Blog – Page 10 – Hospitality Insurance Group

July 8, 2015by Jen Davey Jen Davey No Comments

Insurance Made Simple Part III: Comprehensive General Liability Coverage – How to Protect the Company’s Assets

Why worry about and purchase General Liability coverage? Most banks do not require CGL insurance to get a mortgage, so why is it important?

Accidents can and DO happen! If someone should sue your business as a result of a real or perceived loss, the high cost of legal defense and/or settlement could be enough to put you out of business.

General Liability insurance coverage is purchased to protect businesses from monetary damages it may become legally obligated to pay because of bodily injury or property damage to a third party that results from an accident or occurrence.

Restaurants, caterers, bars, taverns and social clubs all have potentially serious general liability issues due to premises and operations exposures. Whenever a patron enters your establishment, your business could be found liable should an accident ensue. To safeguard against the unpredictability of accidents, oversights and lawsuits, General Liability insurance is a must!

General Liability insurance has three major coverage parts: Coverage A – Bodily Injury and Property Damage, Coverage B – Personal and Advertising Injury and Coverage C – Medical Payments.

Coverage A – Bodily Injury and Property Damage

Bodily Injury – Your business operations could cause serious bodily harm or even death to patrons. General liability insurance will defend your business and indemnify a third party if you are responsible for the injury, disease or sickness.

Property Damage – This coverage pays for damage or loss to someone else’s property caused by an incident that you are legally responsible for.

Coverage B – Personal and Advertising Injury

This coverage responds to the following types of claims: publishing, verbally or in writing, false information that libels or slanders a person or organization; copying another company’s style of doing business or advertising concepts; and/or infringing on another businesses title, copyright or slogan.

Coverage C – Medical Payments

Medical payments coverage is available for emergency medical treatment in the event that a person is injured on your premises. This coverage responds without any regard to legal liability or fault. Medical Payments is considered “good will” coverage and hopefully prevents an injured person from suing to collect monies to pay their medical bills.

The National Restaurant Association states that slips and falls are the most frequent general liability claims made across the industry. Spills, slippery floors, poor maintenance of parking lots and floors, dim lighting, and stairs without handrails all contribute to unsafe conditions.

The U.S. Center for Disease Control (CDC) estimates that 48 million cases of foodborne illness are reported each year. Improper cooling, infected employees, failure to reheat food to proper temperatures, cross contamination, improper cooking or cooling, and foods from unsafe sources are just a few of the causes of foodborne illness.

What can you do to prevent or reduce the chances of patron injuries and claims?

Implement some risk management techniques or simple safety best practices.

Prevention of Slip and Falls:

Perform timely weather-related maintenance of parking lots and entry areas
Conduct periodic inspection/repair of flooring, stairs, sidewalks and parking lots
Implement a maintenance program to inspect and repair furniture and fixtures
Install handrails on stairways and ramps
Maintain adequate lighting both internally and externally
Ensure quick cleanup of spills
Use slip-resistant floor materials and treatments
Install restroom soap, hand dryers and paper towel dispensers in areas where soap and water drips are minimized

Prevention of Foodborne Illness:

Educate employees about food safety and hygiene by training them in a Serv Safe Food Handling Training program (or similar program)
Implement a hand washing program for employees
Install hands-free ice dispensers
Require the use of disposable gloves for any food contact
Maintain proper refrigeration and cook all food to appropriate temperatures
Avoid cross contamination by employing proper cooking and surface cleaning procedures
Implement a stored food dating system with shelf life labels
Restrict sick employees from food handling areas

Egress and Fire Safety

Install smoke and fire alarms wherever needed
Regularly test emergency power sources for egress lighting
Ensure egress areas are maintained, free and clear
Adhere to maximum occupancy regulations

Purchasing General liability insurance is a MUST for any business owner to protect their business. However, it is important that business owners implement some risk management techniques to prevent them from happening in the first place. Protect your reputation, protect your livelihood – you don’t want a lawsuit to put an end to your business.

Sandra Haley is the Senior Vice President: Underwriting & Marketing at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

June 3, 2015by Jen Davey Jen Davey No Comments

10 Things to Consider When Choosing an Insurance Agent

One might think choosing an insurance agent should be an easy task. Pick the one that offers you the lowest price, right? Well that’s not necessarily the case and probably shouldn’t be at the top of your list of priorities when choosing the best agent. Lower price can mean inferior coverage and that’s fine until you experience a loss that isn’t covered.

Here are 10 things you should consider when choosing an insurance agent:

Direct Writers vs. Independent Agents: There are two different ways to get coverage from an insurance company. Direct writers are insurance companies that hire their own sales people to write exclusively for that one company; they work for the company that employs them. Independent agents work for the insured, not the company. However, they have contracts with multiple insurance companies and can usually offer you more options.
What type of insurance do you need? Some agents will offer many types of insurance and some will be limited in their offerings. For example, some might only offer personal lines insurance whereas others will offer both personal and commercial lines. If you own a business and are looking for an agent to write your commercial insurance, you want to make sure they have some experience in your industry.
Technical Knowledge & Credentials: You should always ask the agent about their experience before trusting them as your insurance advisor. One indication of their technical knowledge is if they have letters after their name. These letters stand for professional insurance designations that signify a higher level of experience and competence. Some of the more common designations are CIC, CPCU, ARM and CRM. Other things to look for are years of experience and education.
Personality Traits: Agents get paid commissions by the insurance company, so it is important to find one that is honest and trustworthy. They also should be passionate and enthusiastic about what they do, and of course, you should like your agent. It’s much easier to do business with people we like than people we don’t.
Questions to ask: It is okay to ask questions when looking for an agent. In fact, you should be asking questions when deciding who you want to work with. Some good questions are:
- What are your areas of expertise?
- What is your reach? Are you local? Statewide? Nationwide?
- What is your experience in my industry? How many years have you been writing this type of insurance?
- Do you have any client references?
- How long have you been in business?
- How many companies do you represent? Which ones?
Do your homework: Before selecting an agent, you should first do your homework on the agent as well as the agency they’re associated with. Your first step is to google the agent’s name and agency. Are there any news articles about them? Have they faced any lawsuits? Are there any reviews? Have a look at their website. Is it professional? Are there any testimonials? You may also want to look at their social media pages (Facebook, LinkedIn, Google+, Twitter, Instagram) for reviews and educational content.
Expectations: A good way to gauge if the agent can live up to your expectations is by asking them for a quote before you commit to doing business with them. This should give you a good idea of how efficient they are (how fast they can get you a quote), how thorough they are when explaining what coverage you’re afforded in the policy, why the price varies if more than one quote is provided.
Detailed written proposals: Once your agent gets quotes for your business, you should review them carefully. There are different types of carriers and coverages can vary dramatically. Some carriers may have exclusions on their policies removing important coverages. Make sure you work with the agent to ensure you have the coverage you need, even if that means paying a little more.
What to expect after binding coverage: Your agent’s job is not done once you’ve bound coverage and your expectations of them should not end there either. Customer service is what is going to separate a good agent from a great agent. Say you purchased a new piece of equipment, built a new structure or underwent renovations—all of these things, along with many others, can affect your insurance policy. Your agent should be checking in with you periodically throughout the year to ask about any changes that might affect your policy. Your agent should be one that is approachable and reachable at all times because when things do happen, that is when you’ll need them most.
Times change—stay active with your insurance coverages. As mentioned above, you need to stay active with your insurance coverage because things do change over time. Your agent should also be keeping you up to date on important regulations, new laws, changes with your carrier and anything else that might affect you as the end customer.

Of course there are other things you might want to consider when choosing an insurance agent (How close/convenient is their office? Are they licensed in other states if you ever decide to relocate or open another location?), but these are the 10 things we find to be most important when trusting someone to provide you with the best coverage for your individual needs. Remember, you can always switch agents, but it is much better to do your research beforehand and find a great one that you can work with for many years to come.

Kim Rushlow is a Commercial Underwriter at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

March 23, 2015by Jen Davey Jen Davey No Comments

General Liability Claims: 10 Tips to Help Prevent Them

General liability claims can come at any time, in any form. Purchasing insurance for this type of exposure is the first line of defense against many common claims.

General liability insurance covers claims of bodily injury or other physical injury, property damage, personal injury (including slander or libel) and advertising injury. The purpose of GL coverage is to protect your business against incidents that may occur on your premises or at other covered locations where you normally conduct business. It can protect your business against significant financial loss resulting from claims of injury or damage caused to others by you or your employees.

Just because you have purchased a commercial general liability insurance policy doesn’t mean you won’t have to pay some of the cost out of pocket, even if the claim is covered! Aside from the potential unexpected expense, dealing with claims can be mentally draining and can even harm the reputation of your business. Although you may have purchased coverage for this type of exposure, it is important that as a business you also do your part in preventing these claims.

Here are 10 ways your business can assist in general liability claim prevention:

Parking Lots & Sidewalks: Parking lots and sidewalks should be routinely inspected and maintained. During the winter season, be sure to perform timely maintenance of parking lots. Have the parking lot plowed by a professional if snow has fallen. You should also inspect the parking lot for any potholes that may need to be filled. While tending to the parking lot, do not forget the sidewalks! Be sure that they, too, are shoveled and cleared.
Slippery Surfaces: During the spring especially, snow can melt from above-freezing temperatures during the day and re-freeze from below-freezing temperatures at night. Use sand and/or salt in outdoor areas that are known to freeze and might be slippery (sidewalks, front entrances – especially brick surfaces, patios, etc.).
Interior/Exterior Lighting: Incidents are more likely to occur in dark or poorly lit areas. Check all lighting both inside and outside of the property (especially in the parking lot) for “dark spots” to ensure that all areas are properly illuminated.
Flooring: Periodically examine the rugs and flooring for any “lifting” or repairs to avoid trips and falls. If any repairs need to be made, do so immediately. Slip-resistant floor materials and treatments should be applied to necessary areas (including dance floors).
Spills & Wet Surfaces: Ensure rapid cleanup of spills and use movable “caution” signage. If the interior floor is wet from rain or melting snow being brought in by patrons, be sure to utilize “caution” signs to notify the public of the wet floor.
Furniture & Fixtures: Check chairs and tables for any “rickety” spots that could cause drinks or food to fall, or even worse, an individual! Ensure all tables and chairs are stable. A routine maintenance program should be implemented to inspect and repair furniture and fixtures.
Bathroom Safety: Place restroom soap and hand dryers/paper towel dispensers in areas where soap and water drips are minimized. All restrooms should be cleaned on a regular basis to avoid water or soap leakage, especially from customers and employees washing their hands.
Stairways: Install handrails on stairways and ramps. Slip-resistant floor materials should be used on all stairways. Elevators and escalators should also be inspected and maintained regularly (if applicable).
Fire Safety: Inspect all smoke detectors to ensure that they are completely functional and do not need to be replaced. Also make sure that all exits are clearly marked. Emergency power sources for egress lighting should be tested regularly. Appropriate kitchen fire safety equipment should be installed and routinely cleaned and inspected.
Establishment at Large: Review the establishment as a whole to ensure a safe environment for patrons and employees. The layout of the restaurant should be carefully planned to avoid any incidents (i.e. tables are not placed near doorways, stairs, opening doors, etc.). You should also adhere to maximum occupancy regulations, ensure egress areas are maintained free and clear, separate delivery areas from patron parking and entry areas (if applicable), ensure parking lots contain minimal shrubbery and vision obstruction for patron security, and you should also utilize exterior cameras wherever appropriate.

