General Liability

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Bar Room Brawls: 3 Assault & Battery Situations That Could Happen At Any Bar

Bar Room Brawls: 3 Assault & Battery Situations That Could Happen At Any Bar

Bar Room Brawls 3 Assault & Battery Situations That Could Happen At Any BarFor any establishment that serves alcoholic beverages, a fight possibly breaking out is always in the back of any owner’s mind.  

According to Insurance Magazine, about 30% of losses at bars, taverns, and nightclubs arise from assault and battery claims.  

 

Out of the thousands and thousands of claims filed, here are three situations we’ve worked with our policyholders when an assault and battery occurred at their establishment.

 

Case #1   

A patron alleged that he was repeatedly assaulted while exiting the establishment after the last call.  

The policyholder had purchased an assault and battery endorsement as part of their liquor liability policy issued by Hospitality Insurance Group.  

The defense attorney, hired by Hospitality to defend the establishment against this plaintiff’s lawsuit, obtained a defense verdict on behalf of the policyholder.

Case #2  

This establishment was not the type of bar that you would think would have an altercation of any sort.

A gentleman entered our insured’s establishment and was served a single drink.

During the night, the gentlemen casually conversed with other patrons until he randomly started violently attacking patrons with weapons concealed underneath his sweatshirt.

None of the injured customers could recall any signs that would have forewarned them of the assailant’s violent propensity.

This incident was a sudden and unforeseen violent crime that occurred on the insured’s premise and was covered by the assault and battery endorsement on their liquor liability policy, issued by Hospitality Insurance Group.  

Case #3

A patron appeared to have entered our policyholder’s establishment already intoxicated.

While inside, the man was said to have disturbed three different groups of patrons and was later struck by a patron inside the bar, causing him to fall and suffer a head trauma.

This policyholder had purchased an assault and battery endorsement as part of their liquor liability policy issued by Hospitality Insurance Group.  The defense attorney, hired by Hospitality to defend the establishment against the plaintiff’s lawsuit, obtained a defense verdict on the policyholder’s behalf.  

As also advised by Nightclub & Bar, general liability insurance with assault and battery and liquor liability coverage is usually the best way for restaurant owners to protect themselves in the event of a fight at their business.

When examining your insurance policy, it’s important to ask if you have assault and battery coverage. It’s not uncommon for an insurance carrier to apply a specialized exclusion for assault & battery exposure as we explain in our blog, “Assault & Battery: Where’s the coverage?Exclusions may occur, and in the event of a bar fight breaking out, a restaurant owner could be denied coverage if an incident like one of these occurs.

Not sure if you have the proper coverage? Hospitality Insurance Group is a liquor liability insurance group writing insurance for bars and taverns in Connecticut, Massachusetts, New Hampshire, North Carolina, Pennsylvania, Rhode Island and Vermont. For more information about how you can work with Hospitality Insurance Group as an Independent Insurance Agent or obtain a quote for liquor liability insurance, click here to request a call from us, email or office visit from one of our local representatives near you.

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Liquor Liability Insurance For Weddings

The most memorable day of your life has arrived. The flowers, the dress, the guest list, with so many facets of planning, it’s important not to forget about the one small often overlooked item that many don’t think about – obtaining liquor liability insurance coverage for your wedding.

Temporary event liquor liability insurance is necessary if you are catering your wedding yourself or if the venue or catering company does not have liquor liability coverage.

According to The Knot’s 2016 Wedding Study, the national average cost of a wedding is $35,329.

With a hefty price tag like that, more and more couples are looking to save on the wedding venue costs by hosting their wedding outside in public parks.

A wedding wine station, a bucket of beers, with so many creative Pinterest wedding ideas for serving alcohol, it’s important to remember that you take on the added responsibility of your guests when serving alcohol at your temporary event.

Bride’s and groom’s to be may purchase a “temporary event” or one-time liquor liability insurance policy to cover them for any potential charges that may stem from alcohol consumption at a special event that they are hosting.

