Taverns, Bars, and Pubs – Group Coverage

Beer Distributors, Beverage & Soda Store Insurance

When examining the risk exposures of a beverage store or wholesaler it is important to create a list of assets and liability concerns. This process enables one to analyze the coverage needed to protect against a loss in these areas.

Since no two businesses are exactly alike, when creating the list, it is advantageous to rank the various operations or activities in one column in order of sales or percentage of time and rank the value of the assets in another column. It may be worth noting the likelihood of a claim for each item listed. This may be illustrated by the following:

Assets	Exposures	Activities	Exposures
Building	Fire, Lightning, Wind, Hail, Earthquake, Flood	Festival, Event, Sponsorship	Liquor and Premises Liability
Stock	Water Damage, Temperature Change	Delivery of Stock	Auto Liability, Product Contamination
Business Income	Loss of Power, Flood	Workers’ Strike	Business Shutdown
Staff	Strike, Virus	Loading & Unloading	Back Injury to Worker
Monies & Securities	Pilferage, Theft	Wrongful Termination	Lawsuit by Employee
Data	Data Breach	Pension Funding	Cyber Fraud or Crime

The above chart may have the assets and activities correspond, such as with the row listing the workers, indicating that there are common characteristics that should be addresses for a loss to the worker as an asset as well as the liability exposure for an injury. However, this is not always possible as with the example of the building–although there is a premise liability concern.

Many beverage stores and distributors own their own buildings. Often overlooked would be the appurtenant structures and awnings that are common on the premises. It is important to evaluate the refrigeration equipment as all these assets are often limited or require the property to be scheduled. Storage sheds, even if located on the premises, may be subject to scheduling. In other words, most carriers require the appurtenant or other structure to be listed as a separate building on the policy. This includes the content contained within. Hence, we recommend covering the items on a blanket basis if possible as the valuation of the property can vary from day to day with respect to the stock.

Another major concern with a beer and soda distributor is insuring heavy and mobile equipment such as the walk-in refrigerators and the forklifts. Check with the carrier if these items will be covered as Business Personal Property, or Machinery and Equipment. It may behoove the insured to schedule these items which can offer more flexibility with respect to the replacement cost, method of recovery, and coverage. In addition, mechanical breakdown, often an exclusion can be addressed.

What would happen if the stock was damaged due to spoilage?

During the peak season, many beverage stores keep thousands of dollars’ worth of stock on the premises and in the of the summers, much of this inventory is subject to damage due to the change in temperature. This is commonly caused by the breakdown of refrigeration equipment. Spoilage coverage is often excluded or limited to standard BOP and property forms; therefore, it is important to evaluate the need to protect against this exposure if the equipment were to fail. Equally as important is how the failure occurs as most policies will only cover in the event the loss was caused by direct physical damage to the equipment, such as a fire, lightning, or wind damage. What if the loss occurred because of a power failure? Or the breakage of a thermostat? Generally, these exposures can be added back by endorsement.

Another major concern of beverage distributors is protecting the loss of income. When examining this concern, it is vital to determine how the income is derived. Wholesalers may have an interest in supplying events and exhibitions. Weather related concerns can cause a disruption to these events. Is event or exhibition coverage needed? How about income from dependent properties? Does the distributor supply a a stadium or arena. Is coverage afforded to the shutdown of the dependent property? Again, this may be added back by endorsement.

Liability concerns include premises, product, operations, and often overlooked, non-owned auto and liquor liability. Most insureds assume there is coverage for liquor liability, however many carriers exclude the liability associated with serving liquor. Host liquor is often included, but if liquor is sold at an event or festival, any claim resulting from the sale of the liquor may be excluded. Non-owned auto liability is important in the event an employee is delivery the stock to party in their own vehicle and a claim result from an auto accident. Generally, the employee’s auto insurance would be primary, but the distributor may be held liable if the employee was working on the time of the store.

Workers’ compensation and statutory disability or DBL insurance may be required by law. Building coverage and limits for monies & securities, as well as plate glass insurance are additional options that may be important to consider.

LIABILITY & UMBRELLA INSURANCE :

Products & Completed Operations
Premises & Operations
Personal & Advertising Injury
Hired & Non-Owned Auto Liability

PROPERTY INSURANCE :

Stock & Inventory
Loss of Business Income

BUSINESS VEHICLE INSURANCE :

Commercial Auto & Trucks
Liability, No-Fault, Uninsured Motorist
Comprehensive & Collision
Hired & Non-Owned Autos
Broadened & Out of State PIP

WORKERS COMPENSATION INSURANCE :

Safety Groups
Dividend Plans

Insurance & Employee Benefits