Running a bar comes with a lot of expenses: payroll, inventory, your liquor license, rent or mortgage payments, taxes, and, of course, insurance. While some of these expenses are beyond your control, there are some steps you can take to manage costs. One is your bar insurance premium. That’s why we’ve put together this list of tips to save money on bar insurance with suggested action items you can take.
How Much Does Bar Insurance Cost?
When it comes to business insurance, bar insurance isn’t cheap. Conservatively, for a small bar, you can expect to pay between $1,000 and $2,000 annually for general liability. And since the business serves liquor, you will need liquor liability. This can cost over $2,000 annually.
When calculating the cost of bar insurance, providers will take into account several factors. Some of the more important ones are:
- Business experience: How long have you been managing and owning a bar?
- Claims history: Have you ever filed a claim for your bar? If you have in the last three to five years, then you can expect this to impact the cost of your premium.
- Employees: How many employees do you have and are they trained in the proper ways to serve alcohol?
- Revenue from alcohol: What percentage of your revenue comes from liquor, beer, and wine?
- Hours of operations: Is your bar open as late as the law allows or does it close down earlier?
Some of these things—like your business experience—you simply can’t control. It is what it is. But there are other factors, both for liability and all of the other business coverages, where you can take steps to reduce bar insurance costs.
Tips to Save Money on Bar Insurance: Liability
There are a lot of tip lists out there for saving insurance but none of them seem to distinguish the different lines of coverage. A bar needs different types of insurance and the approach to saving is different depending on the coverage.
Liability is an essential coverage for bars covering claims that, through negligence by your bar, someone was injured or had their property damaged. This can include claims of personal harm from advertising injury or liquor liability. An example of bar liability would be if a patron slips and falls and is injured in the bar.
1. Audit Your Social Media Accounts
Insurance companies place a high value on the level of risk a potential business represents. During the underwriting process, a quick review of your bar’s social media accounts will tell the insurance company a lot about the type of business you are operating and the clientele you are trying to attract.
For example, if they visit your TikTok page and there are videos of drinking challenges or bartenders and patrons doing shots at the bar, this may raise some questions for the insurance company.
Action Item: Review your social media accounts and make sure the image you are presenting is one that values balancing fun with safety.
2. Properly Train Your Staff
Bars are subject to dram shop laws. These laws decide who can be held liable for an alcohol-related incident. This means it is very important to train your staff on serving alcohol and properly identifying someone who is intoxicated. There are some great training programs, like TIPS or TAM, to help your staff identify and know what to do if a patron is intoxicated.
Some insurance companies may either require your staff to be trained or charge a higher premium if they are not trained. Don’t forget to review proper food handling techniques with employees. If any certifications are needed for food handling and storage, stay up to date with those.
Action Item: Pick a course for training your staff. Contact the organization and set a date to have them trained.
3. Undergo Risk Assessment of Business Operations
Some small business insurance companies employ risk management engineers, who go to a policyholder’s site and conduct an assessment of any risk for a loss. The scope of the assessment can include both liability and property and even workers’ compensation insurance. Usually, this service is provided for free. After the assessment, they will give recommendations for lowering the risk of a loss at your business. This is a simple step you can take to reduce the chance of a claim at your bar.
Action Item: Contact your insurance company to see if they offer risk assessments and, if so, request one.
4. Review Hours of Operation
If you own a bar, then you understand this concept. The later in the evening (or earlier in the morning) it gets, the better chance you have of something going wrong. Insurance companies also understand that this will increase the chance of your business filing a claim. So, review your hours of operation and see if it is worth it for your business to stay open as late as you do. How busy is the business during the last hour?
Action Item: Contact your agent and see if you could get a quote if you shut down at 11 p.m. or midnight. Review sales data to see if this saves you money in the long run.
5. Get Creative with Coverage
Sometimes, you can save money on your bar insurance by buying more insurance. Counter-intuitive, right? But hear me out. If your general liability policy cost is too high, you could look into lowering its limits and purchasing a commercial umbrella policy. The benefit of this approach is you do not have to sacrifice total liability coverage and may be able to end up saving some money.
Action Item: Get some quotes for a liability policy with lower limits and some quotes for an umbrella policy, and then compare the costs.
6. Stay Compliant
There are state and federal regulations for your business that, if not followed properly, can lead to a claim. The most common one is compliance with the Americans with Disabilities Act (ADA). If a business is not compliant with these requirements, a lawsuit can be filed by an individual impacted by the lack of accommodation.
Action Item: Familiarize yourself with state and federal regulations and make sure your business is in compliance.
Following these tips will help you create a safe experience for your patrons. There are also ways to reduce bar insurance costs for commercial property and workers’ compensation, which we discuss below.
Tips to Save Money on Bar Insurance: Other Coverages
While general liability and liquor liability are important coverages, there are other coverages, namely, commercial property and workers’ compensation insurance, that are important for your business. Saving money here isn’t simply about managing risk but includes other steps that can be taken too.
1. Secure Your Business
A commercial property named peril, meaning something covered, is theft or burglary. As a deterrence to these types of crimes, it is worth looking into adding security cameras and alarm systems to your bar. Security systems can act as a deterrent to criminal acts. And if one happens, then it may help you recover any stolen property.
Action Item: Install cameras and a security system.
2. Bundle Your Coverage
Many providers will offer a “bundle” of coverages. This is when more than one type of insurance is combined into a single policy. The most common type of bundle is a business owner policy or BOP. A BOP combines three coverages: general liability, commercial property, and loss of business income.
It is usually more affordable to purchase this policy than all three policies separately. Many BOPs will also have other coverages that can be added through an endorsement. For a bar, if available, liquor liability added to the BOP can be a great way to save money on bar insurance.
Action Item: Review your coverages and, if you do not have a BOP, reach out to your agent or carrier for a quote.
3. Assess the Value of Your Property Accurately
When you are starting out with getting insurance, the provider will ask for the value of your property. You can guestimate it, but odds are you’ll go over your total value out of fear of being underinsured. The problem is that this can lead to you literally paying for a level of insurance you do not need.
Action Item: Perform an in-depth review of the true value of your owned property and then see how that aligns with your policy. If it is less than what you’re paying for, contact your insurance company to discuss adjusting your limits.
4. Adjust the Deductible & Limits
In line with tip number 3, you can control the limits you are paying for and the deductible. A deductible is the amount you agree to pay every time you file a claim. Think of it as a co-pay. You can change this amount; by raising the deductible, the premium will decrease.
Action Item: Check out the deductible on your policy and look into what you’ll save by raising it.
5. Explore Payment Plans
Depending on the type of insurance and the provider, there are usually payment options that can lead to savings on your insurance. For general liability and commercial property, paying for your policy in full will usually net you some savings. If you have workers’ compensation, a pay-as-you-go plan may not save you any money in the short term, but it should result in an accurate premium. This means at the end of the year workers’ comp audit, you shouldn’t owe any money to the insurance company.
Action Item: Look into payment plans offered by your insurance company and see if any will help you save money.
FAQs
Last Bite
Whether your bar is the local watering hole, the place where everyone knows your name, or an upscale venue featuring a famous mixologist, you face the same challenge of claims and bar insurance costs as every other owner. Thankfully, there are proactive steps you can take that can have a direct impact on lowering the cost of your bar insurance.
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