September 15, 2017

Most business owners are at least passingly familiar with the concept of an insurance audit.  Many insurance policies are priced based on some factor that cannot be determined with certainty until after the policy term has expired.  Workers compensation insurance is based on payroll, many general liability policies are based on either payroll or gross sales.  For this reason, in order to determine a price for these kinds of policies, the insurance buyer must make an estimate for that unknown amount of sales or payroll.  The rating basis, either payroll or sales, is then audited at the end of the policy term and if the estimated payroll was higher than the actual payroll, the business owner will be due a refund, if the estimated amount was too low, then the business owner will owe an additional amount to the insurance company.  This is all pretty straight forward and most experienced business people are familiar with this process.

Enter the one way audit. Depending on your perspective, this is either a way to protect the insurance companies from unpaid audits, or it is a nasty scheme to take advantage of business owners by using their familiarity with the audit process against them.  Maybe you will come down somewhere in between these extremes when you judge the one way audit technique; I for one think it is much the latter.

So what is this one way audit technique? Simply put, policies with one way audit features have special wording in them that states that if the audit results in an additional amount due to the insurance company, then the customer must pay this amount.  However, should the audit reveal that there is a refund due the business, then the estimated amount paid in advance will be deemed to be a minimum earned premium, thus no refund will be due to the insured.  What?  How is this a fair way to treat your clients?  Asking them to estimate their gross sales, then keeping the money if they over estimate and charging them for the shortage if they underestimate is one sided and disingenuous in my opinion.  But I can accept this procedure if it is spelled out in large, colorful print on the top page of the policy and perhaps attaching a brochure that explains how this is different from every other insurance audit that the client will have ever seen.

Liquor liability insurance policies are particularly vulnerable to the one way audit clause. Many of them sneak this wording into their policy and usually bury it deep in the policy language.  I have never seen a one way audit based policy that attempted to bring this nasty clause to the buyer’s attention on the front page of the policy.  With more states like South Carolina and Rhode Island now making the purchase of liquor liability insurance policies mandatory, more and more business owners will be trapped by this sneaky clause and will lose money that they expected to have refunded to them at the end of the policy term.

So how do you protect yourself from the one way audit? First of all, you must know how to recognize it when you have this clause in your policy.  Your insurance agent should be able to help you with that.  Secondly, when setting up a policy with a one way audit feature, you should under estimate the gross sales for the policy period.  I would advise using 75% or so of what you think your sales will be when you make your initial estimate to the insurance company.  Remember, any amount that you over estimate will not be returned to you at the end of the policy term.  Now this under estimate will now mean that you will probably face an additional premium due at the end of your policy term.  If this will create a cash flow problem for you then, then I suggest that you plan for that in advance and put that money in a safe place to pay the audit at the end of the policy term.

For help and advice with your liquor liability insurance needs, and with your other insurance policy needs, please feel free to call us, toll free, at 877-687-7557, or visit us on the web at www.clinardinsurance.com.  For more information about South Carolina liquor liability insurance, please visit us at www.SCLiquorInsurance.com.

September 1, 2017

On July 1^, 2017, South Carolina passed a law requiring businesses with certain alcohol permits to prove that they have liquor liability insurance coverage in place with at least $1 million coverage in order to renew their alcohol permit.  The permits that fall under this new rule are those that allow on premises drinking after 5 pm.  If you hold one of these permits, then you will need to prove that you have liquor liability insurance in place in order to renew your permit.

This new ruling seems to be a reaction to an event that happened in South Carolina. A Dillon police officer was paralyzed and brain damaged after being hit by a drunk driver.  The driver had no insurance coverage and the bar that served this driver carried no liquor liability insurance.  Neither of these two parties had the assets needed to cover the losses to this police officer and his family.  As a result, the city of Dillon found itself next in line for the liability expenses of this accident.  This soon proved too high a price even for the town of Dillon to absorb.  This case inspired the SC legislature to respond with a new law that requires business that serve alcohol after 5 pm for consumption on their premises to have $1,000,000 of liquor liability insurance in place before they can renew their alcohol permit.

What does this mean for you? If you are a resident of SC, then over time as more bars and restaurants are forced to purchase liquor liability insurance, you should be less likely to suffer an uncompensated loss if you are hit by an intoxicated driver.  If you are a bar or restaurant owner, then this is a wake up call to double check your coverages to be sure that you have this protection in place.  If not, you can technically wait until your alcohol permit expires before you will be forced to purchase this coverage.  But in reality, going a day without it seems like too much risk.  This is the kind of loss that can absolutely run you out of business should it happen to you.  Liability risks are unpredictable, both in timing and scope and insurance is the only sure way to provide your company with some protection.

