Terry's Restaurant Insurance Blog
In the past I have blogged about equipment breakdown coverage for restaurants and I have discussed one of the more obvious reasons for needing it – breakdown of heating or air conditioning systems. However, with rapid technological changes in the restaurant industry, there are new areas of concern that give new weight to the value of carefully considering adding this protection to your restaurant insurance policy.
Specifically, I want you to think of the new technologies that you may have added to your restaurant in the past 5 years that you now rely on for smooth day to day operations. Which of these could you do without for an extended period of time? How much would it cost you to replace lost income due to the breakdown of this equipment? For instance, many restaurants now use sophisticated, computer based cash registers that integrate with point of sale software systems. What losses would you face if this system broke down? Could you stay open?
Another area of consideration for your equipment breakdown coverage is your commercial grade sound system if you have one, or your inventory scanner system or even your time clock and payroll system that might be run from your computerized register. If these systems go down, your restaurant could be crippled and the lost revenue while you struggle to get your systems running again could be substantial.
All of these new electronic systems are at risk for power surges and electrical arcing. Unbudgeted losses from breakdown of these systems can be significant enough that for some restaurants equipment breakdown coverage should no longer be considered an optional coverage but rather a critical one. Take a moment to check your restaurant insurance policy and see if you have equipment breakdown coverage. After the systems break, it will be too late to go back then and add the coverage.
Restaurants are a unique kind of business and they present unique insurance challenges. If you own a restaurant then you should take the time to seek out an insurance agent who specializes in restaurant insurance. Don’t trust your protection to a generalist. You will likely save money and be better protected if you find an agent who understands restaurants and insures dozens or even hundreds of them.
Clinard Insurance Group, located in Winston Salem, NC is an independent insurance agency that specializes in restaurant insurance. We write insurance for more than one hundred restaurants in North Carolina and South Carolina. Our understanding of how each restaurant is different from the others has led us to create 5 distinct restaurant insurance programs. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a bar and grill and tavern insurance program and a specialized insurance program for catering companies. If we can help you with your restaurant insurance needs, or if you simply need a professional second opinion on any restaurant insurance issues, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.
In part one of this two part series we discussed ways to identify if your current system is a UL 300 system or not. If you have discovered that you are using an older system, then what should you do about it? Well our advice is to replace your old system with a new one that is UL 300 approved.
Before we get to the replacement question, here is a list of situations where most local governments will require the use of a UL 300 system.
Use of vegetable based oils in frying.
Any addition or change or any appliance from the original installation.
Any change to the hood or duct system.
The suppression system can no longer be maintained as required for 6 month maintenance due to the lack of available replacement parts or the servicing company refusing to service the out of date unit.
In addition, it is important to note that all dry chemical units are non-compliant as are the following wet chemical units unless modifications have been made:
Ansul R-102, all sizes 1988- 1995,
Ansul Steel tanks (red in color), all sizes 1988 – 2001,
Kidde Aqua Blue, all sizes 1988 – 1995,
Range Guard, all sizes 1977 – 1995.
Many of these UL 300 wet units can be upgraded, but the difference in cost between a new one and a retrofitted one is rarely more than 15% so most restaurants opt for the new system.
One last note about changing your system: If you do so, please remove any dry chemical fire extinguisher from the kitchen area as their interaction with the UL 300 liquid agents will serve to spread the fire rather than extinguish it. NFPA 10 requires that only K rate fire extinguishers be kept in your kitchen area.
In part 1 of this blog I mentioned that you there are ways to have someone else pay for the cost of replacing your old, noncompliant system with a newer UL 300 system. So how does that work? It’s simple really. There are many insurance companies out there that understand the value of the UL 300 system and as such will provide huge discounts for restaurants utilizing this newer system. We have seen these discounts more than pay for the upgrade of systems in our work. If your agent isn’t currently giving you the full discounts for your UL 300 system, you should choose an insurance company that values this safety feature and is willing to cut your insurance costs because you have it installed.
Clinard Insurance Group, Inc., is an independent insurance agency, located in Winston Salem, NC. We specialize in helping all kinds of restaurants all across NC and SC. If you need help with your restaurant insurance questions, or if you would like to see how much money you can save with our specialized restaurant insurance programs, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com. We have several specialized insurance programs for the different types of restaurants out there so we should be able to find a solution that best suits your needs. Our special programs include our fine dining insurance package, our casual dining insurance package, our fast food insurance package, our bar and grill insurance package and our special insurance program for caterers.
