Do you operate a licensed venue? Are you thinking about purchasing a licensed venue? We strongly recommend giving us a call before you do but here are few points to consider to get you started.
Who are we talking about?
- Pubs & Boutique Bars
- Hotels & Taverns
- Restaurants & Cafés
- Wine bars with food
- Bars with live music
Over the past few years, we have seen a dramatic increase in pricing for insurances associated with operating these venues, specifically, public liability insurance and business insurance. Driven by increased litigation, costs associated with compensation and the defence of claims has somewhat blown out. With the advancement of technology and over time reductions in the price of adoption, insurers are increasing expectations around risk management processes. In simple terms, insurers are expecting clients to be more proactive with risk management processes.
What are my main insurance concerns running a licensed venue?
Property Insurance – Underinsurance
Getting your assets (Building, Contents & Stock) valued correctly when setting up your insurance is critical to ensuring a correct and smooth claim payment. It is often overlooked that insures may only pay out a portion of a claim if your declared values are underinsured (not insured for the full replacement value). For example; A kitchen fire resulting in a loss of around $100,000, may only result in a claim payment from the insurer of $50,000 leading to you, the claimant footing the remaining amount. We strongly recommend keeping an up-to-date assets register and speaking to a professional valuer to avoid this issue.
Hospitality venues are renowned for relatively short life spans, and venues can often have several owners, especially restaurants and cafes. New operators are often lumped with large repair or replacement costs of critical machinery such as fridges as freezes, which unfortunately previous owners have not maintained. These costs including the loss of stock and potential downtime can all be insured. We recommend considering these repair and replacement costs, especially in the first couple of years when cashflow can be so critical.
Without doubt, the most critical and difficult insurance policy for late night venues such as bar, taverns, and nightclubs. Given the potential risks associated primarily with; serving alcohol, slips and falls, anti-social behaviour (fighting) and dancing, insurers have become wary when offering cover and now require a higher standard of risk management than previously seen. It is now a requirement (rather than a recommendation), that a formal risk management plan be presented to insurers when requesting cover.
How can I best manage my risk?
1. Establish a formal risk management plan
To work hand in hand with your business plan, a risk management plan will help you prepare for any unforeseen events which could hinder your business progress and survival. Understanding the scale and magnitude of any risk will help to determine when you will utilise business insurance and when you might choose to self-insure. Similarly, you may need to consider where risk is outsourced, such as using an independent security contractor to manage your security and crowd control. Delmont Insurance is a Steadfast Broker with access to a suite of risk management tools. At no cost to you we can provide a risk report, which provides a risk analysis of hazards common to your industry which can help with you planning – Please Contact Us for more information.
2. The adoption of risk management tools & processes
- CCTV – Ensuring your venue has complete CCTV helps to deter claimants and becomes your best defence should any arise. Remember you need to store the footage, ideally for at least a month.
- Maintenance Programs – The best cure is prevention – Avoiding claims is the best way to avoid excess payments, increasing insurance costs and business closures. Regular inspections of your roofing, plumbing, electrical wiring and equipment should be a part of your work process and this information recorded and documented.
- Reporting Processes – Specifically public liability insurance – Formal a reporting process ensuring you record information when the incident occurs and you inform your insurers immediately in case a defence is required – Remember this will be a requirement of your policy so speak to your broker or insurer to review your current processes.
- Plan, Review, Implement – Most importantly, risk management needs to be incorporated into your business processes. All clients want to avoid claims and minimise costs, there are some claims which cannot be avoided but for the best part a strong management plan goes a long way.
3. Seek out professional guidance
A professional insurance broker can help provide strong guidance and advice, leaving you to run your business and sleep well at time.
If you would like to get a quote or discuss your requirements, please reach out to our office here – Contact Us.