Well Somebody Needs To Be Punished, Might As Well Be You

While most of my blog entries are related to restaurant insurance, this one is simply a warning message from one small business owner to the next.  As employers and job creators, we suffer the IRS and its lack of clarity and inefficiency together.  Recently I had an experience with the IRS that left me just shaking my head in disbelief.  That was followed by the thought that many of my restaurant insurance customers will suffer this same fate.  The feeling I was left with after my conversation with the IRS agent was not unlike that of the unfortunate child in the backseat of a car who gets popped indiscriminately by a parent driver for something his sibling did.   And for that kid, complaining might only draw more ire and perhaps the comment that somebody has to pay and besides that smackdown is just a downpayment on some future, as yet unknown transgression.

Ok, you get the point, I’m b and baffled by and frustrated with the IRS.  Many are.  So let’s get to the details of this story.  When I filed my 940 report for 2013, my FUTA tax bill per the IRS form and IRS rules was $378.  As I had made a deposit against this tax liability in May of 2013 for $500, my 940 form indicated that the IRS owed me a refund of $122.   Makes sense so far.   I choose the option of receiving a refund by check and put a diary on my calendar for 3 months just to check and make sure that they actually refunded my money to me.  Sadly, while the IRS had use of this money for the past 8 months, they don’t offer to pay you any interest on your money while they held it.  Sadder still, that lack of concern about the time value of money doesn’t cut both ways when it comes to the IRS.   

So, you can imagine my surprise the other day when I received an invoice from the IRS indicating that in fact, my FUTA tax liability for 2013 was not the $378 that their very own form 1040 had indicated, but rather a whopping $945.  Their explanation for this change was that they had applied a Credit Reduction of $567 to my FUTA tax bill.    Now instead of a refund due, I owe them $446.14.  Included in this new figure is an interest charge for late payment of $1.14.

Well, this vague term, credit reduction, really didn’t mean much to me, so I decided to call the number listed on the letter for more information.  You know what comes next, a long wait on hold with their terrible on hold music.  After 23 minutes a nice lady came on the line to help explain this credit reduction issue.  The explanation that I was given was simple enough if not bewildering.  I was advised that the state of North Carolina borrowed money from the federal government to pay unemployment benefits in 2013.  In addition, North Carolina is late in repaying this loan.  This then means that a hidden credit in the FUTA tax rate is denied all NC businesses for the 2013 tax year.  Losing this hidden credit means for me an additional $567 in FUTA tax is due.  In short, the state of North Carolina screwed up and someone must to pay for that.  The punishment will fall on business owners in our state.  I wondered if, when the loan is repaid by the state government, would I then be refunded this penalty money.  The answer was no.   So, to summarize:  the federal government penalizes me at a rate far above their actual costs for a late payment by my state government and if and when the state government’s transgressions are rectified, the federal government gets to keep my punishment money.  I told you it was bewildering.

To add insult to injury, consider the fact that the IRS created form 940 doesn’t even hint at this possibility yet they still need to collect interest for this penalty money until they get around to finally notifying me that I owe it. You can do everything right and still have to pay interest.    Add to that the fact that a simple asterisk beside that line with a better explanation on the letter might have prevented me from needing to call them and waste my 23 minutes on hold plus another 10 minutes time of the nice lady who came on the line to help explain this crazy scenario to me.

I’m not sure how my particular FUTA tax calculations might be predictive of other employer’s liabilities, but by my calculations, the fact that someone in the NC state government decided not to pay the federal loan back in time cost me about $71 per employee.  I know that many of our restaurant insurance clients have many more employees that Clinard Insurance so I am certainly afraid that some of them might receive FUTA additional tax bills that could be enormous.  All I can say is that you should get yourself and your cash flow ready for a large additional FUTA tax bill.  It is coming and you will have to pay it.  I got my frustration out by blogging about it.  How will you handle it?

Clinard Insurance Group, located in Winston Salem, NC is a niche player in the restaurant insurance marketplace.  We insure hundreds of restaurants all across NC, SC, GA and TN.  If you have questions or need help with your restaurant insurance, please call us, toll free, at 877-687-7557 or visit our web site at www.TheRestaurantInsuranceStore.com.   We look forward to helping you.