Hospitality Insurance Group strides to do our part in providing coverage for your general liability needs. With just a few steps, our insureds can help in preventing general liability claims! Together, we can make a great team for years to come!

Michele Wright-Nealand is a Jr. Underwriter at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

February 16, 2015by Jen Davey Jen Davey No Comments

Assault & Battery: Where’s the Coverage?

Most insurance agents would not expect to see an assault and battery exclusion on their client’s CGL policy. However, when it comes to establishments that serve a high percentage of alcohol, it is not uncommon for carriers to apply a specialized exclusion for this exposure.

Do you know if your client is properly covered?

Even though they may be receiving some form or limit of assault and battery coverage on their liquor liability policy, this doesn’t necessarily mean they have coverage on their CGL, especially if that coverage is written through another company. These common exclusions could lead to aggravation and even worse, denial of coverage in the event of a claim.

Let’s apply this to a real scenario.

The latter occurred several years ago when an establishment purchased two separate policies from an independent agent to cover both their general liability and liquor liability exposures. The incident involved a patron who died from injuries he sustained after being pushed off the front step of a bar by another patron and hitting his head on the pavement. The estate of the deceased patron filed a wrongful death lawsuit naming both the attacker and the insured as defendants.

Shortly after receiving the suit papers, the insured learned of an assault and battery exclusion on their CGL policy. They also received a denial from their liquor liability carrier. The denial cited that the matter should have been picked up by the CGL. A subsequent suit was later filed by the bar against the agent claiming that they failed to provide insurance coverage that would have protected it from claims resulting from the incident.

So the big question is, could this have been avoided?

This nightmare scenario may have been avoided if the agent had found suitable coverage for these exposures through a carrier willing to insure them properly. Most surplus lines carriers will offer an attractive price but will carve out the most important coverage that your client needs through various exclusions and/or restrictive endorsements.

So what are you really paying for with a non-admitted “surplus lines” carrier? If you are fortunate enough to receive a sublimit on these coverages, then the defense costs will more than likely be within those limits. This means that if the loss is severe enough, it is possible that those policy limits could be exhausted on defense costs alone! The competitive pricing that gave you the edge at the point of sale will quickly be overshadowed by an uncovered claim and your client will be looking to you for answers.

What would happen if a fight broke out at your client’s establishment and your security staff failed to de-escalate the situation properly? Would there be coverage? What if an employee became too physical while escorting a patron off the premises? How would your policy/policies respond? These are some of the key questions that need to be answered when securing coverage.

You can prevent this from happening to you.

When reviewing coverage with your clients, make sure that they are receiving the protection that they need. Roughly two-thirds of our claims involve an assault and battery incident on premises where the over-serving of alcohol may or may not have been alleged. This is why it is extremely important to make sure both liquor-related as well as non-liquor-related assault and battery coverage is being provided.

Don’t wait until after a loss has occurred to determine if your client has the coverage they need. At HIG, we pride ourselves on educating agents on the hazards associated within the bar and restaurant industry. Call us today to find out how we can help you provide your clients with the most comprehensive risk transfer solutions they need to mitigate future losses and give them the peace of mind to focus on what truly matters, the customer.

Frank O’Malley is a Sr. Commercial Underwriter at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

January 19, 2015by Jen Davey Jen Davey No Comments

Insurance Made Simple: Part II – Business Income Insurance, Ah the mystery of it all!

Most businesses would never think of going without property and liability insurance. Even if they do wish to go without it, often times that’s not even an option. For many, the mortgagee requires the purchase of insurance to protect their financial investment.

The reality for many insureds is that the key to surviving a disaster may very well depend on the firm’s loss of income protection. The fact of the matter is, “When trying to control financial risk, insurance is the cornerstone. And business income insurance can prove to be the foundation for survival of a business whose operations have been interrupted by a devastating loss” (Adjusters International).

So what is Business Income insurance?

Business Income, as it relates to Business Income insurance, is defined as the net income (net profit or loss before income taxes) that would have been earned or incurred, plus continuing normal operating expenses including payroll. Business Income insurance provides a business whose operations have been interrupted by a covered cause of loss, with income equal to what the firm would have enjoyed had no loss occurred. The goal of Business Income insurance is to pay for the sale that would have been, had no loss occurred.

How does it work?

Business Income insurance is not sold as a stand-alone policy but as an endorsement to the property or package policy. The coverage of Business Income insurance is triggered by the total or partial suspension of business operations due to loss, loss of use, or damage to all or part of the building or business personal property as the result of a covered cause of loss. The key point here is that the Business Income loss MUST be covered under the property coverage form for the policy to pay out.

Business Income insurance typically has a 72-hour deductible, meaning no coverage exists until the 72 hours are up. It is important to understand that this means the policy does not go back to day one to determine the amount of loss; it will pay only for loss of income after the deductible period.

