Terry's Restaurant Insurance Blog


Business Income Insurance – The Conflict Between Monthly Limitations and Peak Seasons

Most restaurant insurance programs automatically include coverage for lost business income in the event of a covered loss under the property section of the policy.  So, if your restaurant suffers a bad kitchen fire and you are out of business for a month, then the income that you lost during that month of repairs can be covered and reimbursed to you.  But the key word here is can.  It may not be, depending on how your business income protection is worded in your policy.  And this risk can be magnified if your business has a seasonal component to it and the loss strikes you during your peak season.

Let’s take a quick look at the business income issues that can arise after the loss.  In each case, these are issues that you should take some time to discuss with your agent before you experience a loss that puts you out of business temporarily.  One of the biggest areas of confusion is with employee payroll.  You may need to pay your employees even if you are closed in order to keep them from moving on to the competition.  Many of these workers simply can’t afford to miss a month of pay so they will be forced to move on.  Will your policy cover the costs of keeping them on the payroll in order to keep them on as valued staff?  What conditions must be met in order for you to collect from the insurance company?  These are questions that you would do well to answer now, rather than find out after the claim.

Another issue that sometimes crops up after the fact is monthly limitations on the business income coverage itself.  Some policies are written with a monthly maximum that you can collect for any 30 days of downtime.  Some even have a policy limit that says you cannot collect more than a certain amount of money for any one claim.  Does your policy have a monthly or per claim maximum?  If so, do you know what this is and is this limit enough to cover your losses if you have a claim?

One last consideration for restaurants evaluating their business income coverage has to do with peak season issues.  Is your restaurant one where certain months mean much larger revenue to you than others?  If so, you may have a peak seasonality component to your revenue stream.  What happens when your loss occurs during, or just before your peak season?  If you lose 3 months of income during your peak season, will your monthly business income limitation come back to haunt you?  Suppose your average monthly revenue is $50,000 but your revenue jumps to $75,000 per month during your peak season.  If your business income coverage is limited to $50,000 per month, then you could experience a shortfall of $25,000 per month in your claim if a fire occurs during or just prior to your peak season.

With the many different choices facing a restaurant owner when evaluating restaurant insurance, it’s clear that you need some professional help and guidance on the front end.  Discovering that you have the wrong type of protection or policy after a loss is just a recipe for heartache and misery.  Be very careful when shopping for restaurant insurance to be sure that you first select an agent with experience and know how insuring restaurants.  Make sure that you have a good feeling about your agent and he or she is someone that you can trust to be careful to look out for your needs first in the insurance buying process.  While price will be an important consideration, saving money on a policy that will not adequately protect you after a loss is a fool’s errand at best.

At Clinard Insurance, located here in beautiful Winston Salem, NC, we insure over 100 restaurants all across NC and SC.  We will be happy to take a careful, in depth look at your restaurant insurance policies and give you professional and compassionate advice about how best to protect your livelihood.  Visit us on the web at or call us, toll free, at 877-687-7557. 


Restaurant Insurance – Using A Commercial Umbrella Policy To Your Advantage

Many restaurant owners, when thinking about their insurance needs, tend to focus primarily on their businessowners policy.  This policy is the catch all for many of their insurance needs from property to liability exposures and many others in between.  One policy option that gets short shrift is the commercial umbrella insurance policy.  This policy option should not be dismissed out of hand and may be able to provide a restaurant owner with additional peace of mind about protecting his or her livelihood.

Most businessowners policies have a liability limit of $1,000,000 as the maximum amount of protection that you can buy.  Some allow for slightly higher limits but for most, $1 million is the fixed maximum.  But that is just a round number, chosen by the underwriters who designed the policy.  This round number may or may not have anything at all to do with your restaurant’s liability exposure.  You should take the time to carefully analyze all of the things that could go wrong and lead to a liability claim against your restaurant.  Then try to evaluate the worst case scenario and make sure that you have enough liability insurance in place to protect yourself.  If not, the commercial umbrella policy is the way to increase those limits. 