Disaster Planning – This Goes Way Beyond Your Restaurant Insurance Program

Ask any restaurant owner and you’ll get the same answer.  Running, owning and managing a restaurant is a busy life with little time to breathe some days, much less do long term planning.  So it is little wonder that so few restaurants have taken the time to plan for something that may never even happen.  But after the many and varied disasters to hit the US in 2011, I can’t think of a better wake up call for this issue.    In this article you will find a disaster planning checklist of some of the things that you may want to consider while you build the disaster plan that is going to be so important in making sure that your restaurant is a successful going concern after a potential disaster strikes.

2011 wa s big year for disasters.  They resulted in more than $32 billion in insurance claims.  Most of these claims payment were to insured businesses.  And remember, this number leaves out the smaller one of a kind disasters that struck individual businesses, like fires, pipes bursting and data breach.  We are also leaving out the dollar amount of uninsured damages from disasters.   Besides causing the obvious property damage, disaster can also disrupt your restaurant’s operations and can cause interruptions that drive losses to your bottom line as well as possibly inflicting damage to your restaurant’s reputation.

The Hanover Insurance Group recently commissioned a study of the issue of disaster planning by businesses.  They found that 63% of businesses surveyed said it was not very likely or not at all likely that they would experience a disaster such as a flood, hurricane, tornado or any other incident that could cause a loss or interruption to their operations.  They also found that only 41% of the surveyed businesses had a written disaster plan in place. 

I urge you to find a quiet  hour or two to spend creating a written disaster plan for your restaurant.  When you do, there are a few things you want to consider very carefully.  First, try and anticipate all of the types of threats that your business could face, including, but not limited to fire, tornadoes, hurricanes, ice storms, floods, data breach and vandalism.  After you have done this, next carefully assess all of your restaurant’s assets, including the building, the contents inside, your inventory, your data, and other intangibles like your reputation, both online and off.  Review any and all protections that you already have in place against potential threats.   This would include your insurance policies of course but you should also look at procedures such as how to evacuate employees and patrons in the event of a fire.  Also check your sprinkler systems, ansul system, your fire extinguishers and emergency lighting.  Then try to imagine your restaurant after each possible type of disaster strikes.  What are the areas of potential impact on your restaurant’s operations from suppliers for replacing inventory and equipment to lost employees as well as any financial or legal impacts of the disaster?

To aid you in this process, I have listed ten key items that merit your attention so that your restaurant has a better chance of rising from the ashes of a disaster to return to profitability once again.  These items should be carefully considered and a disaster recovery plan put in writing and kept in a safe place, off premises, ready for you if you ever need it. 

1.  Get an overview of all of your restaurant assets and potential threats to your business as discussed above.
2. Develop a written list of all key employees and their job functions and then make sure that you have  a list of backups for each job function in case one or more employees is not available after the disaster.
3. Understand which if any employees can work effectively from a remote location.  Keep that list as well.
4. Be sure that you have stored critical paperwork in a safe place.  This could be legal documents, banking information and employee information.
5. Develop a contact list with all contact information for key external contacts from vendors and suppliers to attorneys and other consultants.
6. Have an understanding of where you will obtain replacement equipment.  This should include both used and new equipment options for the replacement of any equipment from kitchen equipment to computers and point of sale equipment.  Your plan should evaluate just how long it will take to find and replace what is needed and get it up and running.
7. Back up digital data.  You should be creating a regular back up of data to a remote location, be it in the cloud or by moving a backup copy off premises on a regularly scheduled basis.
8. Understand your options for setting up either temporarily or long term in a new location.  Sometimes zoning rules change after some types of disasters and you might not be allowed to reopen your restaurant in the same location, or run it in the same way so you should have a plan in mind for where you can reopen most quickly and with the best long term results.
9. Have a clearly delineated communication plan, first for employees, then later for your customers.  Detail how the crisis team will be notified and how you will communicate information to your employees.
10. Diagram your step by step recovery plan.  This should be a clear outline of what to do first, second and third and in what order as well as an estimation of the costs of each step of the recovery.

At Clinard Insurance Group, we understand just how important it is for restaurants to be prepared and ready before a disaster strikes. While insurance is a very important component of this process it can not guarantee that your restaurant will recover from a disaster.  You should find the time to build and create a disaster plan and then, review it at least once a year to update it as needed.  If you would like to discuss a disaster plan process for your restaurant, or if you would like help with your restaurant insurance program, I hope you will call us, toll free, at 877-687-7557, or visit us online at www.TheRestaurantInsuranceStore.com.

Peak Season And Your Business Income Insurance – Are They Conflicted?