It is the policyholder’s obligation to prove a Business Income loss. Proof usually comes in the form of documentation. It is imperative that the insured keeps good records (profit and loss statements, tax forms, payroll records, etc.) to verify the amount that has been lost. The insurance company will compare the records to the previous year’s and previous month’s records to help determine what the loss actually is.

Coverage Options and Limits

Now that we understand how important and critical Business Income coverage is for an insured to prevent financial ruin, the next step is to understand the coverage options available, which one is best for your client and what limit should be selected.

Before we discuss the different coverage options, it is important to note that when determining the limit of liability, the worst-case scenario should be examined by asking: What is the longest period of time the insured may be shut down, and what would be the worst months for the insured to be out of business? Most businesses underestimate the amount of time it takes to return to normal operations. You should not overlook the time it takes for cause and origin investigations and debris removal. Securing permits can take 2-3 months, while reconstruction of the property can take several months.

Below are the most common coverage options available for Business Income insurance:

1. Coinsurance is the most common method used to determine Business Income limits, especially for those with a maximum expected period of recovery of six months or more. It is also favored because the rates are lower than other options and recovery is not limited by monthly maximums or limited payouts. However, there is a downside to the coinsurance method; the insured may become a coinsurer if the limits are not adequate enough to pay the full amount of the Business Income loss. The insurance company would penalize the insured for not buying the correct amount of coverage. The coinsurance calculation is the same as it is for property coverage Did/Should x Loss.

The best method for determining the correct limits for the coinsurance method is to complete a business income worksheet. Having a CPA or accountant assist in completing the worksheet is highly advised.

2. The Monthly Limit of Indemnity method waives the coinsurance, however, it imposes a monthly maximum payout based on a fractional percentage chosen. The standard options are 1/3 (payout 3 consecutive months), 1/4 (payout 4 consecutive months), or 1/6 (payout 6 consecutive months). The most that will be paid in each period of 30 consecutive days is the limit of insurance multiplied by the fractional percentage you choose. This option is intended for businesses that do not expect a period of recovery beyond six months.

Below is an example of how the monthly limit of indemnity method is applied:

When:	The Limit of Insurance is:	$	120,000
	The fraction shown in the Declarations for this optional coverage is:		¼
	The most we will pay for loss in each period of 30 consecutive days is:	$	30,000
	($120,000 x 1/4 = $30,000)
	If, in this example, the actual amount of loss is:
	Days 1–30:	$	40,000
	Days 31–60:	$	20,000
	Days 61–90:	$	30,000
		$	90,000
	We will pay:
	Days 1–30:	$	30,000
	Days 31–60:	$	20,000
	Days 61–90:	$	30,000
		$	80,000
	The remaining $10,000 is not covered.

Another factor to consider in choosing this option is that in some cases, much of the initial expense may be incurred in a specific 30-day period. Thus, an equal payout per month may not meet the insured’s needs. If an insured does not collect the full amount available in a given month there is NO carry over of monies to the next month.

3. Another method available is the Maximum Period of Indemnity. This option limits actual loss sustained for 120 days, subject to the limit of insurance. No coinsurance applies, but the policy will only pay for 120 days. At the end of that period there is no more coverage, even if the insured still has monies left within their limit of liability. This option is intended for businesses that do not anticipate an expected period of recovery greater than four months.

4. Actual loss sustained is another method where the coinsurance clause does not apply. The limitation for this option is that the loss must still be proven, and the proof is the amount that will be paid. There is typically a 12-month payout for this option, and many higher hazard clients (i.e. restaurants) are not offered this option.

5. Agreed Amount is the final coverage option that is available for Business Income insurance. This option pays out the limit that is agreed upon by the insured and the insurance company. The coinsurance clause is again waived and a completed and signed Business Income worksheet is made part of the policy. Many insurance companies are not willing to offer this option due to the many variables in a Business Income loss that could impact the payout.

This is certainly not the entire story behind Business Income but an overview of what the coverage is and how it can be written. Working with the insured’s CPA or accountant is always recommended when determining the limit of insurance needed.

Not understanding the coverage and writing it incorrectly to meet your insured’s needs can not only be costly for your insured from a premium standpoint but also may have a disastrous effect on your insured if they suffer a devastating loss.

In-depth courses on Business Income are typically offered from your local agents’ association along with other insurance educational facilities. These courses are usually inexpensive, especially in comparison to the disastrous results that may occur if you are providing this coverage incorrectly to your clients, or worse, not offering the coverage at all.

Business Income coverage can be one of the most misunderstood of all property coverages, which is why it is so important that you take the time to learn and understand it.

Sandra Haley is the Senior Vice President of Underwriting & Marketing at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

November 24, 2014by Jen Davey Jen Davey No Comments

Employees Drinking After Hours: A Recipe for Disaster

For bar and restaurant owners, their business is their livelihood, their pride and joy, an enormous investment they have more than likely worked tirelessly to build and maintain.

Opening a bar or restaurant is known to be a risky undertaking. Statistics show that anywhere between 60-90% of bars and restaurants fail within 1-3 years. In an industry where failure is common, would restaurant owners want to increase that risk? Probably not.

Whether to the owner’s knowledge or not, many bar and restaurant employees engage in an activity that seems to be a common trend in the industry – drinking on premises after their shift, most commonly after hours. Whereas the owner may not always be privy to this activity by their employees, it exposes their business to potential disaster.

With the holidays around the corner, it is important to discuss the potential consequences associated with employees drinking after closing.

