Archive for the ‘spoilage’ Tag

Restaurants & Caterers – some great things to know   Leave a comment

The article that I’m pasting below is something that I wrote for the New North Business Matters insurance issue (yours truly is on page 18).  I’m going to post it here, as I haven’t really put anything up in quite a while during the research phase for the Marcellus Shale post(s).  I’ve read quite a bit about Marcellus Shale and the implications for homeowners and businesses, and it’s actually quite troubling.  I’m hoping to have something very soon (a week or less)!

Without further ado, an article I wrote providing tips and information for food service owners looking to improve their insurance:

“I’m paying for a product that I hope I’ll never use.”  It’s a common complaint of any business owner purchasing insurance, and it makes sense.  No one wants to go through the stress of a claim, even if it’s handled efficiently by the insurance company.  If you insure your restaurant properly, however, you can dramatically reduce the amount of anxiety and tension you face – both when putting the policy in force and if you have a claim.

How do you insure your restaurant properly?  There are several things you can do to soften the blow by obtaining cost effective and thorough insurance coverage.  Additionally, there are some specific coverages you can put in place to protect against the unique exposures that food service operators face.  While most of my suggestions apply to restaurants, you can modify them to fit any style of food service operation.

There are several things you can prepare to obtain the best rates If you have deep fat frying, make sure that you have a UL300 approved Ansul wet system, and that it’s under contract for service on at least a quarterly basis.  Your hoods and ducts should also be under contract for quarterly cleaning and servicing – and the filters (baffles) should be run through dish on at least a weekly basis.  The cleaner that your filtration and safety systems are, the more likely it is an underwriter will be to give you great rates.  Make sure that your service tags for all systems are prominently displayed!  And, of course, the overall cleanliness and attractiveness of your restaurant, the more desirable it will be to the insurance company.

Other things that can help reduce your rates:

  • Have an employee handbook with enforced guidelines on safety and food handling protocol.
  • Make sure that any employee that will handle alcohol on a regular basis is either TIPS or RAMP certified.
  • Hold regular safety meetings, and if you can, have a certified safety committee.
  • Make sure that ALL areas of your location(s), inside and out, are very clean and well-maintained.

Have some basic information handy when getting quotes – square footage and seating capacity of each location, gross sales (including a break down between food & liquor), and your updated annual payroll (this MUST include tips!).  The more information you have available, the faster the quoting process will be.  Anticipate filling out an application for liquor liability coverage.

The coverages below are indispensable for food service operations, yet many policies don’t address them appropriately.  Companies like Travelers, Zurich, Nationwide, Ohio Casualty, Erie, and Penn National offer excellent policies for food service operations, but PLEASE take the time to discuss the following coverages with your agent when quoting – regardless of what company offers you quotes.

Spoilage and contamination coverages: Make certain that they’re addressed by your policy – and make sure that the limits provided are adequate!  I insure an upscale restaurant who had adequate coverage for the food they maintained on premises – but not nearly enough to protect their extensive wine and liquor stock!  Make sure to review your limit AND your inventory when purchasing these coverages!

Utility Services coverage, direct damage and time element:  This is essentially an offshoot of spoilage coverage that protects against either your product spoiling, or you losing income, due to a water or power failure.  Make sure that it INCLUDES off-premises occurrences.  You MUST include off-premises occurrences, and make sure that overhead lines coverage is provided!  This means that if the power failure occurs due to something that happens off your premises, your spoiled product and lost income will be covered (distance/radius limitations will often apply).  I had a client who had this coverage and thought he would never need it…. Until someone crashed into a telephone pole down the block and he lost power for over 24 hours!

Employment Practices Liability (EPL):  Simply put, EPL provides protection in the event of a lawsuit due to sexual harassment, discrimination (age, gender, race, etc), wrongful termination, and more.  It can even include vendors and customers if third party coverage is added.

Employee dishonesty will reimburse you if an employee is stealing money, product, or other goods from the business.  If possible, make sure to specify Discovery Basis!

If you provide Valet services, make sure to let your agent know and get quotes for garagekeepers liability.  Last, make sure to include business income and extra expense coverage on the policy – actual loss sustained is the best format, if available.

Fine print time – make sure to ALWAYS discuss coverages thoroughly with your agent.  Each company will handle coverage differently.  These suggestions are good starting points, but they are by no means comprehensive or always applicable.  Your agent will go over in more detail the coverages above, and hopefully some additional things for you to consider.  Good luck and rest easy – insurance is in place to protect you and your business!