Older fire suppression systems for restaurants may no longer be enough to extinguish restaurant fires today. That is because of new cooking media and newer cooking methodologies that can generate higher temperatures and lower flash points. This 2 part series will look at the new UL300 standards and help you understand what you have now and what you may want in the future.
So what is UL300? UL 300 is the standard for testing of fire extinguishing systems for protection of restaurant cooking areas. Underwriters Laboratories, Inc, referred to as UL, is an independent, not for profit product safety testing and certification organization. How do you know if your current system is UL 300? According to Underwriters Laboratories, the only way to know is to check that the model number on your fire suppression system is UL 300 compliant. If so, then you must verify that all components have been installed as specified by the manufacturer’s manual.
The best place to start is to look for the UL300 label on the systems extinguishing chemical tank. Another indicator is the type of discharge nozzle located over each cooking surface. All UL 300 compliant systems use a wet extinguishing agent. Discharge nozzles for the older, dry chemical systems are fairly large, usually around 2 inches in diameter. Wet system nozzles are narrow, typically ¾ inch to 1 inch in diameter and are typically covered with red, orange or yellow plastic caps to keep them clean.
You may have to ask the fire protection company that is offering the ongoing service and inspections on your system. You can identify them by finding the service record tag. This tag is normally attached to the manual pull box for the system.
Here are some red flag indicators that your system is not UL 300 compliant:
Installed prior to 11/21/1994.
No UL label on the cylinder.
Dry chemical extinguishing media.
Dry chemical discharge nozzles – large size – 2 inches in diameter
System uses water spray to protect appliances.
System uses a single nozzle to protect multiple appliances or multiple cooking surfaces.
So what if your current system is not UL 300 compliant? In that case I would recommend that you replace it with a UL 300 system. In part 2 of this 2 part series I will show you how to go about that and how to get someone else to pay for it.
Clinard Insurance Group, located in Winston Salem, NC, is an insurance agency that specializes in insuring restaurants all across North Carolina and South Carolina. If you have a restaurant in NC or SC and would like our help answering your restaurant insurance questions, please call us, toll free at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com. We know that not every restaurant is the same, so we have developed 5 specialized restaurant programs to meet your specific needs. We have a fine dining restaurant insurance plan, a casual dining restaurant insurance plan, a fast food restaurant insurance plan, a bar and grill and tavern insurance plan and a special insurance program for caterers.
This is the final installment of our 10 part series on buying restaurant insurance for NC and SC restaurants. This installment covers the often overlooked but almost always needed protection for liquor liability. Now if your restaurant doesn’t sell any alcohol, then you will not need to purchase this protection. But if you do sell alcohol, then this is a coverage that you can’t afford to do without. Skipping this protection could force you to sell your restaurant and lose most of what you have worked for all of your life. Yeah, it’s that important.
Liquor liability protects your restaurant against 3rd party claims for those injured by an inebriated person who consumed some or all of their alcohol at your restaurant prior to the loss. The loss most often comes in the form of a car accident. Hold on you say, you would never serve someone who is drunk, or let a drunk leave your bar with his car keys in hand. But the liability issue doesn’t work that way. Here’s a real world example. One of our clients had a claim several years ago that cost their insurance company over $750,000 and that was less than 1/3 of the total damages. You see, they had served a customer a couple of drinks with dinner. This customer left their restaurant about 8:30 pm and then visited two bars before finally killing another person in an auto accident around 2 am. This customer was not drunk when he left our client’s restaurant, but because they had served him alcohol, our client was dragged into the lawsuit and forced to defend themselves and ultimately forced to share in the damages.
Hopefully now I have your attention and you understand how important it is to have this protection. Now let’s talk about buying this coverage. There are two ways liquor liability insurance is sold. One is as a standalone policy and the other is ad an add on to your businessowners or package policy for your restaurant. Stand alone policies are generally more expensive and are most often used for true bars and night clubs as opposed to restaurants. If you own a restaurant and your liquor liability is a standalone policy, then this should be an immediate red flag that you need to evaluate your current policy and your insurance agent as you may not be using a true restaurant insurance specialist.