These days, almost all restaurant insurance programs have a coverage for business income lost in the event of a property loss that closes you down temporarily.    When you bought this coverage you probably just assumed that if your restaurant suffers a bad kitchen fire and you are out of business for a month, then the income that you would lose during that month of repairs will be covered and reimbursed to you.  But like so many other business plans, the devil is in the details and if you overlook the details you may have the devil to pay.  The wording of your policy may cause severe restraints on what you can collect and this problem can be made even worse if your restaurant has a seasonal nature in your revenue stream. 

Here’s a quick take on some of the business income issues that can give you fits after a loss.  Knowing these issues before you have a loss will allow you to take some time and discuss with your agent exactly how your policy is designed to help you before you experience a loss that puts you out of business temporarily.

Employee payroll is an issue that can be overlooked in the insurance set up process but really needs to be understood ahead of time.  You may have some key employees that you don’t want to lose so you may have to find a way to pay them a salary even while you are out of business.  These employees probably can’t afford to miss a month of pay so if you don’t protect them, then they might be forced to move on and take their talents elsewhere.  Do you know your policy will cover the costs of keeping them on the payroll during your restaurant’s downtime in order to keep them on as valued staff?  What conditions must be met in order for you to collect for their payroll under the business income coverage section of your policy?  These are questions that you would do well to answer now, rather than find out after the claim.

Another issue that sometimes rears its ugly head after the fact is monthly limitations on the business income coverage itself.  There are some policies out there that have a monthly maximum that you can collect in any 30 day stretch of downtime.  Worse yet are the policies that have a maximum limit that you can collect for any one claim.  Does your policy have a monthly or per claim maximum?  If so, do you know what this is and is this limit enough to cover your losses if you have a claim?

One other consideration for restaurants evaluating their business income coverage has to do with peak season issues.  Does your restaurant have a peak seasonality component to its revenue stream?  If so, you should beware of that dangerous intersection where your monthly limitation meets your peak season revenue stream.   If you lose 3 months of income during your peak season, you had better hope that your policy doesn’t have a monthly limitation, or if it does, that you evaluated it and bought enough coverage to protect you during your peak season.  Suppose your average monthly revenue is $30,000 but your revenue jumps to $55,000 per month during your peak season.  If your business income coverage is limited to $50,000 per month, then you could experience a shortfall of $25,000 per month in your claim if a fire occurs during or just prior to your peak season.  Could you recover from this kind of uninsured loss?

With the many different choices facing restaurant owners when evaluating restaurant insurance, it’s clear that your first line of protection resides in the agent that you choose to help you navigate these complex decisions.   You don’t want to find out after a loss that you have paid good money for the wrong type of protection or policy.  Be very careful when shopping for restaurant insurance to be sure that you first select an agent with experience and know how insuring restaurants.  The agent you choose should be able to provide you with a list of 100 or more restaurants that he or she already insures.  Don’t let your livelihood be a teaching situation for a new agent.  Also, be sure that you have a good feeling about your agent and he or she is someone that you feel you can trust to be careful to look out for your needs first in the insurance buying process.  And remember, while price will be an important consideration, good advice might mean bigger savings on the back end if you experience a large loss in your restaurant. 

Here at Clinard Insurance, located in beautiful Winston Salem, NC, we insure more than 100 restaurants all across NC and SC. Restaurants are a big part of what we do and our experience and understanding can help you buy the policy that gives you a good night’s sleep.   We will be happy to take a careful, in depth look at your restaurant insurance policies and give you professional and compassionate advice about how best to protect your livelihood.  Visit us on the web at www.TheRestaurantInsuranceStore.com or call us, toll free, at 877-687-7557.

Marketing Trends And Your Restaurant Insurance – Are They Integrated?

The recession is easing up in many ways, but restaurant owners know that their clients are not spending as much money with them as they were before 2008.  Smart restaurant owners know that they have to offer more to attract back the revenue that they had in the boom before this recession.  There are enough new and creative ideas showing up in the marketplace to tell me that entrepreneurism is alive and well in the restaurant industry.  The catch is that few restaurants remember to consult their insurance agent before they begin to implement these new ideas and services.  We all know that the time to find out if something is covered by your policy or not, is not the day after a loss occurs.  So what are examples of some of the new ideas and trends that might get restaurant owners in trouble with their restaurant insurance policies?

This list below, while certainly not exhaustive, will provide you with some examples of why you want keep your insurance agent advised of any plans or changes that you have regarding your restaurant and how you operate and what services you provide.

