Insurance for Bars and Taverns

Bars serve alcoholic beverages by the bottle, glass or pitcher which are generally consumed on the premises. Many offer incidental food items, such as snacks or sandwiches, but the predominant operation is the sale of alcoholic beverages. Other exposures may include music, live entertainment, various promotions and contests. Some bars may have small dance floors which also affect the cost of coverage.

Recommended Insurance Programs for Bars and Taverns

Most liability insurance policies for bars are rates on gross sales for the establishment as well as gross sales for alcoholic beverages. Liquor liability coverage is commonly purchased because it is the single largest risk exposure of bars and pubs.

Coverages Recommended for Bars and Taverns:

✓ General Liability Insurance
✓ Liquor Liability Coverage
✓ Business Personal Property
✓ Workers Compensation Insurance
✓ Business Income with Extra Expense
✓ Commercial Crime/Employee Dishonesty
✓ Umbrella Coverage

Other coverages to consider for a Bar:
Money and Securities, Employee Benefits, Hired and Non-owned Auto, Building (if owned), Spoilage, Employment Practices Liability, Environmental Impairment and Stop Gap Liability

Common Risks and Needs Associated with Bars and Pubs

Premises liability exposures are typically pretty high for bars due to public access to the premises and the serving of alcoholic beverages, which can impair motor abilities and increase the likelihood of trips, slips or falls. Because lighting is normally subdued, any change of elevation should be carefully marked. All fire exits should be plainly visible from any part of the premises, and kept unlocked from the inside during business hours. Chairs, particularly bar stools, should be regularly checked for cracks and fatigue. Guests should not be permitted to climb on top of chairs, stools, bars or tables.

Parking lots and sidewalks need to be in good repair, with snow and ice removed, and generally level and free of exposure to slip and falls. Outdoor security and lighting must be consistent with the area. Employees and servers should be trained in dealing with unruly or impaired customers to prevent potential violence. Personal injury exposures include bouncers escorting a patron out of the premises. Any bouncer activity should be documented and witnessed in case of future lawsuits.

Liquor liability exposure depends on the amount and type of alcohol served and the adherence to strict policies on who can be served and how much they can be served. Failure to comply with state and federal regulations can result in the loss of a liquor license which could likely close the business. There must be a set procedure to check ages of all who enter the establishment. All employees who serve liquor to customers should be trained in recognizing signs of intoxication. A procedure should be in place to deny serving intoxicated patrons. Programs that encourage designated drivers or offer free taxi service can be useful.

Property risks come from any cooking operations conducted on the premises. If there are grills and deep fat fryers, these must have automatic fire extinguishing protection, hoods and filters. The kitchen should be kept clean and grease free to prevent fire spread. Alcoholic beverages are susceptible to damage from heat and smoke. A small fire can become a total loss if the FDA condemns stock due to potential contamination.

Where legally permitted, most bars continue to permit customer and employee smoking. The proper disposal of cigarette butts as part of the closing procedure is vital to prevent fire from smoldering ashes or cigarette butts. Theft is a major concern in bars and taverns due to the attractive nature of alcoholic beverages. Liquor should be stored in areas inaccessible to customers. If food is served, spoilage can result from power outages.

Business income with extended time period coverage should be considered by every bar owner. While customers tend to be fairly loyal, they will switch after a major loss due to the lag time between the re-opening and return to full operations.

Most commercial crime exposures for bars come from employee dishonesty and money and securities due to the high amounts of cash, alcohol and tobacco products. Criminal background checks should be conducted on any employee handling money. Employee dishonesty normally centers on the stock/inventory rather than cash itself. Lottery ticket sales or other gambling devices present another major temptation to employees. Because bars tend to have significant cash sales, cash drawers should be regularly stripped and moved to a safe, away from the front of the store. Irregular drops during busy evenings are helpful in preventing a large buildup of cash. Closing time is the most vulnerable time, so security procedures should be in place to prevent hold ups.

Workers compensation exposures come from slips, falls, cuts, burns and heavy and awkward lifting, along with interactions with rowdy customers. The employees in many bars tend to be minimum wage and turnover may be high. Well-trained employees with an incentive to do their best and who have clear direction will have the fewest injuries. Company incentives to encourage long-term employment are positive signs of management control.

Liability Quotes for Bars

General Liability Shop.com offers affordable liability insurance quotes for bars and pubs throughout the U.S. Our Bar programs include all lines of business insurance, as well as our Target programs for business owners policies (BOP). Contact one of our business insurance Specialists today at 800-900-8657, or start a quote online now.

Our Top Carrier Solutions for Bars, Nightclubs and Pubs

Bar Liability Classification Codes

Commercial insurance companies use various liability classification systems in order to classify and rate coverage premiums for bars. Here are the most common business insurance classification for Bars and Pubs:

Business Liability Category: Bars, Taverns and Pubs

SIC Business Insurance Codes:

• 5183: Bars (Beer and Alcohol)

NAICS Liability Classifications:

• 722410: Drinking Establishment with Alcohol

Business ISO General Liability:

• 16920: Restaurant—alcohol sales greater than 75 percent—table service, dance floor
• 16921: Restaurant—alcohol sales greater than 75 percent—no table service, dance floor
• 16930: Restaurant—alcohol sales greater than 75 percent—table service, no dance floor
• 16931: Restaurant—alcohol sales greater than 75 percent—no table service, no dance floor
• 16940: Restaurant—alcohol sales greater than 75 percent—bar service only, dance floor
• 16941: Restaurant—alcohol sales greater than 75 percent—bar service only, no dance floor

Common Workers Compensation Class Codes:

• 9084: Bar, Lounge, Nightclub, Pub or Tavern

Most states have Dramshop laws in place that require bars, and other related establishments that sell alcoholic beverages, to purchase liquor liability insurance. Ask our Liability Specialists about liquor liability requirements in your state.