Serving alcohol is a common practice for restaurants, bars, catering companies, entertainment venues and similar establishments. While providing a wide array of beverage options is important, serving alcohol in particular can create a variety of risks for business owners.
For instance, if a patron of your business becomes intoxicated and injures a third party or causes property damage, you could be held liable for the damages. In order to protect your business from serious financial and reputational losses, it’s important to consider purchasing liquor liability insurance.
What is Liquor Liability?
The term liquor liability refers to an organization’s legal and financial responsibility for the actions of individuals who consume alcohol at their establishment. Under liquor liability laws, a business can be found liable for both the bodily injury and property damage caused by a person they improperly served alcohol to.
What is Liquor Liability Insurance?
Liquor liability insurance is designed to protect any business that sells or serves alcoholic beverages. Specifically, this type of insurance covers damages that result from things like fights, careless behavior or automobile accidents caused by individuals who have consumed alcohol.
Liquor liability is important, as it protects you should your clients or patrons sue your business for damages related to their intoxication—something a general liability policy won’t cover.
Most businesses carry a general liability policy, which covers claims against your business for bodily injury, property damage or personal injury. While these policies often include host liquor liability coverage, they only provide protection related to the incidental service of alcohol. While host liquor liability may protect you if you are simply serving alcohol at a company party, it does not offer the coverage you need if you sell alcohol as part of your business.
What’s more, the majority of states require establishments that serve, sell or assist in the purchase of alcohol to carry liquor liability insurance. As such, it’s important to know what to look for in a policy.
What Should My Policy Account For?
When it comes to protecting your business from any kind of liability, it’s critical that you account for common risks. In order to secure the right level of coverage, keep in mind the following policy enhancements when shopping for liquor liability insurance:
Assault and battery coverage.
When alcohol is involved, fights are a common risk. However, many liquor liability policies exclude coverage for assault and battery. Therefore, it’s important to ensure you account for this protection when building your policy. It should be noted that assault and battery coverage can also be extended to include specific incidents such as sexual assault, stabbings and shootings.
Legal fees from liquor-related claims can easily exceed tens of thousands of dollars. Be sure that your policy accounts for defense costs outside of the policy limit. Otherwise, legal expenses could quickly exhaust your policy limit, leaving little to no insurance to pay for any damages.
Even if you forbid your employees to drink on the job, there’s a chance that they may disregard your instruction. Look for a policy that will cover your employees as patrons to better protect your business from liquor-related incidents.
In the event of a lawsuit, claimants may allege they were injured in nonphysical ways. In these instances, patrons could sue you for stress, mental anguish or psychological injury. Ensure that your policy accounts for these types of injuries.
It should be noted that liquor liability insurance won’t cover claims that arise from the sale of alcohol to minors or similar illegal transactions. Be sure your employees are instructed to verify patrons are of legal drinking age.
What Determines Pricing?
The underwriting process for liquor liability insurance can differ depending on the type of business you conduct. In general, the following four factors determine the rating and pricing of coverage:
Type of venue. When examining a business’s risk, underwriters look to identify the primary purpose of a venue. If you own a restaurant, the primary purpose of your venue is to serve food, so you are generally considered to have less risk than a nightclub or tavern.
Location of the venue.
Liquor laws can vary drastically depending on the jurisdiction. Each state has its own scoring system based on the nature of local dram shop laws. Dram shop laws impose certain liability standards on area venues that serve alcohol. Because the strictness of these laws may change from location to location, where you operate your business can have a major impact on how your liquor liability insurance is priced.
Percentage of liquor sales.
As a general rule, the more alcohol sales you make, the higher your premiums will be. This factor tends to have more of an impact on pricing than venue type, as a restaurant that has a high percentage of alcohol sales may be priced similar to a bar.
Individual traits of the risk. There are a number of miscellaneous variables underwriters will take into consideration when pricing out policies, including the following:
- Types of entertainment offered
- Experience level of management
- Formal loss control measures
- Security measures and procedures for dealing with intoxicated patrons
Serve Your Patrons Responsibly
When serving liquor, the best way to protect your business from potential claims is through proper risk management and liquor liability insurance. These policies can be complex, and it’s important to discuss the nature of your operations with a qualified insurance broker. Contact Scurich Insurance today to learn more.
The Occupational Safety and Health Administration’s (OSHA) electronic reporting rule requires certain establishments to report information electronically from their OSHA Forms 300, 300A and 301. Under the rule, the first electronic reports were due on July 1, 2017.
However, on Nov. 24, 2017, OSHA issued a new final rule officially delaying the first electronic reporting deadline to Dec. 15, 2017. Affected establishments will need to submit their reports through the Injury Tracking Application (ITA) website by that time or face possible OSHA penalties.
- Affected establishments must create an account on the ITA website and submit information from their 2016 OSHA 300A form by Dec. 15, 2017.
- Other deadlines under the electronic reporting rule remain unaltered. Therefore, affected establishments should begin their preparations to submit information from all 2017 OSHA forms by July 1, 2018.
