General Liability, Commercial Crime or Assault and Battery Insurance for Bars and Taverns

The answer to the question above truly is all three types are best because they each provide different layers of protection for the Bar or Tavern Owner. Bar and Taverns are classified under the general liability class codes are used to underwrite a general liability policy for you. The class codes for bars and taverns are:

SIC Business Insurance Codes:

• 5183 –Bars (Beer and Alcohol)

NAICS Liability Classifications:

• 7244 10 Drinking Establishment with Alcohol

Business ISO General Liability:

• Code 16920 – Restaurant-alcohol sales> 75% – Table service, dance floor
• Code 16921 – Restaurant-alcohol sales>75%- No Table Service, but dance floor
• Code 16931- Restaurant –Alcohol sales> 75% No Table service, no dance floor
• Code 16940 – Restaurant –Alcohol sales> 75% Bar Service only, with dance floor
• Code 16941 Restaurant – Alcohol sales> 75% – Bar Service only, no dance floor

Your agent will also want to know what type of services you provide for example; amusements such as pool tables and games, live musical performances or rides such as the mechanical bull ride made famous by the movie, “Urban Cowboy”, located at Gilley’s Bar & Grill in Texas. The purpose behind the codes determination process is to ensure that all the services your business provides are included in the scope of your coverage and you are not left with gaps in your insurance. Once your codes are properly defined your agent or broker will use them to determine what coverage is best for your business and what carrier writes that type of policy.

General Liability insurance is commonly required for all businesses by law, depending on the state you’re located in.  Think of general liability as the foundation or platform you are building upon to protect your business.    At this time, most insurance agents and carriers recommend combining your general liability policy with a business owner’s package designed for your specific industry with supplements, additional policies, riders and /or floaters much like building a custom home. Imagine that these insurance options are all layers of insulation you are adding to you building to protect and enhance it. It is your choice whether you want basic minimal protection or the best insulation available. This is a similar process to choosing loose fill insulation versus rigid foam board insulation.

Sometimes the above concept is not readily apparent to the company seeking insurance. It may be confusing because insurers speak their own language, using insurance terms and jargon, which some business owners may not be familiar with.  The main point here is general liability does not cover every situation the bar owner may be faced with. In particular, it does not cover most crimes and usually excludes assault and battery specifically. So you need another layer of protection

Many times new coverage options come about as a result of litigation and an unmet need for certain coverage in a specific industry.  This is in essence the law of supply and demand at work, and is the exact reason that separate optional policies or riders were developed to provide Assault and Battery Insurance. While on appeal in a suit filed against the bar owner of an establishment called Gigi’s  for assault and battery brought by the injured patron; Gigi’s insurer, Lloyd’s of London, requested a declaratory judgment upholding the exclusionary clause in their insurance policy and to determine that Lloyd’s had no obligation to defend or indemnify the bar owner.  The Court found in favor of Lloyd’s of London and upheld the exclusionary clause.  Lloyds of London is one of the premier insurance carriers in the world and this case made history in the insurance realm.  Unfortunately, this left bar owners in general with an undoubted gap in coverage and a significant need for insurance to address this gap. Bars and Taverns are inherently at risk for this type of occurrence on their premises, so assault and battery insurance is essential as it covers litigation associated expenses and damages to the injured victim and other patrons harmed in the incident.  Assault and battery is an intentional tort not a negligent act.   General liability is designed to cover negligence and accidents so the two actually work together to give you more protection.

This would lead to the next question: Then why do you need commercial crime insurance if you have assault and battery coverage? Again the answer is they each cover different types of harm. Commercial Crime does not cover assault and battery, but it generally covers the following types of matters: robbery, burglary, employee theft and dishonesty, forgery extortion, and computer fraud.  There are many complexities an agent or broker needs to consider before advising a tavern owner which form of commercial crime coverage is most advisable. Some insurance agencies use the standard ISO Commercial Crime Coverage forms or other forms to determine which insuring agreement you need for your protection.

Each of the above types of insurance can be purchased as a separate policy or rider, or in a BOP specifically designed for you.