Public House Insurance Information
Introduction to Pub Insurance– obtaining cheap pub insurance is an important consideration for any landlord or publican wishing to protect themselves against a wide range of perils that can affect the running of their business. Public Houses, can take a good deal of capital outlay to start up and run, and thus it is essential that pub insurance is purchased to protect your outlay and livelihood. Although pubs come in all shapes and sizes, the risks they face are fairly similar and pub insurance on a ‘package’ basis has been developed to ensure protection against these risks. Policies for pubs insurance come split in to various different sections, each with a separate heading. Some of these sections, the insurers will require you to purchase, others you will be able to choose if you want cover or not. It’s important to understand what each section of the pub insurance covers and how the risks contained in each section can effect the running of your business. The main policy sections of a public house insurance policy, you can buy cover against are as follows:-
Buildings Insurance for Pubs– if you own the freehold of your public house, you will be responsible to insure your own building. If you have a mortgage on the pub or other type of finance in place, then the lender will usually require, their interest to be noted on the policy wording. They will also require to see a copy of the insurance policy wording, to ensure it covers and acceptable range of perils. In the case of pubs that are run on a lease/ tenant basis, the building remains the property of the brewery and in most cases, they will be responsible for the insurance of the building and the cost of insurance will normally be passed on to you. If you are just acquiring the lease of a pub, it’s important to discuss the insurance of the building. In some cases ( although it’s unlikely), the brewery may allow you to arrange your own insurance, some publicans, endeavour to be allowed to do this if they feel the brewery’s pub insurance buildings policy is too expensive. If they do allow you to do so, they will want to see a copy of the policy wording and have confirmation, that their interest will be noted on the schedule. The policy wording will cover a wide range of perils, if a particular peril is not available to you, then this should be pointed out by the insurer. To provide you with a quotation, the insurer will need to know the rebuilding cost of the property. If you have had a recent survey on the premises, a valuation for insurance purposes, may be contained within this document. Although the construction of many public houses, may be similar to domestic dwelling houses, it should be remembered they are actually commercial premises, it is difficult to obtain a rebuilding cost without professional assistance. It is of paramount importance that the insurer is given an accurate sum insured for buildings as in the event of a claim, you may find that if you are under insured, your claim may not be met in full.
Contents Pub Insurance– to obtain cover under this section of the pub insurance policy, you will need to present the insurer, with an adequate sum insured of replacement costs of all the items you own or are responsible for. The insurers will usually split, pub contents in to a number of groups, in some cases a different rating is applied to different types of contents. Firstly, they will need to know a sum insured for your stock. They may ask you to further divide this in to : Wines & Spirits, Beers, Cigarettes, Foodstuffs & Frozen Foods. Next comes general contents which will include :tables & chairs, equipment and items that you are responsible for. Finally, tenants improvements, which will include improvements you have made to the premises, which could include new signs and frontage etc. If you are leasing your pub, it’s important to have a discussion with the brewery to discover which items on the inventory, you are responsible to insure. If they are expecting you to insure items, you will need to obtain from them a replacement valuation. It is also worth pointing out that a lot of leased equipment such as EPOS systems will require you to effect insurance to protect the owner, again you should obtain a full valuation to present to the insurer. A wide range of perils will be offered under this section of the policy, although deterioration of stock cover will be dealt with separately.
Business Interruption Insurance for a Pub– whilst the above two policy sections will cover you against material damage to the building & it’s fixtures & fittings and contents, this section will protect you if your livelihood is threatened following a valid claim at the premises. In many cases, cover is overlooked as proprietors do not envisage the effects of a serious event such as a fire or flood. Unfortunately, events such as a fire in the kitchen or a flood do occur and it may not be possible for the public house to trade for a period of time. Sometimes, even a disruption of a few weeks can result in large losses which may be difficult for a business to sustain. In many cases, the insurance company will select a sum insured for you and this could be a figure which your turnover or gross profit must not exceed. Providing, your own figures are within these amounts, then no further action is required. In other cases, particularly where the public house, is quite large or has a large turn over, then the insurer may ask you to supply them with your Gross Profit figure for the last 12 months. These figures should be readily available from your accountant or there is a simple calculation that can help you work it out. Turnover (The actual sales you make, remembering to include sales for accommodation if you pub offers that as well) + closing stock at year end – Purchases made by the business & the opening stock value at year beginning) This is a fairly safe way of calculating the gross profit for a public house as it does not factor out items that may or may not decrease as a result of the premises being closed for a period of time. It is usual to offer an indemnity period of 12 months although it may be possible to increase this if required. The basic cover comes with some extensions which may be useful depending on the type of pub and it’s location. They include ‘Denial of Access’ cover, a good idea if you can envisage access to your public house being restricted following an incident to a neighbouring property, closure for public health reasons and failure of public utilities.