There are two factors in the cost of obtaining liquor liability insurance coverage for your wedding.

  • The insurance premium cost is based on the number of people that will be in attendance
  • How long the event will last

At Hospitality Insurance Group, factors such as the type of alcohol served or whether or not your wedding has a cash bar does not affect the premium cost.  

In addition to liquor liability insurance coverage for your wedding, we also recommend reminding guests not to drink and drive by placing various signage that encourages your guests to download an app like Uber to get home.

Since summer tends to be one of the biggest times of the year for weddings, and also the hottest, it’s also a good idea to provide water bottles in a bucket of ice for guests to stay hydrated. A good rule of thumb is for each alcoholic beverage a guest has, they should have one glass of water as mentioned in our 4th of July blog here.

Not sure if obtaining a policy is right for you? Check with your local venue or catering company, or contact your local insurance agent to find out if Hospitality Insurance Group coverage is right for your wedding day.

Learn more about temporary event coverage or click here to obtain a liquor liability insurance quote for your wedding from one of our Premium Partners.

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Agent Update: New & Renewed Business

You asked, we listened! Effective March 15, 2017, Hospitality Insurance Group will be sending invoices on new and renewal business. Many of our agency partners requested that policies be mailed out upon binding with invoices enclosed in order to make it easier for payment to be remitted to us.

Effective March 15, 2017, Hospitality Insurance Group will be sending invoices on new and renewal business. Many of our agency partners requested that policies be mailed out upon binding with invoices enclosed in order to make it easier for payment to be remitted to us.

Many of our agency partners requested that policies be mailed out upon binding with invoices enclosed in order to make it easier for payment to be remitted to us.

What does this actually mean to our agency partners?

We will no longer be holding new and renewal policies for payments to arrive. Once we receive the bind order and PROOF of payment, we will be mailing our agents the policies along with the invoices. We ask that when you remit payment to us that you enclose the invoice so that we can appropriately match the funds to the correct account.

Endorsements will still be emailed electronically to your agency. The endorsement Additional Premium or Return Premium will be reflected on the last page of the revised declaration page sent to your agency and WILL not be accompanied by an invoice. There is no change to the endorsement processing from what currently exists.

We hope that you will be pleased with this new procedure!

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How New Restaurant Trends Have Affected Liquor Liability Insurance

How New Restaurant Trends Have Affected Liquor Liability Insurance 

Drinking games at bars, BYOB, happy hour, and more. As we celebrate the 25th anniversary of our CEO John Tympanick, John looks back at the last 25 years in business and how new restaurant trends have affected liquor liability insurance.

25 employees, 6 states, over 440 Massachusetts agents, and 1000+ agents across Connecticut, New Hampshire, North Carolina, Pennsylvania, Rhode Island and Vermont. John Tympanick looks back at the last 25 years as Hospitality Insurance Group’s CEO and discusses the restaurant industry trends and changes he has seen over the years that have had an impact on insurance policies.

A lot has evolved over the last 25 years. Take a look at some of the trends we’ve seen in the industry over the years and how in fact it has affected insurance policies of businesses that serve alcohol.   

Ditching The Suit & Tie

More and more companies are looking to promote a laid back workplace and offer beer on Friday’s. What many employers and HR departments don’t understand is they need liability insurance for something like that. What happens when an employee has had too much to drink, and they get in the car, and the unnecessary happens?   

BYOB

Under Massachusetts law, restaurants with 30 seats or fewer, dine-in service, or who already have existing liquor liability insurance are unable to offer “BYOB” allowing a patron to bring in their own alcohol onto their premises.

However, Massachusetts restaurants without an existing liquor license, on the other hand, may or may not be allowed to obtain BYOB licenses depending on the municipality in which they are located.

While BYOB may seem like a great alternative to restaurants that can’t obtain liquor licenses, Tympanick advises that there is still a risk involved.

