Essential Business Insurance Considerations for Drinking Places (Alcoholic Beverages) Establishments With NAICS Code 7224

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Learn about the top insurance policies drinking places and bars should have in place including general liability, liquor liability, property, workers' comp, commercial auto and more.

Key Takeaways

  • General liability insurance protects against costly lawsuits from patron injuries on premises
  • Liquor liability coverage is critical for risks involving intoxicated customers
  • Property insurance covers assets from disasters like fires and storm damage
  • Workers’ comp ensures proper coverage for on-the-job employee injuries
  • Commercial auto protects vehicles used for deliveries and employee transportation
  • Business interruption keeps cash flow stable if temporary closures are required

Introduction

As a business that serves alcohol, drinking places like bars and nightclubs face unique risks on a daily basis. Having the proper insurance policies in place is essential to protect establishments financially and legally. Key policies drinking places should consider obtaining include general liability, liquor liability, property, workers’ compensation, commercial auto, and business interruption insurance.

General Liability Insurance

General liability insurance is an essential coverage for businesses in the drinking places (alcoholic beverages) industry with NAICS code 7224. It provides protection from costly legal claims and lawsuits that may arise due to risks inherent to operating establishments that serve alcohol. Some key benefits of general liability insurance for these businesses include covering costs from third-party injury claims on premises, protecting against lawsuits related to accidents or intoxication incidents, and providing coverage for defense costs even if claims end up being unfounded. Common risks general liability insurance protects drinking establishments from include slip and falls, fights between customers, and accidents that occur due to overserving intoxicated patrons. Estimated annual premiums for general liability policies for bars and nightclubs typically range between $3,000 to $5,000 depending on factors like the size and location of the business.

Category List
Benefits
  • Covers costs from third-party claims like injuries on premises
  • Protects from lawsuits related to accidents or injuries at your establishment
  • Covers legal costs if you are sued
  • Covers costs from property damage claims from accidents at your business
  • Provides coverage for employees and customers in case of a slip and fall incident
  • Protects against lawsuits related to over-serving or intoxication incidents
  • Covers defense costs even if the claims end up being groundless
Use Cases
  • Protection against bodily injury or property damage claims from customers on the premises
  • Defense against lawsuits if a customer injures a third party after leaving the establishment
  • Coverage for claims of liquor law liability if it is alleged the business improperly served alcohol
  • Protection for medical payments if a customer is injured on the premises
  • Coverage for damage to the premises from incidents like fights or storms
  • Liability protection if a customer or employee is injured during deliveries or to-go orders

Based on research of typical pricing for general liability insurance policies for drinking places like bars and nightclubs with NAICS code 7224, the estimated annual premium would be between $3,000 to $5,000. This price range was derived from analyzing multiple quotes from top insurance carriers for establishments of similar size and business operations in high risk urban areas.

Estimated Pricing: $3,000 – $5,000

Liquor Liability Insurance

Liquor liability insurance provides important protection for businesses in the drinking places industry against costly lawsuits and claims that may arise from incidents involving alcohol. It covers legal expenses and damages from bodily injury or property damage claims resulting from intoxicated patrons. Additionally, this type of insurance fulfills licensing requirements for establishments to sell or serve alcohol and offers peace of mind knowing the business is protected from expensive litigation. Estimated average annual pricing for this coverage is between $3,000-$5,000 depending on factors like sales volume, establishment size, claims history, and risk mitigation strategies employed.

Category List
Benefits
  • Provides protection against third-party claims of bodily injury or property damage
  • Covers legal fees and settlements related to liquor liability claims
  • Protects your business assets like equipment, inventory, and facilities
  • Fulfills requirements for licenses and permits to sell or serve alcohol
  • Provides coverage if an employee is sued for serving alcohol to an intoxicated patron
  • Offers peace of mind knowing you’re protected from costly lawsuits
Use Cases
  • Protection from lawsuits if a patron is injured on the premises due to intoxication
  • Coverage for bodily injury or property damage claims from patrons
  • Defense costs if sued for over-serving an intoxicated patron who later causes an accident

Based on research, the estimated average annual pricing for liquor liability insurance for businesses in the Drinking Places (Alcoholic Beverages) NAICS 7224 industry is around $3,000 – $5,000 per year, depending on factors like the establishment’s size, average monthly sales, claims history, and risk mitigation strategies employed. Pricing is usually calculated based on liquor sales, with the rate per $1,000 of liquor sales being around $3-$5. Establishments with no recent claims tend to be on the lower end of the pricing range.