A risk you should not be willing to take

Numerous bartenders and restaurant employees alike see this common practice as a fringe benefit of working in the industry. Just like many of us, bar and restaurant employees like to wind down after work with a drink or two, or three, or maybe even four. This practice is far more common around the holidays when employees are working longer hours. Many bars and restaurants even throw their holiday parties on premises after hours. Buy Caverta online

It is certainly not in the best interest of the owner to allow their employees to drink on premises after their shift. Federal traffic safety data shows that the daily death toll from drunk driving during the holiday season is significantly more than the rest of the year. By the time bar/restaurant employees are done with their shift, sometimes spending 12 or more hours on their feet, they are likely to be exhausted. Combine exhaustion with the effects of alcohol and you have a recipe for disaster. Never mind the fact that some employees may not even be of the legal drinking age. Or that allowing people to drink on premises after hours may very well be a violation of the establishment’s liquor license, which is often a vital part of the operation.

Allowing this behavior can have devastating consequences. It is the type of behavior that can be too costly for the establishment to bear. It could even be deadly.

A lethal combination

In December of 2011, one of the nation’s most highly regarded restaurants saw their worst nightmare unfold. A nightmare that amounted to a million dollar settlement from a drunken driving crash.

The incident occurred at 4 a.m. when an employee of the restaurant caused a crash that killed a 32-year-old man. This employee had a blood-alcohol level of .024%, three times the legal limit. He was charged with felony driving under the influence.

The family of the man who was killed in the accident filed a wrongful death lawsuit alleging that the restaurant allowed their employee to drink excessively after hours and then get in his car and drive. This restaurant that was named “Best New Restaurant in America” by Bon Apetit Magazine and was also ranked one of the “101 Best Places to Eat in the World” by Newsweek. Modafinil USA

How could this happen at such a highly regarded establishment?

The dining group that owns this restaurant and three others already had a policy in place that prohibits employees from drinking on the premises. According to the president of the dining group, no consumption of alcohol was to be allowed by any employee in the workplace. In this case, there was a clear violation of this policy and that is simply the problem. It is easy for a business to put a policy in place but enforcing it is usually the difficult part.

How can you ensure this will not happen to you?

As with anything, there is no guarantee that something of this nature cannot and will not happen to you, but there are steps you can take to curtail the risk.

Here is what we recommend:

Implement a no-tolerance policy prohibiting employees from drinking on the premises before, during and after their shift.
Enforce this policy. (How, you might ask?)
Train your employees – There are many courses available to educate your employees on the potential dangers of alcohol – over serving a patron, serving a minor, serving a patron who is already intoxicated, etc. Some insurance companies even offer a discount on their insurance to those establishments that have trained their staff, click here for more information.
Install surveillance cameras inside your establishment and check them regularly to ensure employees are not drinking before, during or after their shift.
Do not give second chances. If you catch an employee drinking during or after their shift, terminate them immediately.

The bottom line here is this: not only could you lose a valued employee from an OUI, or even worse, a serious injury or death, but you jeopardize your business if you allow your employees to drink on premises after hours. For most of you, your business is your livelihood – is that worth risking?

John W. Tympanick is the President & CEO of Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

October 20, 2014by Jen Davey Jen Davey No Comments

Bar and Restaurant Insurance for Dummies Part I: Underwriting the Risk

As a new entrant to the industry, I have been faced with the challenge of learning the complex world of insurance. There is more to know about insurance than most people could learn in a lifetime, so for the purpose of this series I am going to focus on a specific class of business that I have learned about over the past year and a half: bar and restaurant insurance.

A challenging class

First and foremost I think it is important to point out that the bar and restaurant industries face challenges that make it a difficult class of business to underwrite.

Some of these challenges include:

High failure rate – Some studies show that up to 90% of bars and restaurants fail within the first year in business. Many speculate about the accuracy of this number, but the fact of the matter is that opening a bar or restaurant is a high risk venture.
Cash nature – The cash nature makes it difficult to determine the actual exposure. To rate these risks, the underwriter looks at both the dollar amount of food and liquor sales as well as the ratio of liquor to food sales. It is hard to determine the accuracy of these numbers when a lot of the sales are cash transactions and are not always recorded.
Exposures created by off-premises activities – It is not uncommon for a bar or restaurant to run off-premises activities in connection with their establishment. These activities create additional exposures and are not always reported on the application.
Parking and transportation/delivery – Parking and transportation/delivery present their own challenges. Many injuries occur in parking lots, and there are quite a few instances where an employee must leave the premises in the scope of their work, say to run an errand for the business. What if something were to happen while they were working but off the named premises? If a restaurant has delivery service, that is an entirely separate challenge in itself.
Blurred line between liquor liability and general liability losses – It is not always easy to determine if a loss is covered under the general liability or liquor liability policy. For this reason, it is always a good idea to have both the general liability and liquor liability with the same carrier if possible.
State dram shop laws – Dram shop is a term for laws that hold retail establishments and sometimes social hosts responsible for damages caused by serving alcohol to an obviously intoxicated patron. Each state varies as to whom is liable when an intoxicated patron, guest or minor causes injuries to oneself or to other.
Cooking exposure and risk of fires – Any kitchen with a full cooking exposure is automatically at a higher risk of fire loss. There are risk prevention techniques that can be put in place to minimize the risk of fire, but it is hard to keep track of when and if these techniques are implemented.

Through the underwriter’s eyes

When an underwriter looks at a bar/restaurant submission, they consider the many different qualities that make the risk unique while also keeping the challenges noted above in mind.

