Terry's Restaurant Insurance Blog


Restaurant Insurance – Are Your Liquor Receipts Driving Higher Rates On Your Policy

Any restaurant that sells alcohol should be carrying liquor liability insurance. This critical coverage is designed to protect you from third party claims generated by accidents caused by inebriated customers who did at least some of their drinking at your establishment. And the way that insurance companies underwrite and rate this coverage can be myopic at best. Here’s how to make sure that the insurance company’s myopia isn’t costing you extra money on your restaurant insurance policy .

In an effort to simplify their underwriting process to one simple question, many insurance companies that include liquor liability in their restaurant insurance package policy will simply ask you what % of your gross sales come from sales of alcohol. On the surface, this might seem like a logical way to get at the question of how much liquor liability exposure you have but, there are holes in this strategy that play against the fine dining restaurant as well as the bar and grill.

If your restaurant is a fine dining establishment, you may be especially vulnerable simply because the price of drinks and fine wines is a larger percentage of the gross receipts than a restaurant who just sells domestic beers in a can. Even some bar and grill type dining establishments with the higher end beers on tap can run into this problem. Just because you sell fine wines with your meals doesn’t mean your patrons are all a bunch of crazy drunks, pouring out of your restaurant to commit drunken mayhem on the streets. But you would never know that by talking to some of these insurance company underwriters who have exact rules about your liquor sales percentages.

Luckily, there is a better solution. At Clinard Insurance Group, in Winston Salem, NC, we specialize in all types of restaurant insurance. We have developed a program with our insurance companies that takes into consideration the fact that your percentage of alcohol sales to food sales is high not because you are a bar, but because you sell fine wines and top shelf liquors. With that in mind, we are able to help you keep your liquor liability rates under control and save you money, year in and year out while still providing you with the critical liquor liability coverage you need.

If we can help you with your restaurant insurance needs, please call us. We have developed several specialized restaurant insurance programs to make sure your round peg is not jammed into a square hole. We have a fine dining restaurant insurance program, a casual dining restaurant insurance program, a fast food restaurant insurance program, a bar and grill restaurant insurance program and even a catering company insurance program. If we can help, please call us, toll free, at 877-687-7557 or visit us online at


Restaurant Insurance – Use your Medical Payments Coverage to Keep Loss Costs Down

If you own a restaurant, then you have at least a passing understanding of your restaurant insurance policy. And hopefully you have purchased general liability protection as a part of your package policy. What you may not understand fully, is how the medical payments section of your policy can help you keep loss costs lower, which in turn can save you time and money on your restaurant insurance policies in the future. Here’s how it works.

Your general liability section of your restaurant insurance policy should have two components, one called medical payments coverage – which we refer to as med pay, and a second component which is called liability coverage. The liability coverage is designed to protect you against claims filed against your business for which you are legally liable. This could run the gamut from broken teeth to food poisoning to slip and fall claims. And I probably don’t have to tell you that there are plenty of scam artists out there who visit restaurants just to set them up to demand payment for some kind of questionable claim. But your med pay coverage on your policy is your first line of defense to keeping scam claims and even legitimate ones from ballooning out of control.

Med pay will pay for the medical bills associated with injury to your patrons while they are on your premises. And here’s the best part – it pays without regard to fault. So, while you may not be sure that it is your fault that your client claims he slipped in your rest room, you can initiate a claim using your med pay coverage to cover his medical bills right away. Often by taking quick and decisive action you can mollify the feelings and emotions of an injured patron and keep the claim from escalating out of control. Med pay is the vehicle to help accomplish this goal.

If you don’t have med pay on your policy, of if you feel you might want to increase that coverage, call your agent immediately. This coverage is pretty inexpensive and could save you a bundle in time and hassle by keeping a potentially devastating liability claim under control.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping restaurants all across North Carolina and South Carolina with their restaurant insurance needs. We have developed specialized insurance programs for different types of restaurants to keep you from buying coverages you don’t need and to help you get the ones that are needed for your type of establishment. So we have an insurance program that will fit your needs, whether you are casual dining, fine dining, fast food, bar and grill, or even a caterer. For more help with your restaurant insurance, please visit us online at or call us, toll free, at 877-687-7557.


