For many people, bars, restaurants, and nightclubs are the go-to places for socializing, having drinks after work, or watching a game. However, these establishments are exposed to particular risks because they allow third parties into their premises and serve food and alcohol to the public. Poor food preservation, liquor serving practices, and unruly patrons can lead to costly insurance claims and lawsuits.
Here are some of the risks your hospitality business may face:
- Liability Claims
Lawsuits emanating from liquor liability are quite common, and your hospitality business can be sued for property damage or bodily injury caused by an intoxicated patron either within or away from your premises. A single liquor liability claim can financially devastate your business. Liquor liability claims can stem from overserving patrons, not complying with applicable legislation, and selling alcohol to underage individuals.
Your hospitality business is also exposed to premises liability, meaning you may be held responsible if someone is injured at your premises. Injuries often result from slips, trips, and falls. An even surface or spilled drink can lead to costly insurance claims. Premises liability risks for bars, restaurants, and nightclubs are even higher because alcohol often impairs motor skills, increasing accident risk.
Food safety, the primary source of product and food liability, is another important consideration. For any business that serves food, the risks of food spoilage, poisoning, contamination, and allergic reactions are always present. If a customer becomes ill due to the food you’ve served, your business could face legal consequences, and you may suffer immense reputational damage.
- Property Damage
Bars, restaurants, and nightclubs face substantial property loss exposures. Possible causes of such loss include natural disasters, equipment failure, customers, third parties, and employees. When considering property exposures, water and fire damage are particularly concerning. Hospitality businesses have a higher level of risk because they are likely to rely on open flames (combustible items such as linens, chairs, and tables), appliances linked to water lines (such as dishwashers), sewer backups, and complex HVAC systems.
Equipment breakdown (such as cooking appliance malfunctions, refrigeration leaks) is also a concern. For bars, restaurants, and nightclubs to serve customers effectively, they need well-functioning equipment. Equipment damage can lead to business interruptions and expensive property damage such as water damage due to appliance leaks or fire damage caused by faulty equipment.
Crime is also a challenge because owners of restaurants and bars often have significant amounts of cash coming in and going out. Thieves (and some of your employees) may also target your supplies, securities, and merchandise.
- Employee Liability
If an employee sustains a work-related injury, your business may have to deal with a workers’ comp claim.
Insure Your Business Against Risks
By having the right insurance policy in place, you can protect your business against liability claims, lawsuits, and other inherent risks in the hospitality industry.
While you can reduce your level of risk through the best risk management practices, no system is effective in ensuring a risk-free workplace. Therefore, you should work with a reputable hospitality insurance broker to assess your exposures and secure the right coverage.
As a hospitality business owner, you work with food, alcohol, patrons, employees, entertainment, and food preparation and preservation equipment. Your business is exposed to numerous risks. So, make sure to ensure your business operation is protected by the right insurance policies.
At RMS Insurance Brokerage, LLC, we’ll provide you with affordable and superior hospitality insurance. Contact us today for more information on the coverage you need for your bars, pubs, and nightclubs.