Delivery services are not just for pizza restaurants any more.  Delivery service can be a huge boost in helping a restaurant capture some of their lost revenue from better days.    Adding a delivery service to your restaurant is not without its share of risks and costs.   Here are just a few questions that you might want to ask yourself.   Who will own the delivery vehicles?  Who will be responsible for insuring them?  How will the drivers be trained?   What can you do to help be sure that your drivers don’t rush out there and perhaps end up killing someone?  And what is the right insurance policy form to have in place to protect your restaurant if this does happen?

Catering is another service that many restaurants have added to their arsenal recently.   Catering services  bring their own set of liabilities to your restaurant.  There are the issues of transportation as well as risks caused by setting up what is essentially a restaurant operation off premises from your current restaurant.  Will your current policy cover your liability away from your stated place of business?  What about the increased risk of food spoilage at this location?  And don’t forget the risk of loss to your food while in transit.  Any of these new issues may require a change to your restaurant insurance program to make sure that you have the coverage you need in place.

There is also a trend now towards niche marketing by offering foods aimed at a particular economic or political segment of the marketplace.  Some restaurants now offer locally grown foods or foods with only organic ingredients as well as assurances about non allergenic foods and ingredients.  What if these assurances fail?  Have you raised the bar on what is expected from you?   What if the locally grown food is a source of food contamination?  Is your restaurant insurance policy set up to handle this additional risk?

We also see an accelerating trend toward more flexible payment options for restaurant patrons.  Some restaurants are now accepting online payments and payments from smart phones.  There are even restaurants out there that have created their own smart phone apps that allow the bill from the app itself.  But what are the fiduciary liability issues associated with these new conveniences?  Do you have coverage for these new exposures?

A solid partnership between the restaurant owners and his or her insurance agent is  a key component to protecting your restaurant from risks of loss.  Each restaurant owner should seek out an agent that they can trust, and more importantly, one that has a lot of experience insuring restaurants like their own.  Your restaurant insurance program should not be a training program for an insurance agent that you happen to know or one of your family members.  Let someone suffer from their inexperience.   The risks are just too great and the problems are just too complex for beginners.  Besides, when you utilize and agent who understands restaurants and who insures a hundred or more of them, then you will more than likely save money on your restaurant insurance policies as well.

At Clinard Insurance Group, we insure hundreds of restaurants all across North Carolina and South Carolina.  We will take as much time as you need to help you understand and become comfortable with the policies that you purchase from us.  And in the end, our power in the marketplace will more than likely mean that you pay less for your restaurant insurance when you purchase from us.  If you have any questions at all, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

ADA Changes – Do You Have The Right Restaurant Insurance Policy To Protect You?

The 20 year old Americans with Disabilities Act, or ADA for short, has been interpreted rather narrowly by the courts over time.  As a result, the Equal Employment Opportunity Commission has been charged with making changes to their regulations to bring the ADA back closer to its original intent.  These new regulations when into effect in May of 2011 and they could leave you and your restaurant vulnerable to a large lawsuit by one of your employees.    If you own a restaurant or if you are considering  starting a restaurant, then this is one area where you need to spend some time understanding your risks and how you can protect yourself and your company.   

Before I get into too much detail with you, here are a few rules and clarifications.  If you have 15 or more employees, whether they are full time or part time, then you are subject to ADA rules.  Bear in mind that if you have more than one restaurant location, then you must count all employees at all locations unless each restaurant location is owned by a different entity.  Also you should understand that your general liability insurance will provide you with very little to no protection in the event of an ADA lawsuit by one of your employees against your restaurant.  To protect your business from this type of employee lawsuit risk, you need an Employment Practices Liability Insurance policy, called EPLI for short.  Sadly, most restaurants do not know about this risk or this protection and so they don’t purchase this policy as part of their restaurant insurance protection.  If you have employees, then you need EPLI, just plain and simple.  Going without EPLI either through ignorance or short sightedness can and does wipe out restaurants from time to time.  Don’t take this risk, it is just not worth it.

Most experts agree that the new EEOC regulations will dramatically increase the number of claims filed by employees against their employers.   In times of recession and high unemployment, employers are just too tempting of a target.   ADA related lawsuits against employers already increased by 17% in 2010 over 2009 and now your odds of escaping a lawsuit just went down again.   These new regulations interpret a disability so broadly that many defense attorneys have stated that now almost every American can be categorized as having a disability of some type.  This creates a changed and much riskier legal environment for restaurant owners and you simply must take steps to protect yourself.