There is a laundry list of items the underwriter takes into consideration when making a decision on a) whether or not they want to write the risk and b) how they are going to rate it per the exposure. The items they consider are called risk evaluation factors, some of which include:

Class of business (restaurant, bar, night club, caterer) – Different classes of business have different exposures, plain and simple.
Hours of operation – Establishments with longer hours are at a greater risk for loss, especially if they are open late or do not close at all.
Clientele and location – Both the clientele and location can make a world of difference in determining the exposure of the risk.
Entertainment – Any form of entertainment automatically increases the chance of loss. Establishments bring in entertainment to attract a larger crowd than they would have otherwise, which increases both the sales and exposure.
Promotions – Much like entertainment, promotions are meant to bring in more patrons than normal. People tend to both eat and drink more during promotions because they are getting the same thing at a lower cost.
Years in operation – As previously mentioned, the bar and restaurant industry has a high failure rate. The longer the establishment has been in operation, the more experience the owner(s) are likely to have.
Owner’s experience in bar/restaurant business – The longer the owner(s) have been in the business, the better. Experienced owners are usually more responsible and know how to train their employees to minimize their risk.
Security – employees or subcontractors? Security personnel are important to have, especially in a busy bar environment. However, there are some implications if the security personnel are subcontractors, not employees of the business.
Alcohol server training – It is important that bar and restaurant employees are educated on how to responsibly serve alcohol and recognize those that are intoxicated. Many companies even offer a discount to those that utilize these programs.
Adult entertainment – I don’t think I have to explain much here…

The underwriter takes each of these risk evaluation factors and does with them exactly what the term implies – they evaluate the exposure each factor presents and rate the risk accordingly.

There are many different exposures (types of loss) that bars and restaurants face, some of which are common to any business and some that are particular to this industry. In Part II of this series, I will discuss some of the specific coverages that are essential for bars and restaurants.

Be sure to look out for Bar and Restaurant Insurance for Dummies Part II: Important Coverages.

Nicole Orchard is a Marketing Representative at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

August 18, 2014by Jen Davey Jen Davey No Comments

The Claim’s Perspective: Simple Solutions to Big Exposures

Meteorologists predict a below average hurricane season for this year though business owner policyholders know that forecasts are not an exact science. Unpredictable weather patterns pose an ever present threat of moderate to catastrophic physical damage and interruption to their business operations. Case in point is Revere, MA.

On June 28, 2014 it may have surprised you to learn that a tornado with wind gusts of up to 120 mph touched down north of Boston and in only four minutes left many businesses uninhabitable because of extensive physical damage to buildings, flooding and widespread power outages. What is worse than being a business owner impacted by this tornado is an owner who, as a result of this event, learns that he or she is underinsured and will not be able to restore their employees’ jobs and resume their business operations. Knowing the scope and nature of the commercial property insurance you purchase, when you purchase it, makes an unpredictable weather event more foreseeable in terms of the degree to which it might impact you, your employees and your patrons.

Just as important as understanding the extent of coverage afforded to you by your commercial property policy is a business owner’s responsibility to inspect and diligently maintain the exterior and interior of their business. This can not only mitigate the extent of potential property loss, but it can, in some instances, completely eliminate loss exposures such as flooding and fire.

Unlike storm related events, this type of loss exposure is both predictable and almost entirely preventable, yet we still see catastrophic losses that threaten the lives of employees and patrons and/or result in devastating physical damage and loss of business income. This exposure is created when a business owner fails to routinely inspect, clean and maintenance their commercial cooking operation and fire protection systems. Kitchen exhaust fires are becoming more common, and the burden is ultimately on the business owner to select a contractor that can provide the proper service and help him/her comply with national and industry standards that pertain to fire safety requirements. Simply hiring an unqualified or the cheapest contractor (with no or inadequate insurance) will not prevent the cost of a fire.

Too often we have business owners sustain flooding throughout the interior of their buildings, which leads to temporary closure, clean-up costs and food spoilage losses. As we investigate these types of losses, we occasionally discover that the cause of the flooding is not direct physical damage to the building by a covered cause of loss but rather a poorly maintained or dilapidated roof that allowed water to damage the interior contents and building structure. Consequently, these business owners must then absorb the cost of the repairs on their own if the commercial property insurance policy they purchased does not cover damage caused by wear and tear of the roof. Whether you are the building owner or a tenant, routinely inspect your business, and if you discover something in need of repair, don’t hesitate to fix it. You will likely find that the repair cost is a small fraction of the cost you may incur if a water damage claim is not insurable under your commercial property insurance policy.

Below are a few best practices of commercial property insurance policyholders:

Carefully choose commercial property insurance policy that best fits your business operations. Be sure to consider the inherent and not so inherent risks associated with it
Adhere to a schedule of routine inspections for cleanliness or possible repairs
Upon discovery of any issues, incur the cost and do not delay action
Do not let a property loss be the only opportunity you have to learn the nature and scope of your commercial property insurance policy
Contact your agent if there is a property insurance coverage you do not currently have but would need to resume operations in the event of a loss

Stephanie Connon is the General Counsel, VP of Claim Operations and Assistant Secretary at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

July 21, 2014by Jen Davey Jen Davey No Comments

Insurance Made Simple: Part I – Property Insurance

Helping you and your customers understand the confusing world of insurance!

Insurance companies seem to have their own language. Knowing what coverage to buy and how much of it you need is a mystery to most business owners. Insurance is not as confusing as most insurance companies make it out to be, and I’m here to help you understand it! Here is the simplified version of what coverages are typically offered and why you might need them.