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3 coverages you’ve never reviewed (but have to have) – Business Edition   1 comment

business insurance

Sammy says these coverages are no joke!

Hi hi!  I’m back this week to see what we can do to help our local business owner’s out.  Last week we went over some basic insurance annoyances.  This week we are going to take a look at how to avoid some of that pain come claims time!  The three main coverages we are going to review apply to virtually every business – but I’m also going to go over a special one just for contractors & one for restaurant owners!  It’s a busy week!

Employment Practices Liability (EPL) – The first coverage I’m going to dig into is quite possibly the most relevant one for any business owner with employees.  It’s also one that many people never heard of!!   Coverage is going to vary from company to company, but I’ll give you a basic break down – if you have employees, and one of them sues you for wrongful termination, sexual harassment, EEOC violations or discrimination, failure to hire/promote, etc, EPL will cover two things – the cost of defending yourself against the suit, and any settlement or award that’s granted (up to policy limits, of course!).  There are other coverages that can be added (such as making wage or overtime errors, or harassment of a client or vendor), but that’s the general idea!  Even with a lower limit, you can at least hire an attorney to protect you with minimal out of pocket cost.

Employee Dishonesty – While we are on the topic of employees, why not look at it from the other direction?  Let’s say that you have an employee who is stealing money or goods from you – how would you cover that loss?  Obvious answer here – Employee Dishonesty!  “Wait a minute,” you might say, “that’s already covered on my policy!”  “Well, yes and no” says Sammy.  You might have policy that includes a throw-in amount of this coverage, but it’s usually minimal – $10,000 or $25,000.  If you have a larger operation, or sell higher valued items (cars, machinery, jewelry etc), it may not be enough!  What if an employee at a jewelry store decides they are quitting, and on their last day walks out with a handful of diamond rings?  Or, consider this – there was a case recently where an employee of an auto dealership had been stealing smaller amounts of money from each sale, and ended up getting caught after stealing MILLIONS!  $10,000 is a drop in the bucket in cases like these – and you have to cover the rest of the loss yourself!  Basically, take a look at what you’ve got and make sure you are comfortable with it!

Business Income & Extra Expense (BI/EE) – Are you running an operation that depends on a building, or the contents within?  Who isn’t!  Virtually everyone could have a BI/EE loss, but not everyone is carrying the coverage.  To make it simple, BI/EE provides you with the income that you lose out on in the event of a covered loss (a fire, theft, etc) that prevents you from operating your business for any length of time.   For example, you run a store that sells widgets, and you have a fire that destroys your location – the building and all your contents are gone.  Not only have you lost those goods, but you are also losing income while the business is rebuilding!  BI/EE protects you against this loss!  It’s complicated to explain, and would take a lot more space to go into in depth.   Basically, business income protects the actual income that’s lost, while extra expense provides you the ability to do what you can to start earning income again ASAP.  It’s the extra expenses you incur to start earning income again – for instance, renting a second location to sell widgets while your original one is being rebuilt.

Phew!  That’s a good start!  Now, on to coverages specifically for contractors or restaurant owners!

Voluntary Property DamagesContractors:  Do you ever find yourself moving a client’s TV, furniture, appliances, etc in order to complete your work?  Happens all the time, right?  Guess what – if you drop or break any of those things, that’s almost never covered by your general liability policy!  Boy, I’m chock full of good news today….!  However, there is a quick and easy remedy for this situation – add Voluntary Property Damages!  For most smaller operations (1-5 employees), $5,000 or $10,000 of this coverage should be sufficient, commonly includes a $250 or $500 deductible, and is relatively inexpensive.  Better to have and not need……

Utility Services Off-Premises Power Failure – Direct Damage & Time ElementWhew, that’s a mouthful, eh restauranteurs?  But make sure you can say it to your agent – it’s a crucial one!  “But I’ve got spoilage coverage” says you.  “Not if the food spoils due to an interruption of power off your premises” says Sammy.  If someone crashes their car into a telephone pole a quarter mile from your building, for instance, that loss would be excluded under your ordinary spoilage coverage – you’d need the coverage above.  Direct Damage provides for the food that’s lost, while time element is for the income you lose while replenishing your stock.

Well, I hope that you made it through all of this information alive and well!  If you have any questions, you can always feel free to comment, email, or call my daddy – he loves telling people about insurance coverages!

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