The climate of the hospitality industry is forever changing. Based on completely unpredictable occurrences such as the COVID pandemic and societal realities such as violence at bars and restaurants, hospitality establishment owners have a lot to consider when it comes to their coverage.
The most important thing new owners should know about insurance coverage is that it’s a vital part of running their business. Oftentimes, getting coverage isn’t taken into consideration when it comes to the budget. However, having proper insurance coverage is a huge part of protecting the business, and the ownership, in the case of an accident or incident.
While many people see insurance as an umbrella that could just as easily work for apartment complex or a restaurant, that is simply not the case. A hospitality business should seek an agent that specializes in coverage for their industry — one who knows the ins and outs and the current laws as it relates to things like liquor policies and weapons exclusions. Those are two of the biggest things that restaurant owners should be covered for in their businesses.
Even seasoned restaurateurs may not realize the ever-changing status of liquor laws and other endorsements that are constantly evolving based on the temperature of the world. For example, a weapons exclusion on any policy could be detrimental to a business. It’s also important to be well-versed in bacterial exclusions and marijuana exclusions, for example. And the customer needs to be knowledgeable about how they are covered if the world is ever in another situation like COVID.
It is highly recommended that restaurateurs have their policy reviewed at least once a year and more often if they have any major changes to their business within that year. Getting insurance coverage is not just a box to check. It requires someone that specializes in this area and the hospitality is an ever-moving target. Risk changes and society changes all impact endorsements and coverage should be considered one of the most important aspects of any business in the hospitality industry. Just as with auto insurance, people may not realize they didn’t buy the right coverage until it’s too late. That’s where a specialized agent comes in.
For those that are signing a new lease, it’s also important to be cognizant of what the lease verbiage includes when it comes to coverage. It might be something like a $10 million umbrella, for example, which could be completely cost prohibitive for a company that didn’t budget for an extra $30,000 a year.
And while there have been positive changes as it relates to liquor laws, education of each state’s changing laws is crucial. The new laws can be better for restaurants indeed, but they don’t necessarily translate to immediately lowered costs of coverage — and burden of proof is key in any liquor-related situation.
Overall, restaurateurs should review their policies every 12 months (as is their terms), look at endorsements and any new policies added to new term. Keeping in communication with their agent is vital and can help protect them from the unknowns and the unexpected.