Owning a bar can be a gratifying venture and a lot of fun. It’s a business where you provide fun and entertainment for consumers, sometimes when they need it most. But with food and alcohol involved, it can also be a challenging business, with some particular liabilities and regulations.
Even if your nights usually end without incident, at some point, it will be unavoidable to deal with the funless side of owning a bar: patrons who drank too much and started a fight, sober clients who slipped in spilled booze and hurt themselves, employees injured while serving drinks, a fire that destroys your kitchen, and so on.
These and other situations can lead to legal action against your business, so be sure to understand your insurance needs to be covered and safe.
Commercial property insurance is needed for any place of business. It’s the policy that will protect your company in the event of losses resulting from physical damage to your property, which can include both the building where your bar operates and your personal belongings inside. Any physical damage to your property caused by a hazard covered in the policy will be repaired.
Consider getting replacement cost coverage. It’s more expensive but will give you greater value to rebuild in case the property is completely lost after a fire. And keep in mind that most insurances don’t cover damage caused by natural events, like floods or earthquakes, for example. You need to buy exclusive coverage for these cases if your bar is located in an area of risk.
General & Liquor Liability
These are two separate types of insurance that cover different incidents, both mandatory for a business that works with alcoholic beverages.
- General Liability Insurance– It protects you from lawsuits that do not involve alcohol consumption, such as a customer who slipped on a wet bathroom floor, fell, and broke his leg. Some policies also include product liability insurance to protect you from customers who claim to have been harmed by the food prepared in your kitchen.
- Liquor Liability– It’s related to incidents or damages caused due to the sale or consumption of alcohol, such as intoxicated customers causing fights or damages. Certain jurisdictions may require you to have this coverage when you try to obtain a license to sell alcohol.
Since the line between the two policies can be blurry (and every state’s regulations differ), research the types of coverage provided by each policy to make sure you’re covering all possible claims.
Be sure to also ask if either policy covers assault and battery to protect you from lawsuits brought by drunk customers who hurt themselves because of actions you or your employees took to contain them.
Business Owner’s Insurance
Also known as Business Owner’s Policy (BOP), this coverage is very popular for bar owners. It bundles the aforementioned property and general liability insurance into one policy, often giving you a better rate. In this way, you guarantee coverage against accidents involving your property (including fire and theft) and also against claims directed at the services you provide. Be sure to consider liquor liability in addition to this so that all bases are covered.
Workers’ Compensation Insurance
This is required for businesses in most states if your bar has employees besides you. Workers’ compensation insurance can cover costs if employees are injured or need medical attention due to working in your bar (if they start to lose hearing because of the excessive noise inside the place, for example). In such cases, the policy helps to pay for medical expenses and lost wages.
Commercial Auto Insurance
Let’s say your business has a van used for delivery or even a large truck to transport liquor, and one of these vehicles is involved in a traffic accident. This policy helps to cover the costs of injuries and damage to the vehicle and its driver as well as to third parties involved in the accident. In addition, commercial auto insurance also covers theft and vandalism.
A Toast to Safety
Generally, the life of a bar owner is all about fun and laughter—yours and the customers. Unfortunately, sometimes fun can turn into accidents, threats, and risks. As much as you take precautions and keep everything under a watchful eye, it’s impossible to predict when these things might happen, as dealing with people is unpredictable.
Therefore, you need adequate insurance coverage to deal with these unpleasant incidents and prevent them from spoiling the good time that your bar should always promote. Cheers!