For example, what if you have an employee with diabetes?  You should know that you are not allowed to ask how long they have had it or how long they have been taking medications for it.  But you are required to provide reasonable accommodations for this newly included disability.  This means that you have to provide a place where your employee can test his blood sugar.  You also need to allow him a break to take medications and you may even be required to provide him with a break time to rest.  With all of the variables that you now face, it will be mighty difficult for you to cover all of the rules and regs, even with a full time human relations staff.  And most restaurant owners don’t have an HR staff.

So what can you do to you protect yourself from employee driven lawsuits under the ADA?  I suggest you start by learning all that you can about the new rules and the risks your restaurant faces.   You can learn more by clicking here.  You should educate yourself and your managers on what they can and cannot ask or say to an employee.  You must also decide what steps if any are needed to provide reasonable accommodation for the disability.

If all of this sounds overwhelming, then you are not alone.  But you don’t have to be.  You can put the support of a large insurance company behind you by purchasing  an EPLI insurance policy.  While EPLI won’t protect you from the costs of remodeling to take care of the physical accommodation changes that may be required for one of you employees,  it can protect you from the legal costs of defending a lawsuit as well as the settlement costs you will face if you lose the lawsuit.

At Clinard Insurance Group we know restaurant insurance.  We  insure hundreds of restaurants, all across North Carolina and South Carolina and we advise all of our restaurant insurance clients to invest in Employment Practices Liability Insurance.   We can help you with full restaurant insurance or with just your EPLI quote.   If you have any questions about your restaurant insurance, please call us, toll free,  at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

Your New Employee Hiring Program Can Increase Or Decrease Your Restaurant Insurance Rates

Employee turnover can be a pretty frequent process for restaurant owners.    Good help is always hard to find if you consider that you must sift through a lot of sorry prospects to find one really good one.  There really shouldn’t be any shortcuts to the hiring process, but you can make it easier on yourself and your pocketbook if you have a good hiring plan that you follow very carefully.

The lazy in this world are willing to work pretty hard to stay that way.   And these scammers present a real risk to restaurant owners.   In my last blog I described a scam that is more and more common,  where new employees who plan to lay out of work, report you to the health department as soon as you give them a warning for being late or not showing up to work.    They are just waiting for you to fire them so that they can contact an attorney and claim the firing was retaliation for their reporting you to the health department.  This is just one of several scams out there that can prey on restaurant owners.  Scammers will also seek job protection under the Family Medical Leave Act, and the Americans with Disabilities Act.  If you get drawn into a conflict with one of these scammers it could cost you thousands of dollars in insurance retention fees and attorney costs, assuming you have adequate EPL Insurance and a good workers compensation policy.  Without these policies, you could face hundreds of thousands of dollars in costs.

You have the one chance before you hire a person to find the good ones and to avoid  the bad ones.  But you need a plan that is designed to do so.  Your plan should have specific steps and triggers that will keep you from making an emotional or a rushed decision.  As you build your own hiring plan, keep in mind some of the ideas below that may help better protect you from the employment scams out there that so many restaurant owners have fallen prey to recently.

Step one is to create a meaningful job description.  There are many places on the web that can help you do this in a step by step fashion at no charge.  One I like is at www.onetonline.org.    Be sure that your job description not only describes the type of work to be performed, but is also specific about rules describing behavior, tardiness and other areas where noncompliance might lead to termination.

Conduct a thorough interview.  Be careful not to base your hiring decision on personal feelings or on the initial impression that you have with your candidate.   Find out  if they have ever felt mistreated in a job situation.  If they answer yes, then  keep asking why until you have a clear understanding their side of the story.  Ask this same question to any references that you speak with.  This one question can be the leading indicator for revealing a scammer type personality.

Create some skills tests that will tell you if this person can do the work that he or she says she can.  If you are hiring a person with no experience, then develop a skills test for that scenario that will help you understand if this person is a quick learner or a slow learner.  For a list of some pertinent questions to ask in a job interview, visit www.zeroriskhr.com.

Make a character assessment.  You will need to develop some open ended questions that will give you insight into each candidate’s basic character traits.  You should also find some services that will help you conduct a background check on anyone who is getting a serious look from you.

Requiring  a pre-hire physical examination that includes a drug test, might help you avoid costly future claims.  Be sure to hire medical professionals for any drug testing to give you some distance from this process.