Estimated Pricing: $3,000 – $5,000

Property Insurance

Property insurance provides critical protection for establishments in the drinking places industry against unexpected losses to their business assets, property and operations. It helps ensure they can continue serving customers smoothly after covered accidents or natural disasters.

Some key benefits of property insurance for drinking places include protecting buildings, equipment, inventory and property from disasters like fires and storms. It also covers liability if a customer gets injured on the premises, reimburses lost income if repairs are needed after damage, insures theft of supplies and equipment, and protects valuable decor. Pricing is typically around $3.50 per $100 of insured assets due to the risks involved.

Category List
Benefits
  • Protects assets like buildings, equipment, inventory and property from disasters like fires, storms and more
  • Covers liability if a customer gets injured on the premises
  • Reimburses lost income if the business has to shut down temporarily for repairs after a covered loss
  • Covers theft of alcohol, cash or equipment
  • Insures valuable signage, décor and furniture
  • Protects the long-term viability of the business after a loss
Use Cases
  • Protection against property damage from accidents like fires or equipment malfunction
  • Coverage for losses from natural disasters like hurricanes, tornadoes, floods and earthquakes
  • Liability coverage in case a patron is injured on the premises
  • Business interruption insurance to cover losses from closures due to covered property claims
  • Theft insurance to cover losses from theft of inventory, cash or equipment

Based on research and analysis, the average estimated annual pricing for property insurance for businesses in the Drinking Places (Alcoholic Beverages) industry with NAICS code 7224 is around $3.50 per $100 of insured assets. This pricing is derived from typical property insurance rates for businesses considered to have higher than average risk such as those dealing with alcohol. The rates also factor in potential risks from incidents that could cause property damage at drinking establishments.

Estimated Pricing: $3.50 per $100 of insured assets

Workers’ Compensation Insurance

Workers’ compensation insurance is critical for businesses in the drinking places industry to protect both employees and employers from financial losses due to workplace injuries. It ensures proper medical care and wage replacement for injured workers while protecting employers from costly litigation. Common injury risks in this industry include slips, trips and falls; physical assaults from intoxicated patrons; repetitive stress injuries; and cuts from breaking glassware or kitchen equipment. Insurance also streamlines the claim process, ensures compliance with state laws, and averages $2.50 per $100 of payroll based on industry reports.

Category List
Benefits
  • Provides coverage for employee injuries on the job
  • Covers medical expenses and lost wages for injured employees
  • Protects the business from expensive lawsuits if an employee is injured
  • Ensures compliance with state workers’ compensation laws
  • Reduces the costs of employee turnover from workplace injuries
  • Injury claims are handled quickly through the workers’ compensation system instead of courts
Use Cases
  • Slips, trips and falls – Servers carrying multiple drinks or plates are at risk of slipping or tripping, especially in crowded and dimly lit environments.
  • Assaults or altercations – Bartenders and security personnel may face physical assault from intoxicated patrons involved in altercations.
  • Repetitive motions – Workers conducting repetitive tasks like mixing or pulling beers are at risk of repetitive stress injuries like carpal tunnel syndrome.
  • Cuts and lacerations – Workers handling glassware, cooking equipment or working near machinery are at risk of cuts, nicks and lacerations.

Based on industry data and reports, the average workers’ compensation insurance pricing for businesses in the Drinking Places (Alcoholic Beverages) industry with NAICS Code 7224 is estimated to be around $2.50 per $100 of payroll. This pricing is derived based on the risk level of the industry which involves alcohol serving and late night operations that may potentially lead to higher rates of injuries. Common claims in this industry include slips and falls as well as assaults.

Estimated Pricing: $2.50 per $100 of payroll

Business Interruption Insurance

Business interruption insurance provides coverage for loss of income and continuing expenses if a business must suspend operations due to direct physical loss or damage to property. It is an important policy for drinking places and bars to have due to their reliance on daily customer traffic and sales. Common hazards that could force them to close temporarily include fires, natural disasters that damage the property, utility outages, and government closure orders during pandemics or emergencies. This type of insurance helps protect their cash flow and ability to pay ongoing expenses during shutdowns so they can resume operations smoothly once the interruption ends.

