Running a bar can be a particularly risky business. It’s wise to ensure that your establishment is protected with a wide range of insurance policies. With the financial support insurance can provide, you can feel confident that your bar will survive unexpected catastrophes, whether it’s a fire, a customer injury, or theft.

What insurance coverage do I need for my bar?

There are many types of insurance coverage to consider, but these policies are particularly relevant to bars:

General Liability Insurance

General liability insurance covers incidents of third-party property damage, bodily injury, personal injury, and advertising injury. Bars see large numbers of patrons on a daily basis, and there’s an increased risk that people could be injured when they are drinking alcohol. Incidents caused by customers tripping or slipping and falling are common.

In addition, if you serve food or hot beverages, there’s a chance that customers may have allergic reactions to ingredients, eat improperly cooked food, or burn themselves. General liability insurance can step in to cover medical bills and lawsuits if a customer is injured or has their property damaged at your bar. 

General liability insurance includes coverage for product liability, which covers injuries caused by your products, such as food and drinks you serve. If a customer falls ill after eating or drinking at your establishment, general liability insurance may cover the claim. General liability insurance also covers personal and advertising injuries, which can include libel, slander, and copyright infringement.

Examples:

• Bodily injury: A patron trips over an unmarked step and falls. While attempting to catch herself, the patron fractures her wrist. Your general liability insurance would pay for medical expenses and legal fees if the patron sues.
• Property damage: One of your servers spills a drink onto a photographer’s expensive camera. General liability insurance would cover the damages. 
• Products and completed operations: A patron becomes very ill after eating a hamburger at your bar. He sues your business. General liability insurance would provide coverage.

Commercial Property Insurance

Commercial property insurance protects the value of your business’s property, providing funds for repairs, replacement, or rebuilding if property is damaged or destroyed by a covered peril. This is a critical coverage for bars, especially those that serve food and have kitchens, which increases the risk of fire. If your location or key equipment is damaged, it can be costly and difficult to recover. Commercial property insurance can provide financial support in these situations. Commonly covered perils included windstorms, hail, fire, vandalism, and water damage.

Commercial property insurance covers the following:

• Buildings belonging to or leased by your company
• Contents of the building, including furniture, equipment, and tools
• Property of others while it is under your care, custody, or control

Example:

• A severe storm damages your bar’s roof and causes it to leak. Commercial property insurance would pay for you to repair the roof and replace damaged items. 

Business Interruption Insurance

Business interruption insurance is an important addition to your commercial property policy. In the case of a severe incident like a fire, you may be forced to stop operating your bar while repairs take place. Losing income due to your bar’s closure can lead to major financial issues, as you would still be responsible for ongoing expenses such as rent and employee payroll. Business interruption insurance can step in to reimburse you for lost income and operating expenses if your bar is forced to close due to a covered peril, such as fire or storm damage.

Example:

• After a fire breaks out in your bar, you are forced to close for three months while repairs are made.  Business interruption coverage would pay for your rent and other expenses until you are able to open your business again.

Liquor Liability Insurance

Liquor liability insurance is a crucial coverage for bars since your business revolves around serving alcohol. In many cases, commercial leases or liquor license laws may require you to have this coverage. If a customer leaves your bar while intoxicated and causes a car collision or starts a violent altercation with another person and injures them, you could be held liable.

Many states have “dram shop” laws that hold businesses liable if they serve an intoxicated customer who later causes an accident or injury. Liquor liability insurance will step in to cover any claims that arise as a result of the actions of patrons to whom your business serves alcohol. 

Example:

• One of your customers gets extremely drunk and drives his car through the patio area of a neighboring business, causing major property damage. The neighboring business sues you. Your liquor liability insurance would cover the lawsuit and any resulting settlements.

Commercial Crime Insurance

Bars typically deal with large amounts of cash payments and crowds of customers, and they may have a high employee turnover rate as well. This means that bars are particularly vulnerable to crime, both by patrons and employees. Commercial crime insurance can protect your bar from the risks of employee dishonesty or third-party crime.

Commercial crime insurance provides financial protection from losses caused by theft, fraud, robbery, burglary, forgery, or other crimes. This coverage applies both to crimes committed by outside parties and crimes committed by your own employees. 

Example:

• After noticing irregularities in your cash registers, you discover that one of your employees has been stealing cash over a period of several weeks. Commercial crime insurance would cover the loss. 

Equipment Breakdown Insurance

Bars often rely on equipment such as refrigerators, beer taps, electronic sales systems, and other items as a major part of their business. In addition, some bars make food and may have kitchen equipment. If key equipment breaks down, it can severely slow down or halt your business operations.

If your equipment breaks down due to an internal or mechanical malfunction, equipment breakdown insurance can provide funds to repair or replace damaged equipment. This insurance can also cover lost business income while your equipment is out of commission, and pay to replace food or inventory that spoils as a result of the breakdown.

Example:

• A power surge damages your bar’s electronic point-of-sale system, severely slowing down your ability to take orders over the weekend, which is typically your busy time. Your equipment breakdown insurance would pay for repairs and reimburse you for lost income.

Workers’ Compensation Insurance

Workers’ compensation insurance covers employees’ medical expenses and lost income if they suffer an injury or illness because of their work. Workers’ comp also provides financial benefits for an employee’s dependents in the case of a work-related employee death.

There are many common sources of injury for bar employees, from slips and falls, lifting heavy objects, cuts, and burns to dealing with unruly customers. This makes obtaining sufficient workers’ comp coverage especially important. In almost every state, workers’ compensation insurance is required for employers, and there may be serious fines and penalties for companies that do not secure adequate coverage.

Example:

• One of your employees injures his back while lifting a heavy crate of supplies. Your workers’ compensation insurance would pay for his medical expenses and a portion of his lost income if he is unable to work for a time.

Additional Coverages

• A business owner’s policy (BOP) combines general liability, property, business interruption, and extra expense coverage into a single package. For qualified small businesses, a business owner’s policy could help you obtain a wide range of coverage for a lower cost than buying each coverage separately. 
• Cyber liability insurance can cover financial losses that result from cyber events such as data breaches, hacking, viruses, denial of service attacks, and more. This is an important consideration for bars that take a high volume of credit card transactions.
• Employment practices liability insurance protects your business against lawsuits by prospective, current, or former employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a bar with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for bars and taverns:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Business Insurance and Coronavirus

COVID-19 has had a major impact on bars, and bar owners may be wondering how their business insurance will handle this situation. It’s important to understand that you cannot purchase a new policy to cover coronavirus-related losses that have already occurred; insurance policies will not cover losses that have already been discovered.

In the majority of cases, business interruption insurance policies you have in effect will not cover losses caused by coronavirus. These policies typically only cover losses caused by a direct physical loss or damage, like a fire or theft. Some business interruption policies will include coverage for losses caused by “communicable or infectious diseases,” but this is rare.

How workers’ compensation insurance handles coronavirus cases varies widely depending on the state. If you have employees who contract coronavirus on the job, they may be eligible for workers’ compensation payments in some states.

If your business continues operating and a client or other third party sues you claiming that they contracted coronavirus after visiting your business, some commercial general liability policies will provide coverage, depending on your individual policy and the laws of your state.

Consult our FAQ on coronavirus and business insurance for more information.

Final Word

When you run a bar, it’s important to be aware that this is a high-risk industry that presents many hazards. If you maintain a comprehensive range of insurance coverage, your business will be financially protected from common hazards such as fires, theft, injuries for which you could be held liable, and more. With appropriate insurance, you can feel secure knowing that your business would be protected in the event of a disaster.