For restaurant owners, hiring employees is an area where they can get into trouble.  Taking the time to understand the risks and make a definitive plan that you follow without exception should help to reduce the risks associated with a new employee.

At Clinard Insurance Group,  we are  a niche player in the restaurant insurance game.  We insure hundreds of restaurants all across North Carolina and South Carolina.  If you need help with your restaurant insurance, or if you just have questions about restaurant insurance that you would like answered, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantStore.com.

Employment Practices Insurance Claims – Real World Examples For Restaurant Owners

Not many North Carolina or South Carolina restaurant owners purchase EPLI (Employment Practices Liability Insurance).  Few even  know that this type of insurance policy exists and those that do probably don’t fully understand the risks of going without protection.  I want to take a look at some real world claims to help you get a better understanding of the different ways that employment practices can get you into trouble.  All of these claims could have been covered with the right EPLI policy.

Let me start by telling you that EPLI looks pretty expensive at first glance.  And many restaurant owners will discard the notion of purchasing EPLI just based on the cost.  But this high cost is the strongest evidence out there that you should buy this insurance policy.  Take a moment to consider what those high rates are indicating.  The insurance industry is a very competitive industry with very tight profit margins.  Who knows better than the EPLI actuaries what your exposure and estimated loss costs will be?  If they have to charge high rates for this protection, then this indicates to me that the risk of loss is very high.  Any restaurant owner who willingly chooses to operate without this protection is taking a huge and foolish risk.

Now, this first example is less of a specific real world claim and more of a scam that we see happening over and over again.  Knowledge of this trick is being passed around from one restaurant worker to the next.  Let’s say you warn one of your servers about arriving late to work.  You let her know that this is the final warning and if she is late again she will be fired.  This server then files a complaint with the health department alleging unsanitary food handling practices in your restaurant.  Of course she is late to work again several weeks later and of course you fire her as promised.  But she hires an attorney and files a suit against you for wrongful dismissal, alleging that you fired her in retaliation for her complaint to the health department she made.  Now you have to choose to pay and attorney and fight her or to settle and let her win the scam.

Now let’s take a close look at a real world sexual harassment example.   Recently a restaurant franchise paid out $400,000 to settle a sexual harassment claim.  This claim was made by seven teenage workers who alleged that a manager groped them and made vulgar comments to them.  Several plaintiffs had complained to their assistant manager and general manager about this treatment but the restaurant owner was too slow to take action to protect them.   You should ask yourself honestly if you know everything that your managers are doing and saying to your employees when you are not around to hear it or see it.  What could they cost you?  Perhaps your very business.

My third example deals with the Fair Labor Standards Act.  In this case, several assistant managers for a mid-sized restaurant chain formed a class action and sued the franchise.  They claimed that because they were forced to perform non-manager job duties like bussing tables, running cash registers and serving customers, they should have been classified as non-salaried workers.  This would have entitled them to overtime pay.  With the restaurant facing legal fees of around $750,000 and an uncertain outcome for the case, they settled out of court for $1,300,000.  Have you got that kind of cash laying around ready for when this type of loss happens to you?

And let’s not forget about gender discrimination.  This is an area where many restaurants are vulnerable.   Recently a national chain paid $360,000 to settle a gender discrimination suit.  This was a suit brought by some male employees who claimed that they were discriminated against. Their claim that only females were allowed to have the more lucrative table serving jobs obviously was legitimate. 

If you are a restaurant owner, then your business is vulnerable to these types of claims as well as many others.   Going without Employment Practices Liability Insurance is just not a sane option.  At Clinard Insurance Group we are an independent insurance agency with a niche specialty in NC and SC restaurants.  We will be happy to answer your questions and help you  with your restaurant insurance issues.   Just give us a call, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

Restaurant Insurance – What Will The Near Future Hold?

I am an insurance agent with hundreds of restaurant owners as customers.  This means that  I sit at the crossroads of the insurance buyer and the insurance seller, or the underwriter.  With my finger on that pulse, I can often notice subtle changes in the restaurant insurance business before others do.  This article is a just a quick check in on the state of affairs in North Carolina restaurant insurance.   I hope that this warning will help a few savvy restaurant owners stay ahead of the game as the rules begin to change underneath them.

First of all, I am getting a general sense among restaurant insurance companies that they are losing their appetite for buying up market share by pricing accounts below their expected profit point.  The losses have grown too quickly against some of the insurance companies and so they are less inclined to engage in cut rate pricing in order to obtain the smaller sized, single location accounts.   Now  when it comes to  the multi-location, fast food restaurant insurance we are still seeing crazy cut rate pricing, but the Mom and Pop eateries are probably going to experience rate increases over the next few years.

