Bars and Taverns

Owning a Bar or Tavern is a unique risk that must be protected properly

Bars and taverns are one industry where small local businesses can thrive. Because of the differences in state liquor laws, it is difficult to franchise a bar business nationwide. This eliminates competition from the biggest national chains for the bar industry. Still, opening a bar does take a large initial investment. Because of this substantial investment, it is crucial that a small business owner properly protect their bar business with adequate commercial insurance.

When it comes to insurance, there is a distinct difference between a restaurant and a bar or tavern.  Restaurants get the majority of their revenue from food sales. Bars serve alcoholic beverages by the bottle, glass or pitcher which are generally consumed on the premises. The alcohol a bar sells is the primary source of revenue for the business.  Many offer incidental food items, such as snacks or sandwiches, but the predominant operation is the sale of alcoholic beverages. This causes an increases in the risks associated with intoxicated customers. Other exposures include music, live entertainment, various promotions and contests. Some bars include a small dance floor which also affect the cost of coverage.

Bar and Tavern Risks

Increase in frequency of claims

Because of the amount of alcohol consumption at a bar or tavern, there is an increase in the frequency of claims on commercial insurance policies. Ant business that is open to the public will have an elevated amount of claims resulting from slips, trips, and falls. As long as these claims are not severe this may bot result in an increase in insurance premium.

Increase in severity of claims

Because of the consumption of alcohol on the premises, the severity of claims increases dramatically compared to a similar business that does not serve intoxicating beverages. Depending upon the situation and the laws in your community or state, the business may be liable for damages resulting from an intoxicated driver who leaves your business and gets behind the wheel of a car. Partnering with Uber, Lyft, and the local taxi services is a great way to discourage drinking and driving. If you do have some such policy in place, it is important to bring this up when you are speaking with your insurance agent. The more steps your business takes to ensure the safety of all customers, the more likely the insurance agent is to gain additional credits and discounts on your commercial insurance policies.

Risks Related to Workers Compensation

Workers compensation exposures predominantly result from common slips, trips, and falls.  A little less frequent injuries include cuts, burns and back injuries from heavy and awkward lifting.  Interactions with rowdy customers bring additional risks. The employees in many bars tend to be low wage earners and because of this turnover tends to be high for a bar. Well-trained employees with an incentive to do their best and have clear direction result in less injuries. Company incentives to encourage long-term employment are positive signs of management control.

Additional Coverages Recommended for a Bar or Tavern:

✓ General Liability Insurance
✓ Liquor Liability Coverage
✓ Business Personal Property
✓ Workers Compensation Insurance
✓ Business Income with Extra Expense
✓ Commercial Crime/Employee Dishonesty
✓ Umbrella Coverage

Business Liability Category: Bars, Taverns and Pubs

SIC Business Insurance Codes:

  • 5183: Bars (Beer and Alcohol)

NAICS Liability Classifications:

  • 722410: Drinking Establishment with Alcohol

Business ISO General Liability:

  • 16920: Restaurant—alcohol sales greater than 75 percent—table service, dance floor
  • 16921: Restaurant—alcohol sales greater than 75 percent—no table service, dance floor
  • 16930: Restaurant—alcohol sales greater than 75 percent—table service, no dance floor
  • 16931: Restaurant—alcohol sales greater than 75 percent—no table service, no dance floor
  • 16940: Restaurant—alcohol sales greater than 75 percent—bar service only, dance floor
  • 16941: Restaurant—alcohol sales greater than 75 percent—bar service only, no dance floor

Common Workers Compensation Class Codes:

  • 9084: Bar, Lounge, Nightclub, Pub or Tavern
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