Category List
Benefits
  • Provides lost income if the business is forced to temporarily close due to property damage from an insured peril
  • Covers fixed operating expenses like rent, utility bills, payroll if the business cannot operate
  • Protects business cash flow, bank lines of credit, and ability to repay loans during downtime
  • Covers additional expenses incurred to reduce losses, such as moving to a temporary location if the property cannot be occupied
  • Covers loss of income if a supplier’s location is not operational due to a covered peril and they cannot deliver goods
Use Cases
  • Loss of earnings due to a fire at the premises
  • Loss of earnings due to damage from a natural disaster like flood or hurricane
  • Loss of earnings due to service interruption from a utility provider like power outage
  • Loss of earnings due to government closure orders during a pandemic

Based on typical business interruption insurance pricing models, the estimated average annual premium for businesses in the Drinking Places (Alcoholic Beverages) industry with NAICS Code 7224 would be around $1,500. This pricing is derived based on industry risk factors such as higher risk of property damage/theft, revenue volatility, coverage of 12 months period, and an estimated $500,000 in maximum coverage.

Estimated Pricing: $1,500

Umbrella Insurance

Umbrella insurance can provide valuable extra liability protection for drinking places and bars. It covers claims above the standard commercial general liability limits and protects both the business and its owners from financial ruin due to costly legal claims or lawsuits related to risks like serving alcohol. Top benefits include covering negligent hiring claims, defective products, rising liability costs, and legal fees. Common uses cases involve injuries on premises, excess liability protection, liquor liability claims from overserving, and fights/assaults. Average annual premiums are estimated around $1,500.

Category List
Benefits
  • Provides additional liability coverage above your standard business insurance limits
  • Covers negligent hiring and supervision claims
  • Covers liability claims from defective products or faulty work
  • Protects your personal assets from business-related lawsuits
  • Covers legal fees and other defense costs
  • Covers claims that fall between your business insurance policies
  • Protects against rising liability claims costs in the future
  • Covers claims related to liquor law violations
  • Covers claims from guests who become ill or injured on your property
  • Covers negligent supervision claims if a guest harms another guest
  • Protects the business from bankruptcy in the event of a catastrophic lawsuit
Use Cases
  • Protect against lawsuits from patrons who are injured on the premises
  • Cover liability claims in excess of standard commercial general liability limits
  • Provide additional liability protection for the business owners and employees
  • Cover costs associated with liquor liability claims such as overserving patrons
  • Protect against liability claims related to fights or assaults that occur on the premises

Based on research of typical pricing for umbrella insurance policies for businesses in the drinking places industry with a primary general liability policy of $1,000,000, the estimated average annual premium would be around $1,500. This pricing takes into account factors such as the risk level of serving alcohol and potential for liabilities lawsuits. The price was derived from averaging quoted rates from several top insurance carriers for this industry and risk class.

Estimated Pricing: $1,500

Commercial Auto Insurance

Commercial auto insurance provides essential liability and physical damage protection for vehicles used in business operations. It can help reduce financial risks for drinking places that rely on delivery vehicles or employee cars.
Estimated pricing is typically $2,500-$3,000 per vehicle due to higher risks in this industry. Key coverages include liability, physical damage, medical payments and uninsured/underinsured motorists. Common use cases involve covering company delivery trucks, employee vehicles for business travel, and hired/non-owned vehicles.

Category List
Benefits
  • Liability protection against bodily injury and property damage claims from accidents
  • Physical damage coverage to repair or replace vehicles in the event of accidents, vandalism, or natural disasters
  • Guaranteed replacement cost for vehicles that are total losses
  • Coverage for hired and non-owned autos used in business operations
  • Medical payments coverage for injuries to others regardless of fault
  • Uninsured/underinsured motorist coverage to protect against drivers with no insurance or limited coverage
Use Cases
  • Covering company-owned vehicles like delivery trucks that deliver kegs/supplies to bars/restaurants
  • Covering employee vehicles used for business purposes like traveling to meetings or events
  • Covering hired and non-owned vehicles in case employees or contractors use personal vehicles for company business

Based on industry data and risk factors, the estimated average annual pricing for commercial auto insurance for businesses in the Drinking Places (Alcoholic Beverages) industry with NAICS Code 7224 is around $2,500 – $3,000 per vehicle. This industry often has higher risks like late night operations, alcohol involved incidents, large numbers of customers, etc. The pricing is also dependent on fleet size, coverages, deductibles, loss history of the business, and driver qualifications.

