No two pubs/restaurants are the same. That goes for the cost of business insurance. Price depends on turnover, payroll, location, opening hours and the type of hospitality offered.
To find the average or typical cost for your business, you'll need more than one quote for comparable policies. This may take a little work and time from your schedule, but you'll be able to appreciate the cost and variations in policy.
Research with special attention not just to the cost of the premium and level of cover, but the excess and service (eg. risk management) offered by insurers.
With margins in the food and drinks trade tighter than ever you don't want to pay over the average, but cheapest isn’t always best.
Buildings/Catering Unit: Insure for the current rebuild/replacement cost, not market value. Include outbuildings, walls, gates, signage.
Don't forget rebuilding design costs to meet current regulations. Add on site clearance costs and professional fees, eg architect, surveyor, lawyer - usually 10-15% of rebuild cost.
Contents: Furniture, fixtures, fittings, equipment, stock. Insure contents for their current replacement value. Remember insurers apply what they call the rule of average, ie, if you insure stock for 50% of its real value, they'll only pay out 50% of the claim.
If relevant, add on employees' personal belongings and guest/visitors' effects (up to £1,000 per person) and your own household goods.
Public liability: Legal minimum is £2 million. If 20+ employees, at least £5m.
Employers' liability: Legal minimum £5m.
Products liability: Legal minimum £2m.
Business interruption: Calculate lost profit if premises were out of action for a year, plus extra costs, eg, hire of alternative premises/catering unit.
Frozen food: Value of stock that could be written off because of a temperature glitch.
Goods in transit: Max. value of goods transported in any one shipment.
Specified items: Value of equipment you need to cover away from the business, eg, outside catering events.
VAT: If not registered, exempt or partially exempt, adjust all insured sums to include non-recoverable VAT element.
How to get cheap Insurance
Whether you're running a pub, restaurant, cafe, takeaway or mobile catering van, you can cut the cost of insurance and reduce claims if you:
- Comply with The Health and Safety At Work Act and carry out regular workplace risk assessments.
- Join a trade association for discounted insurance premiums.
- Keep business money in a secured locked safe.
- Don't leave premises vacant for long periods.
- Don't store stock in damp basements.
- Reduce stock levels for lower premiums.
- Keep premises/mechanical equipment well maintained.
- Use premises that are self contained with their own lockable door.
- Make your business premises secure with BS standard locks, intruder alarms, CCTV.
For Cheaper Insurance Costs
- Look for a policy where you can pay premiums monthly, interest free.
- Don't use premises with listed building status.
- Put a risk management programme in place.
- Install CCTV.
- Let your insurer know if you take on fewer staff/reduce stock levels.
- Don't offer disco/live entertainments/nightclub facilities.
- Don't provide DSS accommodation.
- Restrict late night opening to Christmas and New Year.
- Don't organise excursions.
- Don't offer play facilities (eg Bouncy Castle).
- Keep premises occupied overnight by an employee/family member.
- Don't have an ATM cash machine on the premises.
- Don't charge admission.
- Don't extend hours of opening more than three times a week.
Risk and Cost increase if:
- You're in a high crime location and/or area subject to flooding.
- Your business is over 10 miles from the nearest fire brigade.
- You offer entertainment (dancing, live music).
- You have late opening hours.
- You offer outdoor activities and excursions.
- You have a high turnover of employees.
- You hire a high number of seasonal staff.
- You offer self-catering facilities in your inn or restaurant.
- You're closed for long periods and no-one lives in the property.
Join a trade association for discounts on pub and restaurant insurance.
The British Hospitality Association (BHA) www.bha.org.uk; The Restaurant Association www.restaurateursguide.com; British Beer and Pub Association (BBPA) www.beerandpub.com; The BII (British Institute of Innkeepers) www.bii.org; Best Bar None www.bbnuk.com; Nationwide Caterers Association www.ncass.org.uk | NCA insurance review.