On the outset, owning or starting your own bar can mean nights of conversations, entertainment, and enjoyment. And, yes it can be all that, but just as with any business, there is more to it: it requires commitment and willingness to pull long hours, giving up on weekends and holidays, occasionally dealing with problematic customers and being able to keep an eye on everything that goes on.
More importantly, it also requires understanding the ins and outs of the business side of things: which includes knowing how to keep your business going in the event of any setback and protecting yourself and your employees from any fallout that might occur. In other words, you need to know the various types of insurance you’ll need as a bar or nightclub owner. Here are the necessary insurance for bars and nightclubs:
1. Commercial or Property Insurance
A commercial insurance is akin to a home insurance for your home. It covers property damage, except disaster insurance, and also includes insurance specific to activities pertaining to bars. Depending on the state and city, however, policies may vary: your policy may or may not include theft insurance or liquor liability insurance, for instance. Therefore, you should clearly clarify what is and what isn’t covered under your insurance policy and then take the necessary steps to ensure you’ve covered all bases.
2. Public Liability Insurance
This insurance protects your bar from any liability for injury incidents or claims involving any third parties, such as your customers. This means if a customer is physically injured on your premises, you’ll need public liability to help deal with it. You’ll also need to show evidence of public liability coverage when dealing with third-party contractors like constructors or cleaners, who don’t service a property unless the owner has public liability.
Additionally, some state laws require mandatory public liability coverage as part of your bar insurance in order to be eligible for bar ownership and licensing. Investors may also stipulate public liability coverage as a mandatory condition in order to protect their investment.
Public liability insurance should generally include the following:
– Full defense fees to cover any and all legal fees you’ll incur when defending your pub against spurious third-party or customer claims.
– Worker compensation to cover the injuries your employees may incur on the premises. Even if your city does not mandate worker comp as part of public liability, you should get it separately.
– Product liability insurance, which is not to be confused with liquor liability insurance. This insurance covers you if you also serve food or drinks other than liquor, cocktails, and other types of alcoholic products.
3. Liquor Liability Insurance
This is, without question, a must-have for owners to protect them from any problems that may arise due to the legal use or consumption of alcohol, including anything that can happen even after customers have left your pub or bar: for instance, if they got into a crash after drinking at your establishment, and they decided to blame you for their intoxication.
Liquor liability does not cover you, however, for damages incurred due to the illegal handling of liquor: such as allowing minors to consume your product.
4. Disaster Insurance
This insurance covers any damages incurred due to natural disasters such as earthquakes, floods, and hurricanes. This insurance is not, as previously stated, included in property insurance; it needs to be purchased separately. While this is not a necessity to have, it’s always better to be safe than sorry. It could seriously come in handy in helping you get back on your feet while recovering from a serious disaster.
5. Theft Insurance
This is also another non-mandatory insurance which helps protect you from losses incurred in the event of criminal theft like armed robberies and break-ins that result in serious loss of cash, inventory, and infrastructure.
6. Worker’s Compensation Insurance
As stated before, this is generally included in your public liability insurance and covers any injuries that your workers sustain during the job. If your public liability doesn’t cover it, you should get it separately. Given the nature of the job, it is always better to be prepared for any eventuality in which your workers can get hurt: slips, falls, bar brawls, and kitchen accidents. Additionally, many contractors will demand worker’s comp as part of the agreement before they allow employees onto your premises.
It may seem like having insurance adds a lot of expense to your business, but in the long run, it can help you on your way to establishing a trusted and insured business. Before you go shopping for insurance policies, however, consult with an independent consultant who can advise you on the merits and demerits of the policies you’re considering.