general liability coverage if the customer involved was injured due to intoxication after being served in your establishment. For that, you will need liquor liability insurance.
- Liquor liability insurance: This is a specific bar liability insurance that covers property damage or physical injuries caused by patrons who have been overserved at your place. And with the risk of overserving alcohol on your property, comes the added risk of violence and assault. Liquor liability insurance policies typically exclude coverage for injuries due to fights and assault, so you will want additional assault and battery liability insurance, too.
- Assault and battery liability insurance: If a fight breaks out in your establishment, you may be held liable if it can be shown that you failed to provide a safe environment for your customers. Hiring security guards and bouncers can prevent many instances of assault and battery claims against you.
- Product liability insurance: Many bars also serve food, even if it’s just popcorn and bar nuts. If the food or alcohol you are providing to your customers is tainted in any way and causes your customers to get sick, you may be held liable for resulting medical expenses and related fees. This insurance will provide the coverage you need for these types of claims.
- Garage-keepers liability insurance: This one’s only really necessary if your bar or nightclub provides a valet service. It provides coverage for damages to your patrons’ cars while they are in your care.
Bar Insurance Coverage for Your Employees
Unless you wear all the hats around your bar, you’ve got employees who need to be protected. Some insurance policies are mandatory, while others may be required by lenders if you have a business loan. Optional coverage is available and highly recommended because any place that serves alcohol could face an increased risk of damage and liability claims.Insurance policies you will need to consider include:
- Unemployment insurance: Required by law and included as part of your state taxes, it provides temporary financial assistance to unemployed workers who become unemployed through no fault of their own. Once you establish and register with your state’s workforce agency and begin paying taxes, your business will be covered.
- Disability insurance: This coverage pays part of an employee’s income if they can’t work due to illness or injury. It’s required by law in California, Hawaii, New Jersey, New York, Rhode Island, or Puerto Rico. Otherwise, this insurance coverage is optional.
- Medical insurance: Most bars employ fewer than 50 people and are therefore not required to provide health insurance benefits for their employees. If you have more than 50 full-time employees, however, the Affordable Healthcare Act requires you to subsidize their health insurance.
- Workers compensation insurance: Slippery floors are as common in a bar as coasters, which makes the potential for a slip-and-fall accident and other work-related mishaps much higher. When employees are injured on the job, you may be responsible for their resulting medical treatment. Workers compensation insurance provides you with coverage for the costs.
Is Bar Insurance Expensive?
Depends. Every bar has unique risks based on the size of their operation, the number of employees and the types of products served. And because no two bars are alike, every bar insurance policy is different too. On average, these policies run about $3,000 to $5,000 a year, but if your bar is small, you can expect to pay less than that.Some factors that influence your insurance rates include:
- The type of bar you own
- The location of your bar
- The number of years you have been in business
- Your annual sales and revenue
- Whether or not your establishment is a venue for live entertainment
The only way to know how much bar insurance will cost for you is to compare rates between a few different companies.Where Can I Find Affordable Bar Insurance?
Shopping around for the right bar insurance may take some time. Researching your options is important though with this kind of investment. You may want to speak with your accountant or financial advisor, to make sure your bar’s value. This will help you get the protection that’s just right for what you need.In addition, a lawyer will be a huge help in order to get a full picture of the liabilities you face when serving alcohol is in the picture. There may be some legal requirements you didn’t consider, and that could affect your insurance needs as well.Finally, your independent insurance agent is going to be another, and perhaps the most important, part of this picture. Finding an agent who understands your needs is crucial. Look for an insurance company who has high ratings with agencies like A.M. Best and various online consumer reviews also may help you evaluate the quality of the insurance company you’re working with. You’ll get peace of mind when you understand all the risks you face and the coverage options you have.