The commercial umbrella policy can provide a higher liability limit over and above your businessowners policy, your commercial automobile insurance policy as well as your workers compensation insurance policy.  Of course insurance companies put limits on how high they can go with these limits but most can write at least an additional $5 million while many can get to $10 million as well.  Now bear in mind that most all commercial umbrella policies have a feature called the self insured retention.  This is really just a fancy name for a deductible.  These retentions are generally in the $10,000 range for commercial umbrellas.   I have seen a few insurance companies that will waive the self insured retention if you have all of the underlying policies such as the businessowners policy, workers compensation policy and business auto policy insured with the same company that provides the commercial umbrella insurance policy.

It is important to never just accept the limit of coverage provided by any insurance policy if in fact you feel that you need a higher limit of protection.  The commercial umbrella policy is a good alternative for those who need more coverage than that provided by their underlying insurance policies.


Employment Practices Liability Insurance And Your Restaurant, A Real Life Example

For those of you who follow my blogs, you will know my feelings on Employment Practices Liability Insurance, often called EPLI for short.  I feel that if you have any employees at all, then you need to consider buying an EPLI insurance policy for your restaurant.  The risks are just too high to ignore. 

One of the reasons that many restaurants don’t yet consider this a necessary part of their restaurant insurance program is that they just have not heard enough about cases where restaurant owners actually lost money as a result of this kind of claim.  The problem of course is that most of these lawsuits are settled out of court and with gag orders attached so no one can really talk about what happened or how much was paid to settle the claim.  This leaves other, unsuspecting restaurant owners in the dark about the realities of our current legal climate and just how vulnerable they really are.  So I thought it might be helpful to discuss a real world case that is in the news right now, just to give you some idea of what is going on out there in the EPLI world.

The Pittsburgh Post Gazette reported on this story on January 12, 2012.  Two former employees of a Panera Bread franchisee filed a lawsuit accusing them of discriminating against fat, black or ugly people.  The subject of the lawsuit, 21 year old Guy Vines claims that the Panera Bread franchisee, Covelli Enterprises discouraged managers from hiring African-Americans, and relegated those that were hired to menial roles out of the public view.  The complaints indicated that these practices came all the way from the top of the Covelli Enterprises organization.   Since this organization runs 200 restaurants in 5 states, there is now talk of turning this claim into a class action suit.

Now of course none of us have the inside track on what really happened here and the case has yet to go to trial so the answers about the outcome remain unanswered.  But the trend is clear.   Employees are learning that they don’t have to just shut up and take orders from above, and in some cases, they are learning that simply making up a story about what happened can give them enough power with a hungry lawyer to get a generous settlement from you.  The trend toward suing your employer for employment practices is a growing one and the threat that it creates for restaurant owners is alarming.  Where will you get the funds needed to defend yourself or even to pay out a settlement in one of these claims.  While you might think that you are doing everything right, those facts may not be important if you are set up by a wily employee who knows how to game the system.  And let’s not forget that with employment practices liability, you can be held liable for the words and actions one of your employees or managers has with another employee.  How can you control all of that?

The safest plan of action is for you to purchase an EPLI policy to protect your restaurant.   Some EPLI insurance companies even offer a protective human resources program that allows you to stay ahead of these risks.  This is generally done at no extra cost to you because, let’s face it, if the insurance company can prevent these types of claims from happening, then they will make more money.  So if you purchase your EPLI from the right company, you may even be able to outsource a good deal of your HR functionality at no additional cost to you.

Employment practices liability is just another example of why restaurant owners need to be very careful in selecting their insurance agent.  If you agent has never suggested this protection to you, that would be a big red flag that perhaps your agent doesn’t have the experience and understanding of restaurant insurance that you need on your team.  At Clinard Insurance Group, located in lovely Winston Salem, NC, we insure more than 100 restaurants all across North and South Carolina.  We would love to put our experience and understanding as well as our volume supported rates to work on your behalf, to save you money and help you get the protection that you are looking for in your restaurant insurance.  Please call us today, toll free, at 877-687-7557 or visit us on the web at


Restaurant Insurance and Cyber Liability – Part 2

In this second part of our two part series on cyber liability and your restaurant, I want to give you a general checklist of areas where you can direct your energies to stopping cyber crime in your restaurant.  This is not an exhaustive list but should be enough to get you started and may perhaps even open up other areas that you can attack to keep this threat in check.  To read the first part of this blog series, please click here.