Restaurant Workers Compensation Insurance – Protect Your Mod

Most restaurant owners have at least a general knowledge of workers compensation insurance . They know that they need it and they know it can cost a lot of money. But only a few really understand the experience modification factor and what it could mean for their future restaurant insurance policy costs. This little primer will help you understand just how important it is to protect your mod and how to do it.

The experience modification factor of workers compensation policies, referred to as the experience mod or just mod for short, is the insurance industry’s way of assigning higher rates to businesses with poor loss experience and lower rates to those who have had more favorable loss experience. Each business has its own unique experience modification factor and this factor is applied to the rates on their policy. For example, if you have had a lot of losses, or perhaps a few large losses, you might find yourself with a mod of say, 1.35. If this is the case, then your workers compensation insurance policy premium will be adjusted upward by 35% to reflect your bad experience. Likewise, if your restaurant hasn’t has a work comp loss for several years, your mod might drop as low as .80 and this would mean a 20% reduction in your overall workers compensation policy premium.

So how is this mod calculated? Well, the first thing you need to know is that the mod is calculated based on past experience. That means what happens today will take several years to come back and bite you. Also, the experience period for the mod in North Carolina is 3 years, so once you get some losses in your mod calculation, they will stay there a while. I want to leave a more detailed explanation of how the mod is calculated to a later blog, but for now, understand that it is not only the number of losses (called frequency) that plays a part, but also the amount paid out (called severity) that impacts the mod calculation. And a little of both, frequency and severity can really run up the mod.

So what can you, as a restaurant owner, do to protect your mod? A lot of how your mod will affect you, both good or bad will be determined by which insurance company you choose for your workers compensation policy. I say this, because, although you may be as careful as you can to avoid injuries among your workers, there is no substitute for an insurance company that is actively working for you to help you prevent claims and reduce the severity of existing claims.

Choose a workers compensation insurance company that will work with you to help you with both prevention and severity reduction. Prevention can come in the form of safety inspections, and loss control techniques that the insurance company can share with you. Reduction can come in the form of programs that help your injured workers get back to work more quickly. Some of the best workers compensation insurance companies even have their own nurses and doctors. Also, you want to purchase your workers comp coverage from a company that assigns case managers to each claim to stay on top of all the medical bills and the disability payments to keep the payout as small as possible.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping restaurant owners navigate the complex waters of insurance policy and insurance company selection. We can help you find a pro-active insurance company that will help you reduce the number of work comp claims and keep the claims that happen from spiraling out of control. Because restaurants are our specialty, we can help you with your restaurant insurance needs whether your restaurant is a fine dining establishment, a casual dining restaurant, a fast food restaurant, a bar and grill or tavern, or even a catering company. We have built special niche programs for almost every kind of restaurant out there and we encourage you to call us, toll free, at 877-687-7557 or visit us on the web at


When it comes to Restaurant Insurance, Watch Out for the Audit Trap

If you are restaurant owner then you probably have some working knowledge of the workers compensation insurance . At Clinard Insurance Group in Winston Salem, NC , we specialize in insuring restaurants and we have found time and again how many restaurant owners are seduced into the cash flow nightmare I call “the audit trap”.

The restaurant owner’s workers compensation insurance policy is rated based on payroll. Since the exact amount of payroll is unknown to the insurance company when the policy is first written, the policy holder has to give the insurance company an estimate of the total payroll for the coming policy year. Many restaurant owners are tempted to “low ball” this estimate to reduce the total premium on their policy. In some cases unscrupulous agents may quote the policy with reduced payrolls in order to make the premium appear smaller. While this strategy could work if the company plans ahead for it, just shooting in the dark with low estimates can create a cash flow disaster.