Business owners need to protect their property. If you own the building that your business occupies, property insurance provides a wide range of coverage for the building, furniture, fixtures, machinery and equipment, stock, and all other business personal property owned by you and used in your business. Losses from fire, severe weather (including windstorms and lightening), theft and vandalism, water damage, explosion, along with many other perils, are typically covered under a commercial property insurance policy.

If you are a business owner that does not own the building you occupy, a commercial property policy will also provide you coverage for your contents that includes furniture, fixtures, machinery and equipment and stock. You can also purchase insurance for the improvements that you have made inside the building that you won’t be able to take with you when you leave the property but still want to be covered if a loss occurs.

Insurance policies offer you the option of insuring your building and/or contents for one of two options: Actual Cash Value or Replacement Cost.

So which one do you select? Is there a better option?

Actual Cash Value is what is used to determine how much the insurance company will pay you for the value of the loss or damaged property. It is the value of your building or contents based on the cost to replace or repair them, minus depreciation. Actual Cash Value is typically the cost that the property could be sold for, which is always less than what it would cost to replace it.

Replacement Cost is the actual cost to replace an item or structure at its pre-loss condition, without any deduction for depreciation.

You still may be wondering which one is better. Well that depends on your individual business plan and how much you want to spend on insurance. Regardless of the valuation option that you select (Actual Cash Value or Replacement Cost), you will never get paid more than the limit of insurance you purchase on your policy. It will cost more for you to insure your property at Replacement Cost because you will need to purchase insurance for the value that it will cost to actually replace the property. There are cost estimators that are specifically made available to insurance companies/agents that help determine the “right” amount of insurance to buy for Replacement Cost.

If you choose the Actual Cash Value option, you need to purchase enough insurance for the cost to repair or replace the damaged property after the deduction for depreciation. This amount of coverage is less than the Replacement Cost option, so the insurance premium will be less. But remember, if there is a loss, you will have to pay the difference out of pocket for the cost to replace or repair the property at today’s prices (since the insurance company will pay you a reduced amount due to the depreciation deduction).

Are you going to rebuild after a loss? Another important factor to consider in determining how you want to insure your property is if you are going to rebuild or replace the damaged property after a loss. Replacement Cost policies will only pay the Replacement Cost if you indeed replace or rebuild after a loss. If you decide you don’t wish to continue your business operation, then the policy will pay you the Actual Cash Value. It will not pay out Replacement Cost if no replacement is being made!

What about flood? Most commercial property policies exclude coverage for flood. So if you live in an area where flooding is prevalent, you will need to purchase a separate flood policy. You can purchase flood insurance from the National Flood Insurance Program that is managed by the Federal Insurance and Mitigation Administration (FIMA). Some individual insurance companies offer flood insurance as well, but it is best to discuss your options with your insurance agent.

Equipment breakdown is another “typical” insurance coverage that business owners should purchase. Many commercial property policies automatically include this coverage. Every business owner has some sort of equipment they need to run their operation, no matter how small the business is. Equipment breakdown provides coverage for air conditioning units, boilers, communication systems, computers, electrical equipment, freezers, P.O.S. registers, security systems, walk-in refrigerators, and almost anything electrical. This coverage protects the business against any equipment repairs or replacement expenses, labor costs, and other expenses to get back in business as a result of a covered loss. State mandated boiler inspections are also included with the purchase of this coverage… Think of it as an added benefit!

Although there are many more property coverages that business owners can purchase, the ones listed above are the “typical” ones you’ll need if you are a business owner.

If you found this article helpful then be sure to stay tuned for future Insurance Made Simplearticles:

Part II – Business Income Insurance – ah the mystery of it all!

Part III – Comprehensive General Liability Coverage – how to protect the company’s assets

Part IV – Liquor Liability – who needs and why the CGL policy is not providing coverage!

Sandra Haley is the Senior Vice President of Underwriting and Marketing at Hospitality Insurance Group.

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.

June 23, 2014by Jen Davey Jen Davey No Comments

6 Tips for a Safe 4th of July Weekend

The 4^th of July is a time for family, friends and FUN! It’s an all-American weekend known for its barbeques, beaches and fireworks. It also means heavy drinking for some. We want everyone to have a FUN holiday weekend, but we also want you to have a SAFE one.

Here are 6 things we think are important to think about before celebrating this upcoming weekend:

Hydration – When you’re laying out on the beach with your friends or playing horseshoes in your backyard with family, it’s easy to forget to stay hydrated, especially when consuming alcohol. According to the American Heart Association, “Dehydration can be a serious condition that can lead to problems ranging from swollen feet or a headache to life-threatening illnesses such as heat stroke.” They recommend that water is the best thing to drink to stay hydrated, but that doesn’t necessarily mean you need to consume gallons of water. Many fruits and vegetables contain a high percentage of water, such as blueberries, oranges, peaches, pineapples, plums, raspberries, cantaloupe, watermelon, celery, cucumbers, iceberg lettuce and tomatoes, so pack some healthy snacks as well!

Hydration is especially important if you’re going to be drinking. To stay hydrated while consuming alcohol and minimize the likelihood of a hangover, you should:

Have one glass of water for every alcoholic drink you consume
Be sure to drink plenty of water before spending a day drinking in the sun
Choose an alcoholic drink that includes at least some water or mix a bit of water in with your beverage
Choose hydrating snacks, like some of the fruits and veggies mentioned above that have a high water content and limit your salt intake (avoid sodium-filled snacks like potato chips, pretzels and nuts)
Mix alcoholic drinks with hydrating juices and use plenty of ice (frozen cocktails are great for a hot summer day!)

