Pick-up, delivery, outdoor seating and online ordering have transformed restaurant spaces and generated new revenue streams during the pandemic, making it important for risk managers to remain engaged with insurance companies and review their coverage as renewals approach.
The need for risk transfer may have changed during the pandemic and in a tough market, insurance conditions have been tightened, which has triggered potential cover gaps for restaurants.
Especially with regard to the first insurance renewal from the pandemic, discussions with insurers are critical for communicating all business. changes and the risk management improvements that restaurants have made, says Jonathan Price, Head of Risk and Insurance, at Main Event Entertainment Inc., based in Dallas.
"We have all changed in the last year," whether it's a move to workers from home, providing personal protective equipment in the workplace or creating a socially distant restaurant space, said Mr Price, who is also the next former president of Risk & Insurance Management Society Inc .: s Dallas-Fort Worth Chapter.
"Carriers must understand the improvements we have made as a restaurant as well as the changing landscapes of restaurants that (now) can offer alcohol or food delivery, or have even added first-party food delivery that they did not historically do," he said. he.
Kristi Whistle, Louisville, Kentucky-based CEO and manager of Marsh LLC & # 39 ;s Restaurant Center of Excellence, said that changes such as restaurants implemented to be successful, such as technology upgrades for online ordering and delivery of food and alcohol, changed exposure.
Restaurants that have entered the delivery space must understand the ramifications, she said. In the case of third-party deliveries, they should "review these contracts … make sure the language of damages is adequate," Whistle said.
Alcohol-to-go is a new exposure and a big enough change for restaurants to announce and have discussions with their insurers, Whistle said. It can also be a certain cyber risk to play with online ordering, she said.
Risk managers in the restaurant industry need to be clear about the new bacterial exemptions that insurers are trying to add policies to, Price says. “We always had the typical foodborne illness, salmonella, E. coli coverage. "Now you see insurers introducing exclusions of felt bacteria," he said. "
" It's important that risk managers get a rash … and understand how an exclusion can potentially affect traditional coverage that they thought they had last year, "Mr. Price
Although sidewalk pickup is generally not considered high risk by insurers, if restaurants use their own employees for delivery, it is "quite crumpled," said Ron Levitt, president, Chicago and an accident broker at CRC Group LLC "In general, food delivery is not the saltiest business class in the industry," said Levitt. "Some insurance companies specialize in it and sign it carefully to ensure that safety procedures are in place," he said.
outsource deliveries to third parties such as DoorDash and Grub Hub, restaurants can mitigate the risk and costs of liability insurance, he
For restaurants that offer food delivery services services, even taking COVID-19 out of the equation, prices have risen anywhere from 20% to 50%, says Josh Miller, vice president, accountant for food and beverage, at Lockton Cos. Inc. in Kansas City, Missouri. "It could possibly go higher if they switch to first-party delivery," he said.
With regard to alcohol, many state governors signed temporary executive orders allowing bars and restaurants to offer alcohol withdrawal or supply orders during the pandemic, and a growing number of states, including Florida and Texas, have enacted laws that make the changes permanent.
Alcohol-to-go is a viable way for restaurants to bring in a new revenue stream, but protocols must be in place, Mr Miller said.
Each state has its own statutory requirements as to whether a restaurant can offer alcohol to go and practices around "what you can sell, who can buy it and how it must be sealed," he said.
Restaurants must control the availability of liquor liability, says Seth Johnson, Clearwater, Florida-based president, RT Binding Authority, part of RT Specialty LLC, a division of Ryan Specialty Group.
"Even before the pandemic, this was very different ultra-long coverage," depending on the country in which a restaurant operates, he said.
Drama laws in many states hold companies, including bars and restaurants, liable to serve or sell alcohol to persons who later cause death or injury. to another person or damage to property.
Some states, such as Virginia and Maryland, are gentle from a drama shop perspective, but others are strict, Johnson says.
If a restaurant has a general liability policy of $ 2 million. , maybe it can only buy a liquor sublimit of $ 100,000 or $ 200,000, for example. Getting full liquor liability in more restrictive states can be "difficult and potentially expensive," Johnson said.