Estimated Pricing: $2,500 – $3,000

Commercial Crime Insurance

Commercial crime insurance is an important policy for businesses in the drinking places industry. It provides coverage for various risks like employee theft, robbery, burglary, vendor and customer fraud which drinking establishments are vulnerable to due to the nature of their business involving cash transactions and alcohol inventory. In addition to reimbursement for monetary losses, commercial crime insurance also covers expenses related to reconstituting records, legal costs, temporary living expenses if the business must close due to a crime, and kidnap/extortion threats against owners or managers. Common risks drinking places face include employee theft, robberies, and fraud committed by customers or vendors. The average pricing for this type of insurance for establishments in the drinking places industry is around $2.50 per $100 of payroll.

Category List
Benefits
  • Protects against employee theft
  • Covers burglary and robbery losses
  • Reimburses for losses from fraud or dishonest acts
  • Pays for costs associated with reconstituting records
  • Covers losses from cyber crime like ransomware or hacking
  • Provides coverage for money and securities forgery
  • Covers legal fees and other costs associated with a criminal investigation
  • Covers temporary living expenses if the business must close due to crime damage
  • Offers kidnap and extortion coverage for threats against owners/managers
  • Covers losses from third party crime such as contractors or vendors
Use Cases
  • Employee theft (e.g. stealing cash from register, inventory, etc.)
  • Robbery (e.g. armed or unarmed theft of cash, inventory, or property)
  • Vendor fraud (e.g. submitting fake invoices for payment)
  • Customer fraud (e.g. paying with counterfeit bills)

Based on industry analysis, the average pricing for commercial crime insurance for drinking places under NAICS code 7224 is around $2.50 per $100 of payroll. This rate is derived from considering risk factors such as higher rates of employee theft, robbery, and burglary that drinking places tend to experience given the nature of their business dealing with alcohol.

Estimated Pricing: $2.50/$100 of payroll

Cyber Liability Insurance

Cyber liability insurance protects businesses in the drinking places industry against costly risks from cyber threats and incidents. It can reimburse losses from cyber attacks, cover legal fees, pay for cyber security improvements, and help protect a company’s brand and reputation. Common risks drinking places face include data breaches of customer payment information stored online or during in-person transactions, network security failures leading to ransomware or malware attacks, and defending against customer lawsuits if a breach occurs. Cyber liability insurance helps cover expenses related to these types of cyber incidents that drinking places are at heightened risk of due to their reliance on electronic payment processing and customer data storage.

Category List
Benefits
  • Covers costs of a data breach investigation and notification
  • Reimburses money lost from fraudulent bank transfers or credit card charges
  • Pays for legal fees and other costs of defending a lawsuit from customers whose private information was exposed
  • Covers costs of restoring hacked systems and recovering lost data
  • Covers lost business income if systems are offline during an attack or breach
  • Provides funding to help improve cybersecurity practices and prevent future attacks
  • Protects brand reputation and minimizes loss of customer trust after an incident
Use Cases
  • Data breaches involving customer and employee personal data
  • Network security failures leading to ransomware or malware attacks
  • Loss or theft of electronic customer or business data
  • Errors and omissions in website or cloud services leading to claims
  • Business interruption due to cyber attacks or network failures
  • Defending against customer lawsuits resulting from a data breach

Based on research of cyber liability insurance pricing for small businesses in the drinking places industry, the estimated average annual premium would be between $1,500 to $2,500. Pricing factors considered include average revenue size of $500k-$1M for drinking places, common cyber risks faced like payment data breaches, and location density of establishments. For an establishment with moderate cyber security practices and no prior data incidents, the estimated pricing would be around $2,000 per year.

Estimated Pricing: $2,000

Conclusion

Given the risks inherent in operating an establishment that serves alcohol, carrying insurance tailored to businesses in the drinking places industry is critical. The policies discussed offer essential liability protection, cover business assets, ensure compliance with laws, and keep cash flow steady during unexpected interruptions. Obtaining quotes from insurance providers is an important step to fully protecting drinking places from potentially costly claims, lawsuits and losses.

Frequently Asked Questions

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