Here’s why. Let’s say your actual payroll on for your company is $500,000 per year. And let’s also assume your workers compensation rate is $5 per $100 of payroll. This means your policy costs would be $25,000. Now let’s assume you start your policy with a low ball estimate of $250,000. This means your new policy is issued at a cost of $12,500 instead of $25,000. Looks pretty good so far. But now jump ahead 15 months and the insurance company has now performed an audit of your payroll and found that your actual payroll during that policy term was $500,000. So they send you a bill for the additional premium due of $12,500. Now that wasn’t really unexpected, but if you didn’t budget for this, it could put a crimp in your cash flow. But here’s the kicker. The insurance company will now increase the payroll on your renewal policy and send you another bill for $12,500 due right away. Suddenly you have to come up with $25,000 to square yourself with the insurance company. And that can make for a real cash flow problem.

Again, if you plan for the audit and reserve funds to make the payment then you can gain a cash flow “float” advantage by low balling your payroll and gross receipts estimates. But more often than not, the business owner fails to implement a plan to reserve these funds and instead faces a cash flow crunch at audit time.

Restaurant Insurance is confusing at worst and complicated at best. Keeping on top of your payroll estimates and how that relates to your actual payroll is an important part of managing your business insurance policies.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping restaurant owners with their insurance policies. We have specially designed programs for your restaurant, whether you are casual dining, fine dining, fast food, bar and grill, or even a caterer. We want all of our restaurant clients to be informed insurance consumers. If you want more help with your restaurant insurance, please call us, toll free at 877-687-7557 or visit us online at Restaurant Insurance.


The Hidden Trap of Spoilage Coverage on Restaurant Insurance Policies

Spoilage coverage…I’m sure most of you don’t really give it a second thought. Most restaurant insurance policies “throw in” $5,000 or even $10,000 of coverage. Even the policies that don’t automatically include it have a relatively cheap endorsement to add it. But that coverage could disappear just when you need it if you didn’t take notice of the stealth clause that voids your protection. Has your agent explained this little known protection stealer to you?

The first area to take a little time on is to answer the question, how much spoilage coverage do you actually need? Most agents will just ask “how much spoilage coverage do you want?” or some will just throw in an arbitrary number and go with it…but do you know how much is enough?

I’ve developed a pretty straightforward formula that will give you a good indication of how much you need. I invite you to give me a call if you want to find out more and I’ll be more than happy to share this formula with you.

The other BIG issue with spoilage is what I call the “stealth clause”. On the declarations page you’ll see your coverage amount and deductible and you think all is well and good and then a freezer bites the dust on you (of course the day AFTER you get your steak order!) and you call in the claim. The insurance company adjuster shows up and asks you for your written refrigeration contract….What? no one said anything about having a written maintenance agreement. The adjuster then proceeds to show you where, buried on page 127 section C subparagraph 2 that the spoilage coverage only applies if you have a written refrigeration maintenance agreement in place and then he denies your claim.

This “stealth” clause is more common than you think. We have companies that understand that maybe you maintain your refrigeration yourself ( I know I did when I had my restaurants and I still have the Freon gauges and a jug of R12 in the basement.) This is just one of the items on our proprietary checklist that we go through with you to insure you have the protection that you need at the most competitive price.

This blog just points out one of hundreds of reasons why you should only purchase your restaurant insurance policy from an agent who specializes in restaurants insurance. If your agent doesn’t handle at least 25 or more restaurants, then you probably aren’t dealing with a specialist and what your agent doesn’t know could hurt you financially.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in both North Carolina restaurant insurance and South Carolina restaurant insurance. We want all of our clients to be informed insurance buyers and we work hard to help them understand all the ins and outs of the restaurant insurance policy. It doesn’t matter if your establishment is fine dining, casual dining, fast food, bar & grill or even catering, we understand your business and we have a program that can help you. Please call us, toll free at 877-687-7557 or visit our Restaurant Insurance Page.