How does it work?  Liquor liability insurance is rated based on your gross sales of alcohol.  Ultimately, most policies charge a stated rate per $1000 of gross alcohol sales.  We have seen rates as low as $2 per $1000 of sales and as high as $25 per $1000 of sales.  The reasons for this wide discrepancy in rates are really based on the different kinds of situations in which those businesses with on premises alcohol consumption find themselves.  For instance, if your ratio of alcohol sales to food sales is relatively low, then you can expect a much lower liquor liability insurance rate.  If you are a bar that closes earlier, your rates will be lower than on that stays open later.  Live entertainment can often contribute to a higher rate.  If you would like to learn more about exactly how much this coverage will cost your restaurant or bar, please feel free to call us at 877-687-7557 or visit us online at www.scliquorinsurance.com.

August 31, 2017

Liquor liability insurance is an important but underutilized insurance protection that any establishment that sells alcoholic drinks for consumption on their premises should consider purchasing. Many bars and restaurants do not fully understand this insurance policy and as such go without this important protection.  Some don’t purchase liquor liability because of the cost of the coverage, others mistakenly believe that their general liability insurance provides this protection and still others are just unaware of this kind of insurance policy in the first place.  We are seeing a trend in states where several are now requiring proof of liquor liability insurance in order to renew your alcohol permit.  States where this is in force include Massachusetts, Rhode Island and South Carolina.

 

So what kind of loss does liquor liability protect for the bar or restaurant owner? Simply stated, if you serve alcohol to a patron who then goes out and causes property damage or bodily injury to a third party, and if you are held liable for these damages because you over- served this patron, then liquor liability insurance is the insurance coverage that you need in place to protect you from this third party liability.

 

Many bar owners might say that they are very careful and do not over serve their customers and therefore they don’t need to purchase this kind of insurance policy. Sadly though, that is not the only determining factor in who might face lability and lawsuits.  I have seen several different cases where a patron leaves one bar, relatively sober, and then visits two other bars as the evening goes on, leaving each one progressively more intoxicated than the last.  The drunken patron later causes an automobile accident and kills a young driver and all three bars that served the drunken patron over the past 8 hours are sued.  Often they all end up having legal bills and a liability judgement against them.  So this exposure is not just one that you can control with your internal procedures.  When a loss exposure is this far out of your control, insurance is the best way to protect your business and personal assets.

 

Once you have determined that liquor liability insurance is needed, how do you decide what limit of coverage to purchase? Generally I would advise that you purchase as much as you can afford.  The problem here is that your exposure to loss is essentially unknown and unlimited.  There is no way to predict the extent of your liability to an unknown third party before an accident happens.  Given that, buying more than you need would certainly be safer than buying less.

 

Your liquor liability insurance policy will be rated based on your gross sales for alcohol. You will need to make an estimate of those sales for the 12 month period of time that the policy will be in force.  At the end of the policy term, the insurance company will ask for your actual alcohol sales during that time period.  If you had underestimated this sales number, then you will owe the insurance company an additional premium.  If you had overestimated your sales, then you will be due a refund.

 

If you want more information, or if you need help setting up a liquor liability insurance policy for your restaurant or bar, please feel free to call us, toll free, at 877-687-7557 or visit our website at www.clinardinsurance.com or www.SCLiquorInsurance.com.

Clinard Insurance Group Named Rough Notes E-agency Of The Month February 2011 March 8, 2011

In this blog, I usually try to focus on insurance policy and coverage help that will allow insurance consumers out there to become more informed buyers of the insurance product they need.  In this article, I want to deviate from that tack just a bit and take a moment to sing the praises of Clinard Insurance Group in particular.

The occasion for this change in approach on this blog is that Clinard Insurance Group,  an independent insurance agency in Winston Salem, NC has been named the e-Agency of the month by Rough Notes magazine.   Rough Notes is a national insurance industry magazine with over 40,000 subscribers.  So this is a big honor and we want to let all of our readers know about it.

The Rough Notes article focuses on our digital marketing efforts in particular but does give a lot of other information about our agency and our more traditional marketing methods as well.  This is an important marker for those of you out there considering an agent for your business insurance.  The reason this is so, is that we take our digital and traditional marketing expertise and we use it help our business insurance clients grow their businesses as well.  We understand that if your business grows, then so does ours.    One of the ways you can see us working hard for our clients is through our partners page that is a place where our business clients can offer coupons to the online world to help increase their client base.

If you would like to read the rough notes article and see photos of some of the people behind the scenes at Clinard Insurance Group, just click here.  I hope you enjoy this inside look at our agency.

At Clinard Insurance Group we want all insurance consumers to be informed buyers.  We work hard to try and disseminate information to the public about insurance issues that affect their lives and their businesses.  If we can help you with your home insurance, your auto insurance, your life insurance or business insurance, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.  Also, keep in mind that we also specialize in used car dealer insurance, auto repair and body shop insurance, restaurant insurance, and insurance for small contractors and landscaping companies. 

The source information for this article was originally posted to a blog at www.InsuranceAnswerGuy.com and you can find the full version at that site.