Getting commercial insurance for a bar or nightclub is not something most bar owners feel comfortable doing. The reasons are obvious: commercial insurance for a bar—like virtually all sorts of insurance—is a complicated business, made more complicated by the specialized language in which such insurance policies are written. Trying to compare them can seem like comparing apples and oranges.
What is Bar Insurance?
Your first question about bar insurance may very well be: what is it and how is it different from other types of insurance, like a restaurant insurance policy? Commercial insurance for a bar is the equivalent of home owners insurance for your home. It covers property damage (though not disaster insurance) and usually, in the case of bars, will include types of insurance specific to activities that take place in the bar.
So, for example, although theft insurance may be included as part of a nightclub insurance policy, more likely than not, it will have to be bought separately.
Other considerations for what is and isn’t covered by a bar or nightclub insurance policy include health insurance, Liquor Liability Insurance and Theft Insurance for Bars and Other Employee Related Insurance. A bar owner should ask exactly what is and is not covered in his or her bar or nightclub insurance policy to make sure his or her establishment is properly covered.
Factors Affecting the Cost of Insurance for a Bar
When it comes to bar insurance, however, there are certain factors that will have a huge effect on your policy rates. Sometimes minor changes to the way that you run your bar will make a big change in terms of your bar or nightclub insurance policy. Consider the following, for example:
- How much would it cost to replace everything you own? This is probably the central question you should ask when it comes to determining the size of your bar or restaurant insurance policy. You should consider everything from the cost of the building, to the cost of all the furniture and fixtures on your premises. If the whole thing burnt down, what would it cost you to rebuild and start again?
- Be aware of the difference between “actual cash value” and “replacement cost” in bar and nightclub insurance policies. Actual cash value means the cost of your property at the time of the incident that destroys them. It includes the depreciation due to wear and tear. Replacement cost is the cost that it would actually take to restore your bar or nightclub. So a bar owner should consider this when they are accessing the value of the bar or nightclub insurance.
- Will you have employees? Another crucial question is whether you have employees. If you do, you will probably need workers compensation insurance should one of them be injured. In addition, however, you should be aware that if you have neither worker’s compensation or liability insurance, you may run into a problem should you need to have any construction or redesign work done on your business. Many companies will not allow their workers to work on your property if your insurance does not cover these workers while they are there.
- Will you serve food? And if so, how much: One of the factors that makes a huge difference when it comes to the price of commercial insurance for a bar is the percentage of food that they serve relative to the level of alcoholic beverages. The rule of thumb is that if more than half of your sales are in alcoholic beverages than you are considered a higher liability and will have higher rates. If more than half of your sales are in food, a lower cost restaurant insurance policy might actually work better for your business.
So if your bar and grill is close to that amount, you may want to consider promoting more sales in food so that you can get safely over that amount. Be careful, however, because you will need to keep careful track and be able to prove your percentages.
- Are you going to have live entertainment at your establishment? You might be surprised to learn that one of the factors which effects your insurance rate is whether you will include private entertainment. Why? If you intend to have pyrotechnics or a foam machine, this will affect your rates. As will a whole series of other entertainment related activities such as swimming pools or dart boards. Be aware of these extra costs to your bar insurance as you plan you bar or nightclub.
- Do you get floods, hurricanes, tornados or earthquakes in your area? Disaster Insurance for Bars and Nightclubs is separate in most cases. In addition, don’t be fooled. Even if you think your establish is likely to survive an earthquake for example, don’t be fooled, a fire caused by an earthquake is technically not covered by the fire insurance a policy may have.
These are just some of the factors that will go into determining what kind of insurance to get and even more crucially, at what level you will get your policy. Be sure to do your research carefully in your area and to double check that you have indeed received the best deal for bar insurance.
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