Loss of Licence – for a public house, loss of licence insurance should be considered a must have pub insurance policy section. The withdrawal of the licence usually signifies the end of the business or a period of time where the premises cannot trade whilst applications are made to have the, licence reinstated. Licences are refused for a variety of reasons, not necessarily as a result of the action or inaction of the publican. If a licence is refused, there can be a down grading of the value of the business premises although in many cases, it is possible on appeal to have the licence reinstated. Cover is available for these scenarios up to the sum insured provided by the insurer. Like all policy sections, there will be certain terms & conditions and the insurance company will be expected to be kept informed of any events or developments that may at some future date lead to a suspension or loss of licence.
Breakage of Glass – even if you lease your public house from a brewery and they arrange the building insurance, you may find yourself responsible for the glass in the building. Glass is expensive to replace and the cost of replacement frame work and boarding up can come to a tidy sum, especially if the glass is of a decorative nature. Usually, the sum insured is chosen by the insurance company and you will need to make sure this is adequate for your needs. If the your public house has has large or ornate glass, check with the brewery as to it’s replacement cost, This section of policy will have a limit as to how much the insurance company will pay.
Money – public houses take a good deal of cash at it’s important that the money section of the policy is adequate for your needs. Usually, there are different sums insured whether the pub is open or closed ( sums insured for overnight on the business premises are usually lower). The insurer will have requirements for the storage of cash on the premises, they will require to know the safe in use and it’s rating. For cash carryings to the bank, there may also be rules for the number of people required during transportation, it’s important the rules are followed for a claim to be valid. It is usual for theft from unattended motor vehicles to be excluded. Some times, it is possible add ‘Assault Insurance’ to this section of the policy which will pay out if the proprietor or a member of staff is attacked whilst carrying money. This extension is purchased on a unit basis, the more units you purchase, the higher the sum insured. A worthwhile extension covers damage to clothing although it’s worth bearing in mind that as with other sections, there is a policy excess.
Public & Products Liability – these two sections will protect you against sums you are legally liable for in respect of accidents and injuries to members of the public occurring whist they are on your premises. Usually a sum insured is chosen by the insurer with £1,000,000 being the minimum on offer. Subject to agreement, the insurer will pay defence costs as well. Accidents do happen in pubs frequently and it’s important to have this cover in place. Products liability extends the cover to include the sale and supply of goods and will cover such eventualities as food poisoning. Of course, you will still be expected to follow all legal guidelines and procedure to minimise the chance of a loss happening.
Employers Liability– if you have any employees, you will need to effect Employers Liability Insurance, to ensure that you are trading legally. This type of cover is one of the few insurances that are a requirement of statute. The Employers Liability Protection Act 1969 made the definition of an employee as wide as possible to ensure that temporary workers, & even volunteers or people on work placements schemes were afforded protection against accidents whilst occurring at work. As an employer, you will be required to have a good understanding of all the legal requirements of running your business and the necessary steps to make sure that your employers are working in as safe an environment as possible.
Other covers – a public house insurance policy, will have a number of other sections which may or may not be options, these include Book Debts, Personal Accident insurance for the proprietor and staff, Goods in Transit, to cover items that you collect using your own vehicles. Deterioration of Stock cover, ideal if you keep frozen foods on the premises, theft by employee and legal advise cover. It’s important to read through all of the covers on offer and analysis the impact a loss will have on your business. Although available to purchase on a package basis, this can be a fairly complex cover to arrange. Each public house, though facing similar risks, will have different demands and needs and it is vital that these are discussed, to ensure that the correct cover is purchased.