Bar and Nightclub Risk Management Explained
Due to the nature of the business, bar and nightclub owners need to be prepared for more liability and claims than most other businesses. With very specific risks, business insurance coverage and bar and nightclub risk management practices need to be adequate and extensive to cover a wide variety of liability and property damage claims.
Bar and Nightclub Risk Management Strategies
With the risks being so high, owners should consider the following bar and nightclub risk management steps to better protect yourself, your employees and your establishment against claims for events & liquor liability or assault and battery etc.:
- All bar and nightclub risk management programs should keep an incident activity log where bartenders and other employees can note the date, time and nature of every incident. This can be an especially helpful risk control tool to be used as a defense in an events & liquor liability claim.
- A well run bar and nightclub risk management program requires ongoing beverage service training for bartenders and wait staff, as this will serve as an additional barrier against potential liquor liability claims.
- A best practice in bar and nightclub risk management is to require a certificate of insurance for any outside agency that provides security at the establishment. The outside agency needs to provide proof of insurance naming the establishment where they provide security as an additional insured.
- A good bar and nightclub risk management program includes the use of surveillance cameras both inside and outside the bar or nightclub to monitor activity of patrons and employees. Having cameras to record incidents can be one of the most effective ways to protect against Excessive force, liquor and assault and battery claims.
Nightclub Insurance Programs – What do they cover?
As mentioned above, nightclubs are at an elevated level of risk. A nightclub insurance program will usually contain basic insurance policies standard for most businesses but will have extensions specific to the nightclub industry.
The following insurance coverages are typically found in a nightclub insurance program and are tailored to each nightclub’s specific needs.
Commercial General Liability Insurance – Typically, a Commercial General Liability policy is needed for businesses to protect themselves from lawsuits claiming personal injury or property damage due to their products, services or business practices.
As part of a nightclub insurance program, a CGL policy can include extensions for the following liabilities:
- Liquor liability in case an intoxicated patron leaves your nightclub and causes property damage or bodily injury and sues your nightclub claiming they were overserved.
- Assault liability for situations when a patron is injured either in a fight in your nightclub involving other patrons or during an altercation with nightclub staff, typically bouncers.
- Food and product liability in case any food or beverages served in your nightclub cause food poisoning or other bodily harm.
- “Slip and Fall” liability. This coverage is standard for almost all businesses operating in a commercial building but is especially important for nightclubs. Wet floors and intoxicated patrons are an all-too-familiar combination in nightclubs that can lead to substantial lawsuits.
Commercial General Liability policies will usually cover lawyer’s fees, legal costs and settlement costs or awards for damages stemming from a lawsuit claiming that your nightclub is liable for losses suffered by a patron or a third party.
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Commercial Property Insurance – A Commercial Property Insurance policy is also a standard coverage for almost every business because fires, floods, sewage backups, gas explosions, burglaries, etc., happen every day to businesses somewhere in Canada. Without it, businesses are looking at a total loss for their property, equipment and assets in case of peril.
In a nightclub insurance program, Commercial Property Insurance will be tailored to help a nightclub protect:
- Equipment such as sound systems, kitchen/cooking equipment, refrigerators, beer taps, HVAC systems and bathroom plumbing. Nightclub equipment needs protection in case of typical hazards like fires or floods and in case they break down due to wear and tear. Staff, customers and suppliers all have the potential to damage or cause equipment failure. A typical example is clogged pipes that lead to property damage when nightclub patrons flush plastic or cellophane down a toilet.
- Against crime. Nightclubs are exposed to a high level of risk when it comes to robberies and burglaries because they are known to deal largely in cash and are open late. Speaking of theft, nightclubs also fall victim to employee theft and credit card fraud. Employee Theft Insurance is a valuable tool for ensuring your nightclub is fully protected.
As a nightclub owner, you may also want to consider Business Interruption Insurance as part of your nightclub insurance program in case your business needs to shut down because of a peril or equipment failure. Business Interruption insurance allows you to keep paying the recurring expenses you likely have as a nightclub owner while your nightclub is under repair.
An ALIGNED Advocate can provide expert guidance about insurance and risk management best practices for bars and nightclubs.
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