One of the most obvious places to start is with network security.  Restaurant computer systems are chock full of client information that is valuable to cyber criminals.  You must take all steps that you can to prevent a breach of your network.  Your IT firm will know the best ways to keep your network secure so consult them for help.  Don’t forget, when it comes to restaurant insurance, you will need to carefully evaluate the costs to replace your equipment and your data if it is damaged or destroyed due to a breach of your network.

Keep in mind that your restaurant itself could suffer a loss of income in the event of an ecommerce incident.  For instance if a virus or other malicious attack destroys your computer systems and makes it impossible to accept credit card payments for a time, you will lose income.  Carefully evaluate what you stand to lose and then make sure you have the business income protection in place to protect your restaurant.

If your restaurant is active on the internet or in social media, consider that you could be held liable for wrongful acts associated with content posted to those sites.  Carefully control who has access to your sites and what is published.  Bear in mind that you could be held liable for alleged errors, misstatements, or even infringement of copyrights or rights to privacy.

Cyber extortion is also on the rise.  The cyber criminal takes command of your network system and demands a payoff in order to unlock your system.   These criminals can also simply attack each of your customers by stealing the data from your network.  Then they demand money from your customers, one by one to unlock their data.  You should take the time to understand how best to prevent this kind of loss as well as determining what costs you will face if your prevention efforts fail.

Restaurant owners who face a security breach may have to comply with requirements in the law about notification of the breach to those who may be affected.  The costs of compliance with these state rules could be a huge expense.  You want to be sure that your restaurant insurance can provide you with protection against these expensive requirements.  In addition, your restaurant may need to allocate expenses for public relations and rebuilding their reputation with your clientele. 

When evaluating your restaurant insurance policy and the exposures that you face with cyber crimes, it is clearly important that you choose and insurance agent who has a detailed knowledge of restaurant insurance.  Your brother in law in the insurance business may be a nice guy but if he doesn’t have experience with insuring restaurants like yours, then you might be putting your restaurant assets at risk while he learns on your policy.  At Clinard Insurance Group, located in Winston Salem, NC we insure hundreds of restaurants all across North Carolina and South Carolina.  If you would like our help with your restaurant insurance needs, please call us, toll free, at 877-687-7557 or visit us on the web at


Your Restaurant Insurance And Cyber Liability – Part 1

Cyber crime is on the rise globally.  And cyber criminals are now focusing their efforts on smaller businesses because these businesses typically don’t have the means to protect their data like the larger firms do.  This makes them an easier target for cyber criminals.  This is part one of a two part blog designed to better educate the restaurant owner about cyber crimes and the risks that they pose to a restaurant owner.  This part will deal with an overview of cyber crime in general and the insurance products that have been developed to help protect you from liabilities arising from cyber crime.  Part two will be a more in depth look at the areas of your business where you may be vulnerable to cyber crime.

As I mentioned, small businesses are now the focal point for a number of these criminals and restaurants are a particularly juicy target for them.  CNBC reported recently that 40% of the security breaches that occurred in 2010 were in the hospitality industry.  Point of sale terminals are a primary target for cyber criminals engaging in credit card fraud.  More restaurants are embracing social media and mobile devices as part of their marketing and business plan and these operations can increase their exposure to cyber crime.

There are three areas of action that a restaurant owner should take to better protect against losses caused by cyber crime.  First of all, take steps to prevent attacks in the first place.  Secondly, purchase a cyber liability insurance policy to cover losses that you are unable to avoid.  Last of all, you should prepare a crisis management plan that can be implemented quickly in the event of a data breach.

You might be thinking that your general liability insurance will protect you from data breach losses caused by cyber criminals.  In almost every case you would be wrong.  Insurance companies are taking steps to limit protection for this kind of liability in their general liability policies.  This a very new type of exposure and the insurance market for protection is developing at this point in time as separate insurance policies designed just for this type of loss.    In 2009 it was estimated that the costs of fixing data breach incidents average $204 per compromised customer record.  How much would it take for you to fix the damage if your network systems were invaded and the data stolen and used for fraudulent purposes?

With next week’s blog, I will provide you with a checklist of steps to take to better protect your restaurant from cyber liability losses.  In the meantime, if you need any help at all with your restaurant insurance, please feel free to call our office, toll free, at 877-687-7557.