To better understand this trend, I looked at the losses we have seen this year in the restaurant insurance business.  Doing this reveals the huge impact that weather is having on company loss ratios.  Hail storms, tornadoes and other weather related claims have damaged roofs and rooftop equipment and even forced the temporary closing of some locations.  The bottom line for many companies who specialize in writing small restaurant accounts is that these accounts are starting stand out as money losers compared to other types of business like construction and manufacturing.  Because of this, we are seeing the beginnings of some rule tightening behavior as well as other price related, short term,  knee jerk reactions that are so very typical of insurance companies who have suffered more losses than they intended.

While weather is the big loss driver this year, there is another , more disturbing trend in restaurant insurance losses.  This is the increase in the frequency of medical payments claims and liability claims with large loss reserves.  When I study the details of these claims I am shocked by how many people think that an injury on a restaurant premises is a payday opportunity.  We even had a claim where an obese woman was going from her car to her wheelchair in a perfectly level and well maintained and lit parking lot and she missed the chair and landed on the pavement.  She hired an attorney and is going after the restaurant owner for $25,000.  Reading these claim reports just leaves me shaking my head.  I mean there are dozens of similar claims going on with our restaurant clients right now.   Does a weak economy lend itself to more of this type of behavior? 

So what should you do to protect yourself from these potential claims and potential future rate increases?  Start by making sure that you use independent agent who lives and breathes restaurant insurance.  This type of agent should have more than one good restaurant insurance market for your business and should be able to use that to help keep your rates low.  This agent  will also better understand the trends in restaurant insurance in your area and should better understand how your policy should be set up to give you the most protection at the lowest possible cost.

After that, take some time a care to be sure that your own house is in order.  Keep an eye out for places in your restaurant that might tempt one of those gold diggers to dump a costly and time consuming liability claim in your lap.  Are there spots in your restaurant where a customer could trip, or slip or hurt themselves somehow?  If so, take steps to regularly look for and fix these areas.

At Clinard Insurance Group, located in  Winston Salem, NC, restaurant insurance is our business. 
We insure over a hundred restaurants all across North Carolina and South Carolina.  We want restaurant insurance buyers out there to be informed consumers.  We freely share this kind of information because we truly care about restaurant owners.  If we can help you with any of your restaurant insurance questions, or if you would like a quote on your restaurant insurance, please call us, toll free, at 877-687-7557, or find us on the web at www.TheRestaurantInsuranceStore.com.

Your Restaurant Insurance Program – Did You Forget Work Comp Insurance?

I am an independent insurance agent who insures over 100 restaurants and for years I have noticed a very disturbing trend amongNorth Carolinarestaurants.    Over half of the accounts that call me for a quote on their restaurant don’t have a workers compensation policy in place.  Even worse, without exception, all of them have made this risk management decision without a clear understanding of the potential costs of this choice.  Running your restaurant without workers compensation insurance in place is just inviting disaster.

I’m not sure why so many restaurants are operating without this critical protection.  Few overlook property or liability insurance.   Perhaps some start out with mostly family members as employees and think that this provides them a measure of safety from their employees’ claims.  Or maybe when they opened their  restaurant they were just trying to cut costs to the bone in an attempt to make their break even point a lower number, and then just failed to add the insurance after the restaurant stabalized.  Or worse, some may have relied on their insurance agent’s advice and the agent let them down.  No matter the cause, all of those restaurant owners out there who have failed to purchase workers compensation insurance in NC are probably breaking the law but more importantly, are jeopardizing their very livlihood.

 So, what are the risks of not purchasing workers compensation insurance for your restaurant inNorth Carolina?  Well, the law requires all employers who have 3 or more employees to purchase a workers compensation policy.  However, there is very little enforcement of this rule.  This lack of enforcement may have led many restaurant owners to think that it’s ok to skip this policy. 

But the real problem for restaurant owners without workers compensation insurance won’t rear it’s ugly head until one of their employees in injured on the job.  And believe me, someone will be injured eventually.  The big unknown for those without coverage is just how extensive that loss will be.  TheNorth Carolinaworkers compensation insurance policy is very short and simple.  It simply says that the insurance company will pay all claims that the employer is legally required to pay under the NC workers compensation statute.  And that points out the big problem for the uninsured.  The law will require you to play all claims just as if you were the insurance company, whether you buy a policy or not.  Not buying a policy doesn’t get you off the hook, it just hangs you on the hook a bit higher.  So, if you are going to stand in the shoes of the insurance company and pay all claims yourself, I hop you have taken the time to read the statute and understand exactly how much you might have to pay. 