“A lot of people think by letting someone BYOB; there isn’t a liability. But what happens when someone comes in with their bottle, already intoxicated, and leaves your restaurant? We think there is definitely an exposure there for the restaurant.”

A waitress in Somerville also reacted to the BYOB concept in a blog by Thrillist stating: “I wouldn’t want to work at a BYOB because it makes policing intoxicated customers and preventing over-serving difficult, “but it does shift [some] responsibility away from the server and the restaurant.”

Alcohol In Supermarkets

Remember when alcohol became available in supermarkets like Stop & Shop back in 2006?  Current laws in Massachusetts only permit a maximum of 3 liquor licenses per corporation in the state. This is why you see alcohol available in some grocery stores but not others. We do think that in the next 25 years, Massachusetts will reconsider and make more licenses available to corporations as mentioned in an article here from 2011.

Cork It

Another trend we’ve seen in the last 25 years is charging a “cork fee” where the customer brings the liquor to the restaurant, and they charge you a bottle fee. Although this may help a restaurant save on costs and space for inventory, does having a cork fee increase the liability for a restaurant because they are now charging? We believe either way there is a liability, but ultimately it’s a judge’s decision.

Sunday Funday

Possibly because of the economy, the state has become more lenient on “Blue Laws.” Back in 2003, residents of Massachusetts were not allowed to purchase alcohol on Sundays. Then in 2014, Massachusetts altered its “Blue Laws’’ to allow for retail liquor stores to open as early as 10 am on Sundays.

Increase in Claims For Assault & Battery

As for the insurance industry, insurers have opted to tighten their belts with restaurants by placing sub limits on liquor liability assault and battery coverage. Out of the total number of insurance claims by restaurants, 35% are assault and battery related, a huge increase compared to 25 years ago.

For that reason, Hospitality Insurance Group does not sub-limit their insurance policies to their insured, whereas the majority of our competition charges extra for this coverage.

Restaurants Getting Creative

With more and more restaurants opening, we see that they are looking for a competitive advantage among the competition to stay engaged with their patrons. Creative new restaurant concepts where “flaming drinks” are offered may seem innovative,  what happens if that drink burns someone? Or offering games such as “beer pong” also known as “Beirut” at bars encouraging patrons to drink more.  As more restaurants move toward computerized systems and online technology, cyber security is becoming an area with some large uninsured exposures in some cases. While cyber security is not a current offering at Hospitality Insurance Group, we do see this being a possibility in the future.

But what about the next 25 years and where the hospitality industry is headed?

As allowed by some states, including Connecticut,  restaurants can stay open until 3 or 4 am. Do we think that will end up happening in Massachusetts? Probably not, because nothing good happens after midnight, let alone 3 am.

Despite consumer interest and other states like Illinois repealing their happy hour ban, we also don’t foresee Massachusetts lifting the current happy hour ban in place.

As for Hospitality Insurance Group, Tympanick says “We’ve seen a lot of our competitors in various states stop offering liquor liability coverage for one reason or another, so we’re here to stay.”

If you’re a restaurant looking for coverage, please contact one of our state representatives to find a local independent insurance agency near you. 

by By Nicole Orchard By Nicole Orchard No Comments

Celebrating Insurance Awareness Day: All Your Questions Answered

June 28th is Insurance Awareness Day – a very exciting day for the insurance industry! It is a day for the experts in the field to share their knowledge about the perplexing world of insurance and to help you better understand the potential risks you face on a daily basis. Whether you own a business, house, car, boat or even a pet, everyone needs some sort of insurance to protect their assets. So today, our knowledgeable and experienced staff are answering some of their most frequently asked questions to [hopefully] make insurance just a little bit easier to understand.

INSURANCE AT A GLANCE

Q: Why buy insurance for my new business?

