If you run a restaurant, bar, or club, chances are you've seen the ads. Get a quote in five minutes. No agent, no paperwork, just a price. For a busy owner juggling staff, inventory, and a full dining room on a Friday night, that kind of speed is tempting.
But hospitality is one of the riskiest industries to insure, and a policy built by an algorithm rarely accounts for the way your business operates. These instant-issue policies are often priced low because they're built to exclude, limit, or deny far more than a policy designed to address the way that you operate your business. Here are ten places where that gap shows up, and why it matters.
1. Assault and Battery Coverage
Even white tablecloth restaurants serve liquor, and liquor means patrons can become intoxicated. A fight in the parking lot can result in a lawsuit. Many online policies exclude coverage for this type of risk entirely or cap it so low it's barely worth having.
2. Liquor Liability Limits That Haven't Kept Up
Liquor liability cases are ultimately decided by a jury, and jury members have less tolerance for liquor liability than ever before, resulting in larger jury verdicts. Are your limits high enough? Are you reporting changes in your liquor sales percentage to your carrier, a requirement that's often buried in the policy conditions?
3. Warranties and Conditions You Don't Know Exist
Some policies require a monitored burglar alarm or 24-hour on-premises security as a condition of coverage. If you don't meet that condition, a claim can be denied outright, and unfortunately most owners have no idea of that requirement until it's too late.
4. Equipment Breakdown, Spoilage, and Utility Interruption
A walk-in cooler failure or a utility outage can wipe out thousands of dollars in product overnight. Many instant-issued policies exclude or severely limit this coverage, even though it's one of the most common losses in the industry!
5. EPLI Coverage
EPLI, or Employment Practices Liability Insurance, protects your business against employee claims like wrongful termination, discrimination, harassment, and wage and hour disputes. Tipping and tip pooling practices are under more scrutiny than ever, and if your practices don't align with your EPLI policy's requirements, you may not be covered in a dispute. Worse, many small and mid-size hospitality businesses carry no EPLI at all due to these online policies not covering these types of claims.
6. Extended Business Interruption
If a fire or major covered loss forces a restaurant to close, the financial impact doesn't necessarily end when the doors reopen. It can take months for a business to rebuild its customer base, restore normal sales volume, replace lost inventory or equipment, and return revenue to pre-loss levels.
Business interruption coverage is designed to help replace lost income while a covered loss prevents you from operating. But some policies may provide only a limited period of coverage after the business resumes operations—or may not provide the extended business income protection a restaurant needs to fully recover.
7. Hired and Non-Owned Auto
When you're out of an ingredient on a Friday night, you have to send an employee to the store. If that employee gets into an accident while running the errand, most instant-issue policies exclude this exposure completely. Read more about hired and non-owned auto here.
8. Employee Theft
Turnover is high in this industry, and there's more cash moving through a bar or club than in most public-facing businesses. Even a few days of theft can put a real dent in already tight margins, and this coverage is frequently missing or minimal in low-cost policies.
9. Lease-Required Endorsements
Most restaurants lease their space, and most commercial leases require specific insurance endorsements to shift liability away from the landlord. Instant-issue algorithms can’t read your lease, and your instant-issue policy may not include the provisions that your landlord requires. As a result, you may be left holding the bag if your landlord is able to avoid liability because your policy is defective.
10. Excess and Umbrella Coverage
Guest expectations run high, and it doesn't take much for a bad experience to turn into a claim. Umbrella coverage is relatively inexpensive given the protection it provides, and claims settled by an insurer don't become public court losses, which helps protect your reputation along with your bottom line.
RMC Group is a full-service insurance and financial services firm, and our Property and Casualty team works with hospitality businesses to build coverage around how they operate—not around a generic template. We take the time to understand your business, review your current policy, read your lease, look at your liquor sales and operations, and identify potential gaps before a claim puts them to the test.
Our approach goes beyond simply checking whether you have the right policies in place. We look at the details that can make a significant difference when a loss occurs, from assault and battery and liquor liability to property coverage, cyber liability, equipment breakdown, and policy exclusions and warranties. We also help business owners understand what their coverage does—and doesn't—protect them from, so there are fewer surprises when they need their insurance most.
If you're currently carrying an instant-issue policy, have recently opened a restaurant, bar, or club, expanded your operations, or simply haven't had a comprehensive review in a while, we'd be happy to take a closer look. A risk review with RMC Group is an opportunity to have an experienced team evaluate your coverage, identify potential gaps, and discuss options based on your specific business at no cost to you.
Ready to see where your policy stands? Contact RMC Group's Property and Casualty team at 239-298-8210 or visit rmcgp.com to schedule a risk review.