6 things to think about when choosing tribal restaurant and bar insurance

Let’s face it: buying insurance for your restaurant and bar is about as exciting as buying soap or toilet paper. It’s a necessary evil, yes – and in fact, just may save your business in the long run. There are a number of add-on coverages you may need, and some you won’t. When you’re shopping for tribal restaurant and bar insurance, keep in mind these six things.

1. Pricing and stability

What’s number one for most restaurant or bar owners? Price. Savvy business owners always look for ways to save money. But keep in mind, that’s just one item in the equation you need to consider, says Brett Barnsley, Arrowhead’s Tribal Program managing director. It’s important to look at who the carrier is that’s giving you that great price. How long have they been in the restaurant market? How are they rated as far as their stability and strength – are they going to be around for awhile? Otherwise, you may inadvertently choose a provider that’s new to the field who offers loss leader pricing, but who then exits the market due to unprofitability. “You’ll find yourself spending too much time every year shopping for insurance,” Brett explained.

2. Comprehensive yet custom coverage

“Also make sure you’re doing an apples-to-apples comparison,” he added. “Do the policies you’re comparing offer the exact same coverages? Are they including coverage you don’t need – or worse, excluding coverage you DO need?”

3. Claims handling

Look at how quickly and thoroughly they handle claims, Brett suggested. While you often can’t know this until you file a claim, ask if they use independent adjusters, and how close to your tribal restaurant and bar are they located, so that they can respond quickly to a claim. Arrowhead’s third-party claims administrator is American Claims Management, whose adjusters are nationwide.

4. What coverages should your tribal restaurant and bar insurance include?

Property covers your building, equipment and contents in case of a fire or many other losses. Earthquake and flood coverage are typically not included but may be purchased separately. Arrowhead’s tribal program also includes in its property coverage:

Food contamination, to protect your restaurant in the event of power loss and spoilage of freezer and walk-in contents (subject to a sublimit in Arrowhead’s policy)
Loss of business, to help you recoup some income if you lose sales through specific covered causes

General liability (GL) is an umbrella coverage protecting you in such cases as when a customer breaks a tooth over something in the food or gets sick after eating, or when a vendor slips and falls. Some programs require separate endorsements for the following, but these are included in the Arrowhead Tribal GL:

Foodborne illness, if a guest becomes sick after eating at your restaurant
Assault & battery, important for your bar to protect against altercations on your premises
Cyber coverage protects you in case you’re hacked and employee or customer data or credit card information is stolen. Read more about protecting your business from cyber threats.

Workers’ benefits protects your business when an employee is hurt at work.

Other tribal restaurant and bar insurance coverages you may want to consider are the following:

Liquor liability, protecting you when a customer over-imbibes and causes harm to himself/herself or others (an added endorsement)
Commercial auto, if your business includes delivery vehicles or if employees use their own vehicles in work-related pick-up and delivery trips (a separate policy)

5. What are the key factors that affect tribal restaurant and bar insurance rates?

Your claims history and whether or not your business is primarily liquor-driven are two key factors that affect rates. If you operate as a restaurant with a bar and your sales are primarily from food (over 50 percent), then your rates are lower than a bar that also offers a limited menu, but whose sales are primarily liquor. As liquor sales increase, exposure to risk goes up as well.

6. How you can keep premiums lower for your tribal restaurant and bar insurance

As in any insurance coverage, rates are more favorable with a clean (or nearly clean) claims record. This you already know – that’s why you emphasize a well-scrubbed kitchen, proper dishwashing equipment, customer credit card protection techniques, checking drivers’ licenses for young-looking drinkers and more. According to a recent MyNewMarkets article, the biggest claims restaurant-and-bar establishments are seeing are assault and battery, foodborne illness and slips/falls. Beyond these basics, you’ll want to consider

Liquor training. A key aspect of your rates, particularly if your business is primarily a bar, it helps when your servers, waitstaff and bartenders are trained under a well-known organization such as National Restaurant Association.
Security. If your establishment operates primarily as a bar, do you employ a bouncer? Have armed security? Unarmed security? Do you use off-duty police? Is your security team employed by your tribal restaurant and bar, and if so, how are they trained? Or do you use a third-party security service? All these factors weigh in your underwriting.
Safety plan. A written and enforced safety plan can help you eliminate all sorts of hazards, from kitchen to restrooms to unruly customers. Well-trained workers are less likely to sustain on-the-job injuries or injure someone else. Arrowhead has resources to help you create a plan if you need help.
Auto coverage. If you have delivery vehicles, make sure those listed on your policy are up-to-date, and that the drivers that are listed are indeed still employed.
Equipment coverage. Again, make sure the equipment listed on your policy is up-to-date: you’ve removed old equipment no longer in use and you’ve added in new equipment.

Additional sources
10 Ways to Reduce Your Insurance Premiums
What to Know About Underwriting Restaurants & Bars