OSHA’s electronic reporting rule affects establishments that:
- Are already required to create and maintain OSHA injury and illness records and have 250 or more employees;
- Have between 20 and 249 employees and belong to a high-risk industry; and
- Receive a specific request from OSHA to create, maintain and submit electronic records, even if they would otherwise be exempt from OSHA recordkeeping requirements.
The electronic reporting rule applies to establishments, not employers. An employer may have several worksites or establishments. In these situations, some establishments may be affected while others are not.
To determine whether an establishment is affected, employers must determine each establishment’s peak employment during the calendar year. During this determination, employers must count every individual that worked at that establishment, regardless of whether he or she worked full-time, part-time, or was a temporary or seasonal worker.
Finally, a firm with more than one establishment may submit establishment-specific data for multiple establishments.
||Number of Employees
|Dec. 15, 2017
|July 1, 2018
||Forms 300A, 300 and 301
|March 2 (2019 and beyond)
||Forms 300A, 300 and 301
The data an employer must submit and the timeline for submitting this information to OSHA depends on the establishment size.
Establishments with 250 or more employees will be required to submit information from their OSHA Forms 300A, 300 and 301. However, in 2017, these establishments will only be required to submit data from their 300A Form. Establishments in high-risk industries with between 20 and 249 employees will be required to submit information only from their OSHA Form 300A.
For the first reporting year, the deadline has been delayed to Dec. 15, 2017. However, the final rule that delayed the first deadline did not alter subsequent deadlines, so reporting deadlines for 2018, 2019 and beyond remain as shown in the table above.
Submitting the Report
The ITA is a secure website that OSHA created specifically for the data required by the electronic reporting rule. The ITA allows employers three options to submit their reports:
- Manual entry;
- Comma-separated value (CSV) file upload; and
- Application programming interface (API) transmission.
The ITA offers affected establishment instructions and sample files and templates to help them complete the submission process.
OSHA-approved State Plans
The final rule required OSHA-approved State Plans to adopt the electronic rule or “substantially identical” requirements within six months of the final rule’s publication date. The final rule was published on May 12, 2016.
This means that OSHA-approved State Plans have the authority to adopt reporting requirements that go above and beyond what is required by the federal rule. For this reason, establishments located in OSHA-approved State Plan jurisdictions should consult with their local OSHA offices to make sure they are satisfying all electronic reporting requirements.
However, the following OSHA-approved State Plans have not yet adopted the requirement to submit injury and illness reports electronically:
- South Carolina
- New Jersey
- New York
Similarly, state and local government establishments in IL, ME, NJ and NY are not currently required to submit their data through the reporting website.
Contact Scurich Insurance or visit the OSHA tracking of workplace injuries and illnesses webpage for more information regarding electronic reporting.
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently made changes to the system for determining employers’ experience mods. Because experience mods are one of the largest factors when determining your workers’ compensation premiums, it’s important to know the details of these changes, and what they mean for your business.
Split Point Changes
The largest change the WCIRB made was to the split point, which had not been changed since 2010:
- Losses in excess of the split point will now be ignored during the calculation of an employer’s experience mod. These losses were previously considered, but did not carry as much weight as losses below the split point. Excess losses focus on the severity of injuries and illnesses in the workplace, a focus that will no longer be considered under the new changes to the rating system.
- Losses up to the split point will still count fully in the calculation of an employer’s experience mod. These primary losses focus on the frequency of injuries in the workplace, as they are fully weighted during the calculation of an experience mod. Because the WCIRB chose to focus on primary losses, the agency believes that employers will be encouraged to develop safe workplaces and reduce the occurrence of injuries and illnesses.
In addition to the focus on primary losses, the split point will now vary between approximately $4,500 and $75,000, based on the size of a business, instead of the previous $7,000 fixed split point. There will be approximately 90 threshold split points. The WCIRB believes that a varying split point will benefit smaller employers, who could previously expect abnormally high experience mods after a single, catastrophically large loss. Additionally, other states that use a fixed split point typically set them at $15,000 or higher, which the WCIRB believes is unfairly high for many small businesses.
For example, under the old split point system, a small employer with a single $60,000 loss would have a vastly different experience mod than a larger employer with 10 $6,000 losses. Under the new system, the WCIRB hopes to encourage safety at all times instead of punishing employers for abnormally high and rare losses.
What the Change Means for You
Although the varying split point can now reach extreme heights, the WCIRB believes that the elimination of excess loss consideration will cause premiums to remain flat. However, it’s possible that you could see your split point—and consequentially, your premiums—rise if you increase your workforce substantially.
The most important factor when working to lower your workers’ compensation premiums is to reduce the frequency of injuries and illnesses in the workplace—especially now that the calculation of your experience mod will be determined almost entirely by primary losses. For help keeping your workplace safe and responding to injuries and illnesses at your business, contact us at 831-661-5697 today.