Grill Safety – Nothing says “It’s 4^th of July” better than the smell of burgers and dogs on the grill. While indulging in these American staples, it’s important to remember that grills can also be dangerous if not used properly. June and July are the peak months for grilling fires. Gas grills alone have been involved in an annual average of 7,200 home fires from 2007-2011, while charcoal or other solid-fueled grills were involved in an annual average of 1,400 home fires (NFPA’s “Home Fires Involving Cooking Equipment). The National Fire Protection Association offers the following tips for grilling safety:

Propane and charcoal BBQ grills should only be used outdoors
Be sure to place the grill well away from the home, deck railings and out from under eaves and overhanging branches
Keep children and pets away from the grill area
Keep your grill clean by removing grease or fat buildup from the grills and trays below the grill
Never leave your grill unattended
Always have a fire extinguisher on hand or know where one is located if you are not at your home (check it beforehand to make sure it is not expired!)

If using a propane grill, you should also be sure to check the gas tank hose for leaks before using it for the first time each year.

Fireworks – Fireworks are an Independence Day essential. In fact, most people can’t imagine their Independence Day weekend without them. Although beautiful to look at, fireworks can also be extremely dangerous. The United States Consumer Product Safety Commission states that on average, 200 people go to the emergency room every day with fireworks-related injuries in the months round the July 4^th holiday. They suggest the following safety tips when using fireworks:

Never allow children to play with or ignite fireworks
Avoid buying fireworks that are packaged in brown paper because this is often a sign that the fireworks were made for professional displays and that they could pose a danger to consumers
Always have an adult supervise fireworks activities. Parents don’t realize that young children suffer injuries from sparklers, which burn at temperatures of about 2,000 degrees – hot enough to melt some metals
Never place any part of your body directly over a fireworks device when lighting the fuse. Back up to a safe distance immediately after lighting fireworks
Never try to re-light or pick up fireworks that have not ignited fully
Never point or throw fireworks at another person
Keep a bucket of water or a garden hose handy in case of fire or other mishap
Light fireworks one at a time, then move back quickly
Never carry fireworks in a pocket or shoot them off in metal or glass containers
After fireworks complete their burning, douse the spent device with plenty of water from a bucket or hose before discarding to prevent a trash fire
Make sure fireworks are legal in your area before buying or using them

It is also important to realize that animals (dogs especially) can be afraid of fireworks and may act out if they’re frightened. Be sure to know how your pets react to the loud noises if they’re going to join you in your celebrations. If you have small children, keep them away from animals you don’t know or are unfamiliar with as you never know how they may react.

Drinking & Driving (and yes, that includes boats and jet skis) – According to data from NHTSA, during July 4^th weekend, from 2008-2012, 765 people lost their lives in crashes involving drivers with BAC of .08 or more. These fatalities account for 40% of all motor vehicle traffic fatalities over this same five year-period. Nobody wants a weekend of fun to turn tragic, so do yourself and the millions of other people on the road a favor and use a sober driver. If you don’t want to stay sober, STAY where you are. Your life is more important than anywhere you might want to be. Often times, people learn the consequences of driving under the influence when it’s too late. Don’t let that happen to you – be proactive instead of reactive when it comes to drinking and driving.

Rip Currents – The coastlines are filled with beachgoers over this festive weekend. You may find yourself diving into the cool ocean water for a break from the hot sun, but swimming in the waves of the ocean is much more difficult than swimming in a pool. The ocean currents and conditions can change quickly and drastically, so it’s important you’re aware of the state of the water you’re swimming in. You should be aware of the following things when swimming in the ocean:

Swimming in currents and waves can cause fatigue more quickly than in a swimming pool
Smooth water located between breaking waves could signal the presence of a rip current
Be sure to ask the lifeguard about use of floatation devices before bringing them into the water
Your body cools quickly while in the water, so limit your time and get out of you start to feel cold (although you’ll probably be cold the second you step in if you live in the northeast)
Be sure to check and obey warnings posted on the beaches
Be sure to take your cell phone to the beach and in case of an emergency, when the lifeguard is not present, call 911

Sun Protection – While enjoying your weekend with your family and friends, people often forget to apply and reapply sunscreen. You may not even realize you’re getting a sunburn until the next day when you’re in complete agony and can’t move without feeling a burning pain. Sunburn’s may seem just like a temporary irritation, but long term exposures to excess UV radiation can cause skin cancer, eye damage, immune system suppression and premature aging, especially for children. One blistering sunburn in childhood or adolescence more than doubles a person’s chances of developing melanoma later in life (Skin Cancer Foundation). To avoid sunburns, you should:

Avoid direct sunlight during the sun’s peak hours (10:00am-4:00pm) or at least limit your direct exposure
Always wear a broad-spectrum sunscreen with a sun protection factor (SPF) of 15 or higher
Reapply sunscreen every two hours – or more often if you’re swimming or perspiring
Cover your skin tightly with women long-sleeved shirts, long pants and wide-brimmed hats (especially children)
If you have fair skin or burn easily, consider laundry additives, which give clothing an additional layer of ultraviolet protection for a certain number of washings. You can also purchase special sun-protective clothing that is specifically designed to block ultraviolet rays

We want everyone to enjoy their 4^th of July weekend, but it’s important to recognize and understand the dangers that come with the American holiday. Having seen many tragic accidents, we think it’s better to be educated so you can take the necessary precautions before a great weekend turns bad.

HAPPY INDEPENDENCE DAY, AMERICA!

Please be advised that the opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute a legal opinion.