Bars, Taverns and Restaurants

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Bars, Taverns and Restaurants have many different risks they face. The differences between a food truck, a four star restaurant and a diner are as different as the differences between a florist, a gun club, and a dry cleaners.

Many of these different risks cause a bar tavern or restaurant to be classified very differently depending on their operations. These risks go a long way towards determining which classification code a business is placed in. Which classification code the business is classified in is a large part of what determines how much they pay for commercial insurance. Limiting these risks before they turn in to insurance claims can save your business immensely over the long term.

Most states determine if a business is a restaurant (not a bar or tavern) if it makes a certain percentage of its revenue from food and not alcohol sales. Typically that amount is 50%. If the business makes more than 50% of its revenue from alcohol sales it is in a riskier classification code and is charged a higher premium for commercial insurance.

Separate from the percentage of alcohol sales a business makes, the first and most obvious risk a restaurant, bar or tavern faces, is if the business offers alcohol or not. If the business does offer alcohol, does the business offer hard alcohol or just beer and wine. After alcohol consumption the next risk is how late the business is open. You can imagine the difference in risks between a diner open from 5:00 AM –  2:00 PM, a restaurant that closes at 8:00 PM and a bar that serves no food and stays open until 2:00 AM. The latter might carry a few more risks that might turn in to insurance claims. Because of this risk the business is going to pay more in premium for their commercial insurance.

Most insurance carriers recommend a certain amount of insurance coverage for businesses in this industry those coverages include:

  • General Liability
  • Liquor Liability
  • Commercial Property
  • Business Personal Property
  • Workers Compensation
  • Business Income and Expense Coverage
  • Commercial Crime Coverage
  • Umbrella Coverage

General Liability will cover the business for slips and falls that happen on the property, Liquor Liability Is required by law in most states and the amount of coverage is usually determined by the amount and type of alcohol you serve. Commercial Property Insurance covers damages to the building and most fixtures attached to the building. Workers’ Compensation is required by law in nearly every state and is coverage to prevent lawsuits for injuries that occur to your employees as part of normal business operations. Business Income and Expense Coverage is an addition to a Commercial Property Policy and will cover your business for loss of revenue due to being closed after damage to your premises. Commercial Crime Coverage will cover your business for crimes committed by your employees while acting on behalf of the company.  Umbrella Coverage is designed to extend the limits of existing policies when those limits have been met. It is important to note that Umbrella Policies only kick in on top of other existing policies. If the cause of the damage is not a covered peril than the Umbrella Policy will not be activated.

Below is a list of all the classification codes that might be included as a Restaurant, Bar or Tavern.

SIC Business Insurance Codes:

    •   5183- Bars (Beer and Alcohol)

NAICS Liability Classifications:

    •   722410- Drinking Establishment with Alcohol

Business ISO General Liability:

•   Code: 16920- Restaurant- alcohol sales >75%- Table service, dance floor

•   Code: 16921- Restaurant- alcohol sales >75%- No table service, but dance floor

•   Code: 16930- Restaurant- alcohol sales >75%- Table service, no dance floor

•   Code: 16931- Restaurant- alcohol sales >75%- No table service, no dance floor

•   Code: 16940- Restaurant- alcohol sales >75%- Bar service only, with dance floor

•   Code: 16941- Restaurant- alcohol sales >75%- Bar service only, no dance floor

NCCI Class Codes:

  • 9082 – Traditional Restaurant.
  • 9083 – Fast Food Restaurant
  • 9084 – Restaurant who receives more than 50% of their revenue from the sale of alcohol.
  • 9058 – Restaurants owned or operated in a hotel.
  • 9053 – CA, NJ and OK includes employees located in clubs like swimming, tennis or fitness.
  • 9079 – CA, MA, NJ, OR or TX depending on the st applies to vending, dance halls and hotels.
  • 9072 – Applies to NY only. Includes fast food restaurants.
  • 9071 – Applies only to NY. Full service restaurants, buffets, diners and other establishments that include wait service. May include musicians.

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