Workers compensation claims for restaurants can be huge, sometimes over $100,000.  If you are going to be the one paying, I hope you have read the statute.  Do you know how many weeks salary you must pay for permanent disability if an employee cuts off a finger on meat cutter?  Or how much and how long you will have to pay for temporary disability insurance if one of your kitchen workers slips and injures her back?  What if one of your delivery employees is killed in a car wreck?  The problem with self insurance is that the unknowns are huge out there.  To properly self insure these risks, you would need to keep huge cash reserves ready to pay these claims when they happen.  Buying insurance is really no more complicated than substituting a small known loss (the work comp insurance premium) for a larger unknown loss (an uninsured injury to your employee).  I think if all restaurant owners took the time to really understand what is at stake, then none would choose to go without a workers compensation policy.

Clinard Insurance Group, an independent agency located in Winston Salem NC is a niche player in the restaurant insurance market.  We understand restaurant insurance and we speak your language.  We insure over one hundred restaurants located all across North Carolina and South Carolina.  We are happy to answer your restaurant insurance questions, please call us, toll free, at 877-687-7557 or visit us on the web at www.TheRestaurantInsuranceStore.com.

Restaurant Insurance Help – Restaurant Fire Facts You Should Know

I believe that the more you know understand about any particular risk, the more likely you will be to act in ways that protect you from that risk.  With this in mind, here are some facts about restaurant fires.  This information comes from a 2004 FEMA study of restaurant fires.  I hope this short blog will help you prevent a disaster or tragedy in your restaurant.

The 2004 FEMA report studied fire data from fires that occurred in 2002.  Here are a some of the findings in this report:

There were an estimated 7100 restaurant fires in 2002 in the US and they were responsible for $116 million in property damages.

Under a third of restaurant structure fires started in an area that had a fire alarm or fire suppression system in place, and less than half of all fires, whether structural or not, occurred where there was an automatic extinguishing system.

This study also studied the causes of restaurant fires.  As you can imagine, cooking was the single leading cause of fires, coming in at 64.2%.  Heating systems caused 9.9% of the fires and electrical systems, appliances and air conditioning systems accounted for another 8.6% of the fires.  As often as people talk about arson in the restaurant insurance business, it is interesting to note that the arson percentage was only 5.2% for restaurants compared to 18.7% of all other non-residential fires.  So in 2002 at least, it wasn’t restaurant owners who were out there torching their businesses.

Another factor that was measured was the time of day when restaurant fires start.  With restaurant fires, there is a unique incidence pattern, that coincides with the daily cycles of the restaurant business.  This is not surprising since the vast majority of restaurant fires are started by the cooking process.   The most likely time for a restaurant to experience a fire is between 9am and 10 am.  This shows us that most fires are related to prep work before lunch.  This report also shows  one more, smaller peak at around 8:30 pm.

How about the role of extinguishing systems?  It may at first seem surprising that almost 54% of restaurant structure fires started in an area with no automatic extinguishing systems.  But what this  means is that most of the fires that began in the areas with fire suppression systems never became structure fires.  They were put out in the kitchen, usually by the fire suppression system itself.  The real danger for the restaurant owner is the fire that starts where there are no fire suppression systems installed.  These fires are more likely to become full structure fires.  It is worth noting also that almost 9% of all restaurant structure fires started where an alarm system or suppression system was present but did not function properly.  In order to rely on these systems, they must be inspected on a regular basis.

The take away for restaurant owners  in this data is  to keep your fire suppression systems cleaned and functioning and to be sure to regulalry clean vents and other places where grease builds up.  Keep a close watch on kitchen activities, especially during the prep time as that is the most likely time for a kitchen fire to start.  Reducing your fire risks in your restaurant will help to keep your restaurant insurance costs lower over time and may also protect your restaurant from a disaster.

Clinard Insurance Group, also known as The Restaurant Insurance Store, is an independent insurance agency, located in Winston Salem, NC.  We understand restaurant insurance and we speak your language.  If you would like to put our skill and experience to work for you and your restaurant, please call us, toll free, at 877-687-7557 or visit us on the web at http://www.TheRestaurantInsuranceStore.com