A: Insurance allows entrepreneurs to start businesses, which helps not only them but the country itself. Without insurance to protect their investment, few people would be willing to risk opening, say, a bar or restaurant. A catastrophic loss paid out of pocket could result in not only the closing of the business, but a disastrous financial impact on the owners. Transferring the risk of damage to a building from a fire, or a possible lawsuit from someone falling on the premises, to an insurer allows a business to generate economic activity that benefits the owners, the employees, and society at large.

Q: Why should I purchase liquor liability insurance?

A: States impose varying degrees of responsibility for those engaged in manufacturing, selling, or serving alcoholic beverages. Serving an intoxicated person or a minor may result in a lawsuit against you, the business owner. Depending on the circumstances, the suit may take years to resolve. Even if you are found not liable, the legal fees alone could bankrupt you and your business. Transferring the risk to an insurance carrier means you transfer not only the legal costs but the amount of the verdict, if any, up to the limits of the policy.

Q: Are bars and restaurants required to carry liquor liability insurance?

A: Some states require establishments that serve, sell or assist in the purchasing of liquor to carry Liquor Liability insurance and some do not. However, even in the states that do not mandate this coverage, as the owner of an establishment of this nature, you could be required to purchase insurance by a financial institution or a lease agreement if you have taken out a loan or if you are renting space. In any event, to carry this insurance could mean the difference between having to close your doors or continuing to run a successful business should you ever be faced with a lawsuit.

Q: Is a temporary event policy necessary if I am hosting an event where liquor is going to be served?

A: The summer holiday season is upon us and with that comes celebrations that you may be hosting. It is important to consider purchasing liquor liability insurance to protect yourself against potential claims that may arise from over service of alcohol. Once a suit is filed, all individuals involved in hosting the event could find themselves named in a suit. A temporary event policy will help to offer protection should you find yourself in this situation!

Q: What is underwriting and what role does it serve within the insurance industry?

A: Underwriting is the process of evaluating insurable loss exposures, accepting or rejecting them, classifying accepted risks, and determining the appropriate price. Underwriting serves both the insurer as well as the insurance buyers by helping the insurer avoid adverse selection.

Q: How can I save money on my insurance?

A: Most insurance companies offer cost-saving incentives for businesses that insure with them. Know what your insurance company offers for discounts and make sure you are getting all that you are eligible for. Most insurance companies have filed for insurance credits for those insureds who meet certain criteria. For example, at Hospitality Insurance Group we offer a discount for those establishments that have trained their staff on the safe service of alcohol. Many agents/insureds are not aware of the discounts that are being offered by their insurance company. You should speak with the insurance company and find out what credits they allow and make certain that you request the discount if you meet their criteria.

COVERAGES

Q: What does Coverage C-Medical Payments cover on my CGL Policy and how does it differ from Coverage A- Bodily Injury and Property Damage Liability?

A: Coverage C-Medical Payments coverage includes first aid administered at the time of the accident along with necessary medical, surgical, X-ray, and dental services. Coverage C differs from Coverage A because is not liability and pays regardless of whether the insured is legally liable.

Q: Is an umbrella policy or excess coverage necessary to purchase for my business?

A: Standard business liability coverage will be enough in most situations, but when serious situations arise, commercial umbrella insurance or excess liability coverage will help ensure that your business is protected. Umbrella/Excess liability insurance protects you when accidents happen and your existing liability insurance policies cannot cover all the expenses. Essentially, it picks up where your business auto liability, general liability, liquor liability or other liability coverage stops, providing extra protection against bodily injury and/or property damage.

Q: Is there a difference between an umbrella policy and an excess liability policy?

A: Yes there is definitely a difference between these two policies.

An excess policy also known as a follow form policy, follows the same coverage and exclusions as your underlying policies (general liability, commercial auto, liquor liability, etc.). If there is no coverage in the underlying policies then there is no coverage in the excess policy. The excess policy provides you with higher liability limits. Typically your underlying policies will provide you with limits of $1,000,000 per occurrence (each incident) with a $2,000,000 aggregate (annual policy payout). If you need higher limits you would purchase an excess policy to provide you with those higher liability limits.

