Many people dream of opening a nightclub. They imagine hanging out with people every night of the week while watching the profits drip in. But unless you have the right insurance, your dream can quickly become a nightmare.
Insurance protects you against claims that your customers make when they suffer injuries or other medical situations. While you may have a policy that covers the building you rent or own, you should also have liability coverage. The key is figuring out what kind and how much liability insurance to get.
General Liability Coverage
When you buy hospitality insurance, you can choose from different types designed to protect you against things you cannot control. You can file a claim if a tree crashes through the roof and damages your property, or you have a water leak that causes you to shut down for several weeks. You must look at the types of liability coverage that you can add to a plan that covers a nightclub too.
General liability insurance is one of the more common types. Often called GL insurance or business liability, it protects you against injured parties. Let's say that one of your customers slips and falls in the bathroom and breaks their arm. If you did not have signs up to warn them about the slick floor, they can sue for their hospital bills and lost wages. GL insurance covers most forms of bodily injury, which refers to an injury that someone sustains on your property.
With GL insurance, you can also get coverage against advertising issues and reputation coverage. Damage to your reputation occurs when another nightclub owner makes claims that your business or employees harmed their reputation. An owner might sue and claim that one of your workers spread lies about a nearby club or that you made misleading comments about their business. The right liability insurance will cover the suit and help you avoid paying any money out of pocket. Your policy also protects you against issues that relate to your advertising, such as releasing a commercial that contains copyrighted materials.
Though you will likely have insurance on your nightclub itself, you may find that it does not cover third parties. A third party may refer to another company you work with such as a cleaning company that comes in every morning. GL insurance covers any damage they do that another party can trace back to your business. A good example is a worker from a third-party company who damages a customer's car.
Professional Liability Insurance
Another type of insurance that your nightclub should have is professional liability coverage. Also known as PL insurance, it covers you if a customer claims that your business made mistakes that impacted them. Let's say that you hold a party where you plan to hold a contest and give away a new car. The customer who wins that contest may file a claim that says you neglected to tell them that they were responsible for paying taxes and title fees.
Employer Liability
Your nightclub policy should also include employer liability coverage. Always check with your state to see if it requires this type of insurance. Many states ask that business owners have employer liability coverage that includes workers' compensation. Not only does this type of insurance cover the hospital stay and medical care that a worker needs, but it also protects you against any lawsuits they might file.
Let's say that you have a bartender who spends long hours behind the counter pouring drinks. That worker might suffer a repetitive stress injury from doing the same motion over and over again. You may also find that a worker falls when doing a duty outside of their normal tasks, such as asking a waitress to clean the bathroom. When the employee files a worker's compensation claim, your employer liability coverage will protect you. It pays for any medical bills they have and replaces their lost wages until they can return to work.
What Happens to Your Club Without Insurance?
The cost of opening a nightclub can cost quite a bit of money. You may feel tempted to cut back on some of your overhead costs to save money, but you should never reduce the insurance you have. There are some big potential risks associated with not having the right insurance. In many states, employers face steep fines if they do not pay workers' compensation. You also risk losing both your club and other things you own in an ensuing lawsuit. When someone becomes injured as the result of your negligence, they can sue you. If the court sides with that person, the judge can garnish your wages and take any property that you own as well as force you to sell the club to pay back the injured party.
As a nightclub owner, you're responsible for things you may not consider. What would you do if a customer had too much to drink and caused an accident on their way home that led to another person becoming injured or even dying? You should also think about what you would do if several customers had a fight in your parking lot that led to damage to vehicles and other property. In many cases, you are responsible as the nightclub owner because you allowed them to drink. Liability insurance protects you against these cases and many more.
Get Liability Insurance for Your Nightclub
The amount of liability insurance that your nightclub needs can range from $100,000 for a small bar to $1 million or more for a popular nightclub. It depends on whether you own or rent/lease the building and how many employees you have. When buying general liability insurance and other types of coverage, make sure you have the right types to protect your business. You need enough insurance to cover injuries to both customers and workers, as well as coverage for property damage.
Contact DiNicola Insurance Services to get help choosing the right type and amount of liability insurance for your nightclub.