Insurance

[Jman]

I need a general idea of what it would cost to fully insure a very small, all age no alcohol/ no smoking club in Pennsylvania. Also, are there any insurance companies who specialize in this type of thing?

[David]

Jman:

There are a lot of insurance companies, mostly independent sellers of National Companies, that will sell you this type of coverage. The easiest thing to do is look through your local Yellow Pages under Insurance. Then ask them if they sell Business Insurance. You can also check out www.nightclub.com click on the "Reader Service Online" tab, upper left of screen just below the Nightclub and Bar logo. They will have a listing of insurance companies that you can shop and do business with that deal with our industry.

[Jman]

David,
Unfortunately, I only see one insurance agent in the section you talked about, and the link to this agent's website doesn't work.

[Baudtender]

Well, somewhere between $4.5K and $30K per year would be
my best guess. If that margin scares you, read on...

There are a few things that will affect the rate you pay:

1) No smoking: probably not. Fire insurance is a miniscule
part of your policy - most joints that go up in smoke rarely
do so because of patron smoking so that's not a huge risk
to them. Even with no smoking, expect them to insist on
smoke/heat detectors and many fire extinguishers spread
throughout the business. Don't forget you have HVAC and
product cooking/heating/cooling equipment that are at
the root of most club fires (errr... not to mention arson.)
2) All age: probably adversely ("All Ages Club" means "Young
Idiots With Little To Lose" to risk assessors.) They'll want to
see strong customer security policies.
3) No alcohol: will affect positively - you won't need any liquor
liability insurance so long as you don't allow BYOB either.
4) What coverage you want - casualty, theft, simple liability,
product liability, owner/officer liability umbrella, with a gazillion
riders you can add on for everything from sexual discrimination
lawsuits to the urinals spewing out molten lava (that's a
particularly affordable rider in Pennsylvania, by the way.)
5) What about workmen's comp insurance - you'll save some
bucks if the same company writes both policies and gives you
a package deal. Employee health insurance? Your personal
life/car/home/etc insurance? The more business you throw the
agent, the better deal you can expect to get. They get a
commission on what they write, so that's their room for
negotiation.
6) Your projected gross income - their risk exposure is directly
measured by the number of customers that visit your premises.
The best measure they have of this is your gross income, so be
prepared to estimate it up front, keep great and detailed records,
and have a CPA certify your figures if they require it. At the end
of each insurance contract term, you'll get an "audit" where they
measure what you did as opposed to what you predicted. The
beaner here is that if you underestimated, you owe them a pile
of cash to make up the difference. If you underestimated, you
can expect a partial refund. We all play the same game.
7) Very small size: will affect positively. Less for them to insure.
8) Your deductible: affects both ways. Small deductible means
larger premium, and vice versa. Won't affect to the same degree
as your auto insurance, dammit.
9) The company that insures you - wretched, rotten companies
that will string you along for a year or more before paying off a
simple undisputable claim are very cheap. Strong companies that
don't give you headaches and bullshit may or may not be cheap.
You probably can't tell before you buy which is which - so get
referrals. Of course, ask the referrer if they ever had to file a
claim and how it worked out. Get this out of your head -
insurance companies are not doing you a favor, they're making
big money off of us. They're the sharpest, snakiest gamblers
you'll probably never meet.
10) The agent - don't buy insurance from drunks. I know a
bar owner that bought a policy from a hard-drinking regular only
to find out at claim-time that the guy went bankrupt and never
deposited his binder or premiums. So sorry, says they.
11) Whether or not the company likes your kind of business.
Insurance companies live and die by their actuarial statistics, and
when they find certain kinds of companies skewing their numbers,
they run away from them. Oh sure, they'll insure you, but boy,
will you pay out the yazoo for the "privilege" and once the
inspector they send out to visit you files his report, you can
expect a list as long as your arm of demands for
structural/mechanical improvements that cost more than
everything in the building (and probably the building itself, if you
own it.) And if you choose not to do them, that's fine, they'll
cancel you and keep the premiums you've paid so far and you're
back where you started.

Go to regular bars and restaurants and ask the owners for some
referrals on who insures them. You can also check out the
PA Restaurant Association (http://www.parestaurant.org/)
which has a discount program for its members. I'm not a big
proponent of cold-calling from the Yellow Pages - too many snakes
in this field and I've been burnt enough by them. You may find
yourself with the same company for 20 years, or you may find
yourself bidding it out every damned year because the same firm
can and will adjust its rates wildly depending on how they did the
year previous. The agent's job is to treat you like a human and
a friend, the insurers job is to treat you like a risk statistic.

Be prepared to be surprised - insurance is outrageously
expensive due to the multitude of bullshit lawsuits that our
industry attracts.

I can guarantee you that there are absolute rules of thumb as
to how much it'll cost you, but we aren't allowed to know them.
The quotes you'll get from multiple bidders will vary enormously.
Don't cut corners here - get references and get multiple bids.

Baudtender

[steffen]

Great advive Baudtender... It unfortunately sounds like you've dealt with this stuff before.... Is that a good experience or bad?!?

:D :D

[Baudtender]

Well, that's a pretty profound question, Steffin. The nature of
the beast makes it difficult to have "good" experiences with
insurance companies. What I mean here is that the whole
concept is a gamble on catastrophe. If nothing happens, you
wish you had the money back. If something happens, you
wish your claim would be processed as fast as they cashed
your premium checks, but the whole process is mired in misery
regardless of what happens.

Talk about tough opening days - 6 hours into our first day
with a packed house we had the ANSUL system discharge in
the kitchen covering everything in wet chemical goo. It was
a brand new install - a defective part just plain broke. If
there was a fortunate part, it was that we had a perfect
inventory of what was lost, but it still took 9 months for the
insurance company to cut us the claim settlement check. I
don't even want to think about what would have happened
if we didn't have the cash reserves to recover and keep going
while the insurance company stalled. But, when it was all
said and done, it was the first time in 20 years that I actually
had an insurance company pay me more in claims than I
paid in premiums.

Liability insurance is a different animal - there are some bar
owners around here that swear that having such insurance is
an invitation for lawsuits - the line of thinking being that
lawyers don't sue on principal - how many lawsuits are filed
against homeless people? But having been sued a few times
by hucksters, and then being able to appreciate my investment,
I sure as hell wouldn't advise anyone not to cover themselves.
It's an ugly and expensive game, but I still think it's a necessary
evil.

Baudtender