An umbrella policy also expands the limit that your company already has in its existing, or underlying, liability policies. However, an umbrella policy will usually broaden coverage for things that your underlying policies may not cover. If your auto liability policy covers accidents that might occur in a specific area, an umbrella policy could expand the coverage territory.

Both policies will provide you with higher liability limits for bodily injury and property damage. However, the umbrella policy may broaden coverage for things that are not covered in the underlying policies while an excess policy will ONLY pay based on the coverage that you have in the underlying policies.

Q: Am I covered for food spoilage if my refrigerators/freezers break or if there is a power outage during a storm?

A: Depending on the insurance company and the coverage form that is being offered you may or may not be covered. Some forms include a set limit for spoilage that can be increased if more coverage is needed. Some forms will automatically include spoilage but not provide coverage for power outage. Even if the form you are purchasing does not include spoilage, almost all insurance companies will allow you to purchase spoilage coverage and include the perils you want coverage on. So be sure to do some homework here and know what you are getting in the form and what you might need to purchase as additional insurance to meet your needs.

CLAIMS

Q: If someone falls and hurts oneself on a restaurant’s premises, does the person have any recourse against the restaurant?

A: A restaurant may be liable if someone slips or trips and falls on their premises. For example, if someone slips on spilled food or drink inside the restaurant or snow and ice that has not been cleared from a walkway, the restaurant might be held liable for any injuries that person sustains. For the restaurant to be held liable, they would have to have known or should have known about the dangerous condition and failed to warn visitors or clean it up.

Q: Why is it important to report a liability claim as soon as possible even if I do not feel that there is a claim that will be pursued?

A: It is important for the claims adjuster to investigate and gather information as quickly as possible to make a complete liability decision. Failure to report in a timely manner could result in loss of important investigative material that could change the outcome of the claim. Even if you do not feel a claim will be pursued, you should report it so the adjuster can complete a thorough first party investigation in the event the other party resurfaces down the road.

Q: As a business owner, what relevant information needs to be provided when a liability claim is reported?

A: In order to assist the claims adjuster with his/her investigation it is important to provide a copy of the surveillance video capturing the incident. If available, scene photos, and witness names/contact information are also important pieces of information to provide in your incident report. The more evidence that is preserved, the better for the investigation process.

Q: What is the importance of providing an employee’s personal contact information if he/she was a witness to an incident?

A: In case the matter goes into litigation at a later date and the employee is no longer employed at the insured establishment, the claims adjuster or defense attorney will be able to make contact. Sometimes more detailed information is required.

Q: As a business owner that has suffered a loss, what are my duties after reporting the claim?

A: It is your duty to take all reasonable steps to protect the property from any further damage. You will need to maintain a record of your expenses that were necessary to protect that property from further damage to be considered as part of the settlement. Also, you will need to keep a complete inventory of the damaged and undamaged property to be considered as well. It is also very important that you cooperate with the insurance company in the investigation and/or settlement of the claim.

 

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.

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Spring is Near but Not yet Here

While spring is on its way, we are not entirely in the clear from the threats of the cold winter weather. As history shows, March is one of those months when the temperatures can fluctuate by an astounding 20-30 degrees from day to night. Today could be a warm, sunny, spring-like day and tomorrow we could face a blizzard – we really just never know what March will surprise us with.

Recent fluctuation of temperatures from subfreezing to above freezing has caused frozen pipes, and even more concerning, subsequent thawing conditions. In 2015, hundreds if not thousands of northeast business owners experienced firsthand the economic toll caused by weather-related water losses. The arctic cold we’ve experienced thus far this year is reminiscent of last year’s extremely challenging climate conditions. There is no doubt that the business owners who sustained property damage and interruption of their operations last year are now aware that they can reduce their risk of a water loss by taking preventative steps to protect their business. For our policyholders who were more fortunate, we hope the following will assist you with a better understanding of how you can prevent large water losses.