Rates for liquor liability vary widely from one insurance company to the next and also from one program to the next offered by the same company. There are several factors that can drive your liquor liability rate. First of all is the ratio of alcohol sales to food sales. Get this ratio above 30% and you are going to start falling out of the most preferred rate plans. Get above 50% and you may find yourself kicked out of the businessowners add on coverage and be forced to purchase a standalone liquor liability policy. Another factor is the type of alcohol that you sell in your establishment. If you sell only beer and wine and no hard liquor, then you should have a reduced rate. If you are selling no hard liquor at all, then you need to check with your agent to be sure that he or she knows this and that this is reflected in your rate. Past claims will also play a big part in what rate you pay and whether or not you are able to add this protection to your businessowners policy or if you have to purchase a standalone policy. The last factor that can impact your rate is the type of safety training and safety programs that you are running in your restaurant to help prevent a liquor liability claim from happening.
One last tip that should be mentioned relates to bar and grill and tavern type restaurants. Often these types of restaurants are discriminated against in their liquor liability rate and get classified as night clubs. This is often unfair and you should know that there are a few programs out there that recognize this and have special rates for bar and grill type establishments that don’t treat them as night clubs. For more information on the bar and grill liquor liability issue, please read my blog on this topic by clicking here.
At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping restaurant owners with their insurance needs. We understand the importance of using an insurance specialist for your industry and we work hard to fill that need for our clients. Our specialty with restaurant owners is so broad that we can usually help you with every type of policy that you buy for your business and for your family, including your family auto insurance, your home insurance and your life insurance and retirement planning. We also understand that not all restaurants have the same insurance needs and as such we have developed 5 different restaurant insurance programs so that you aren’t subsidizing add on coverages that you don’t need. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a bar and grill and taveren insurance program and a special insurance program for catering companies. If we can help you with your restaurant insurance in either North Carolina or South Carolina, please feel free to call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantStore.com.
This is part 9 of our 10 part series on how to insure your restaurant. This section deals with an insurance policy that is not well understood and even less often purchased. This is the EPLI insurance policy and EPLI stands for Employment Practices Liability Insurance. This is a coverage that every restaurant owner with employees should consider purchasing.
EPLI coverage nicely fills some gaps in coverage that your business owners policy or your commercial package policy leaves. Specifically these have to do with some intentional actions that you take with your employees for which you may later be found liable and owe for damages. The most common types of EPLI claims are for wrongful termination, sexual harassment, and discrimination. Now you might say to yourself that you don’t need this coverage because you would never do any of those things. But what you must consider is that you might be accused of doing one of these acts. And if so, then you will have to defend yourself and the defense is not a cheap process. So even if you didn’t want to purchase the insurance for the judgment because you think you would never commit one of these acts, consider that you might want to purchase the insurance to pay for your attorney to defend you.
EPLI can be purchased as a separate policy, or in some cases can be added to your existing package or businessowners policy. If you purchase it as an add on, be sure that you understand if the protection has a sublimit of coverage that is lower than your general liability limit and also check in to be sure that defense costs are included. Last of all, if defense is included, be sure to find out if that is unlimited and outside of the policy limit, or if defense costs are counted against your total liability limit.
There is one more thing to consider. Most EPLI policies are claims made based policies, whereas your general liability protection is usually occurrence based. With a claims made policy, you need to report the claim within the policy period so if the claim rears its head after you have cancelled the policy, then you will find yourself without coverage. To protect yourself from this situation, you should laundry list your potential claims at the end of each policy term and submit that list to your insurance carrier.
EPLI protection may seem like a real specialty coverage for just a few but the truth is, with the layoffs that many restaurant owners have had to resort to in the past few years, this is a must have protection. At Clinard Insurance Group, in Winston Salem, NC, we want all of our clients to be informed insurance consumers. We encourage you to call us and ask questions regarding this or any other blog article that we have posted. We specialize in helping restaurant owners buy insurance for their restaurants and we understand that not all restaurants are the same. We don’t want your insurance policy to a square peg jammed into a round hole, so we have created 5 different restaurant insurance programs to help you better select the one that meets your needs. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a bar and grill and tavern insurance program and a special insurance program for caterers. If you need help with your restaurant insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.