There's no doubt that operating a nightclub or bar can be an incredibly lucrative venture bringing potential for significant profits, especially if your venue is one that draws the crowds. But with plenty of people comes plenty of risk, and depending on the venue size, type and a range of other factors, different levels of insurance should always be considered. Here's what to think about if you operate a hospitality business, especially those serving alcohol.
Property Insurance for the Building Itself and Contents
If the physical premises are owned outright, the building itself should be insured. Fire can represent a very real risk in hospitality venues, especially those operating a kitchen and certain styles of cookery including open cooktops increase fire risk. It may also be worth finding out fire insurance provides cover for smoke damage, as this can affect carpets, furnishing and other equipment.
Property insurance may not be to be taken out if you rent from a landlord, but all venue owners should enquire what level of cover is included in the rent and whether this covers the content of the venue that could be affected in the instance of a disaster like a fire, flood or storm.
Equipment Failure or Damage & Loss of Income Insurance
Refrigeration and kitchen equipment, bar taps, drainage, sound and entertainment systems all have the potential to unexpectedly stop working making it worth obtaining cover for any unforseen business repairs. There are also insurance options to shield your business against partial loss of income if the repairs are so significant the doors have to be closed until the business gets back up and running.
This is probably the most important form of insurance for nightclub and bar owners, and is in many instances is compulsory when operating a hospitality business, especially those serving alcohol. Public liability insurance provides cover for any patron who may injury themselves in your business with premiums will be determined based on the amount of risk, venue size, location of the establishment and the annual revenue of the business.
An extension to public liability insurance is product liability, which provides cover for potential health issues that could occur from patrons consuming food and beverages served in the establishment. Depending on the type of bar or nightclub different levels of liability insurance should be considered, including concert liability and liquor liability to protect against issues arising from the use of alcohol including what can happen to patrons after they leave the venue.
There's potential for all hospitality businesses to be broken into or robbed while trading, whether through an armed hold up or employee dishonesty. It's not just money that could be at risk; cover against theft includes stock, assets and other equipment of value. There are different levels of theft insurance. Some cover may provide against physical property, others against cash or employee dishonest and some umbrella policies provide cover against all three.
There's no doubt that business insurance is a necessity for all hospitality businesses, including nightclubs, bars and restaurants, especially as the business grows. To determine the best level of cover, it is often worth speaking to a broker through companies like National Corporate Broking Pty Ltd for more advice based on the specifics of the hospitality venue. In some cases, a cost/benefit analysis can be useful to determine how important certain levels of cover may be, based on the level of risk that is present.Share