Frozen & Thawing Pipes

Pipes that are exposed to severe cold or run along exterior walls that have little to no insulation have a greater tendency to freeze. As pipes freeze, the water inside expands. This can cause the pipe itself to expand as well. Once frozen, the water that had been continuously flowing through the pipe thaws and will escape when the pipe ultimately breaks under pressure of expansion.

Ice Dams

Another type of winter hazard that business owners face are ice dams. Ice dams occur when a ridge of ice forms at the lower edge of a roof and prevents melting snow from draining adequately. Water accumulates behind the dam and can eventually leak, most often causing damage to the interior of the building.

Take Preventative Action

It is important to take preventative action and not allow a bad situation to become worse causing thousands of dollars worth of damage to your property. The following are a few steps that can be considered so that you have a profitable end to this winter season.

  1. Monitor your thermostat and maintain it at a consistent temperature 24 hours each day. This is especially important for seasonal operations that are not open during the winter months.
  2. Consider draining water from pipes that you have determined may be exposed to severe cold or are located in unheated or uninsulated areas.
  3. Inquire with a licensed plumber about allowing a minimal amount of water to flow through a pipe in order to prevent it from freezing.

The best approach for a commercial property policyholder would be to consult with a licensed plumber prior to the arrival of severe weather conditions so that you know the risks and what actions will safely reduce or even eliminate the chance of a water damage loss.

As eager as we are for spring to arrive, it is important to remember that we are not in the clear until temperatures stay well above freezing. The first day of spring is on March 20th this year and hopefully that means warmer weather as well. Until then, Hospitality Insurance Group wishes you a pleasant and uneventful end to this winter season.

 

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.

by By Sandra Haley By Sandra Haley 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.

by By Michele Wright-Nealand By Michele Wright-Nealand 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:

  1. 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.
  2. 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.).
  3. 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.
  4. 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).
  5. 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.
  6. 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.
  7. 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.
  8. 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).
  9. 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.
  10. 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.

by By Sandra Haley By Sandra Haley 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 130:

$

40,000

Days 3160:

$

20,000

Days 6190:

$

30,000

$

90,000

We will pay:
Days 130:

$

30,000

Days 3160:

$

20,000

Days 6190:

$

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.

 

by By Sandra Haley By Sandra Haley No Comments

Insurance: A Necessary Evil

Most people find buying insurance a necessary evil.  No one wants to spend monies for an intangible item like insurance, but having it is not only a smart business decision in order to protect your property and your financial assets, it is usually a condition of getting a mortgage on a building. Some people purchase insurance for peace of mind, some purchase because they are forced to, and others purchase because they have suffered a prior loss and did not have insurance to cover the loss!

Your business faces plenty of threats—from fire to fraud, dishonest employees to dissatisfied customers and disconnected utilities. It’s important to understand the risks your business faces and what coverage you need to protect yourself.

Property insurance, which protects buildings and their contents such as equipment, furnishings and inventory, is the most popular kind of protection for small businesses. Banks and mortgage lenders insist you carry property insurance. Why do they care? Insurance protects the lender’s investment in case the property is damaged.

Business interruption insurance pays not just the lost sales, rent and payroll costs while you rebuild your business after an accident, but it also pays for you to rent a temporary office or equipment so you can get back on your feet quicker.

General Liability insurance is less common than property insurance among small companies but arguably more important. A claim for a serious injury could easily wipe you out. Liability insurance covers any injury or damage your company might cause to other people, their reputation or their property.

Liquor Liability insurance is mandatory in some states if you are in the business of serving or selling alcohol, but in many states it is not required.  Liquor liability pays if you are negligent in serving a minor or in over serving an individual who leaves your establishment and gets into an accident harming themselves or innocent people. When purchasing liquor liability coverage, be sure that your policy includes Assault & Battery coverage!

Before you go shopping for insurance, investigate what perils a company in your industry is most likely to face and which could threaten your company’s survival. It’s always better to play it safe!

Sandra Haley is the Senior VP 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.

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