Making an insurance claim is never a fun thing to have to do. Edmund Weil has first-hand knowledge of how best to deal with insurers.
The story of owning a bar is full of unexpected plot twists – usually in the shape of things going wrong. Most such mishaps are mere annoyances: a bartender’s fumble with their flashy new Japanese knife results in a dash to A&E, a valuable bottle’s fatal plunge from the top shelf, or the toilets staging a rebellion on the busiest Friday in months. All part of the rich tapestry of bar ownership. Take it in your stride, and life goes on.
At some point though, there’ll come a moment that stops you in your tracks. Something that jeopardises your business and livelihood. This could be a catastrophe, such as serious injury to a guest or staff member (or indeed a global pandemic), but more likely it will be an episode as mundane as a leaking pipe in the unattended office upstairs which deluges your bar. In such times of crisis one of the first calls a bar operator will make is to their insurer – which will often coincide with their first deep dive into the detail of their insurance policy.
I can speak to this from experience, having endured two bar floods in the past six months. Even after 13 years in the business, I learned some salutary lessons. Water damage claims escalate quickly. Initial costs include pumping out water and renting industrial dehumidifiers. Business interruption follows – a sodden bar can’t operate – leading to lost sales and strained cashflow. Then comes the damage to the fabric of the bar: fixtures and fittings, finishes, wiring – none of which react well to water. Such remedial work often forces more closure days.
Depending on the severity of the damage and the turnover of the bar, the claim could run into six figures. Not an ideal time to discover a cryptic bit of wording that severely limits your cover. In my case, my policy had been rewritten after the floods in 2021 to impose a cap of £25,000 on any water ingress claims in basement bars. In industry jargon, I was “underinsured” – and I didn’t even know it.
Getting properly insured is one of the most laborious and dreary tasks on the to-do list of bar owners, but it doesn’t come close to the purgatory of dealing with the insurer once you’ve had to submit a claim. The truth is that, like so many other aspects of running a bar, insuring one is fraught with pitfalls, risks and shifting goalposts. Having learned some painful lessons myself, and done further research speaking to brokers and other bar owners, I’ve compiled some top tips for existing or aspiring bar owners:
Find a reputable broker
These are the middlemen between you and the insurers. Many are simply glorified salespeople, but the right broker will ask all the right questions about your business and make sure that the policy you end up with covers all the right bases (there are many to cover!) and carries the right balance of risk versus cost. The best brokers will also be a point of contact between you and the insurer and help you manage your claim.
Provide accurate information
When getting a policy together you’ll need to hand over a lot of information about the business: turnover, gross profit, number of employees, wage bill, stock holding. Be precise – despite the tedium. Guesswork can cost thousands in underinsurance or, worse still, void a claim.
Read the small print
Identify excesses (deductibles designed to discourage or minimise claims) and caps (limits on larger claims). Also be sure to check that none of the exclusions written into the policy apply to you or your company (for example if a CCJ or liquidation has been issued against the company or one of its directors, in some cases this could void an entire policy if not disclosed).
Collect evidence for no fault claims
If someone else is at fault for the claim (eg if another occupant in your building has negligently caused damage by flooding or fire) gather evidence of their liability. You insurer may choose to pursue the other party (or their insurance) and then your standard excesses or caps may not apply, and you will be able to claim more money.
Engage smartly with loss adjusters
In the event of a claim, the insurer will most likely appoint a loss adjuster who will visit to assess any damage and ask questions about the business. Co-operate but avoid oversharing. Ultimately, their aim is to minimise. Be prepared to provide a full and itemised account of loss-related costs and management accounts to substantiate your gross profit in business interruption claims.
Get ready for the long haul
Significant claims can take months or years to settle, so you’ll need to be prepared for a black hole in your cashflow. One bar-owning friend who was catastrophically flooded in 2021 told me that his (very large) claim remains in limbo three years later. He said that at times, dealing with the claim became like a full-time job and caused huge levels of stress while distracting him from the vital task of picking up the pieces and restoring his business. In cases such as these, it might be an idea to seek out a loss assessor – a counterpart to the insurer’s loss adjuster – whose role (for a commission) is to manage your claim and maximise the payout.
Expect premium increases
Insurance lingo whispers of ‘loss ratios’ – the delicate balance between premiums received versus claims disbursed. Although the essence of insurance should be to spread risk, underwriters are focused on profit. If your claims start to outstrip the premiums you’ve paid, brace for an unwelcome increase. It will feel unfair and demoralising but should not discourage you from keeping robust insurance cover or making valid claims.