From the Front Lines: Restaurants

How did you get started?

I was working for Fidelity Investments, where you work long hard hours and you sometimes feel like your income is predicated on the company’s overall success. I wanted to get into the sales world to have a little more control over my own destiny, career-wise and financially.

Why restaurant?

There’s a lot of turnover on it. We value the people who have been there and done it and know how to run a restaurant. The restaurant industry is a very, very hard business, the failure rate is very high, but the people who know it and do understand it really get it.

The exciting part is to learn about them and their vision. My favorite part, and I say this to every client, is to ask, “How did you get into this business?” I always ask because I like to learn about them and what’s important to them.

Biggest restaurant changes?

Carriers are now looking at liquor sales a lot differently than they used to. That’s the big thing. When I first came into the business, they wouldn’t write more than 25% liquor sales. I think they’ve changed their mindset on that with regards to liquor—now, some are doing as much as 40-50% liquor sales.

I think the other thing we’re seeing, which a lot of business owners are not addressing, is employment practices. For lack of a better term, it was like the old boys’ club in the sense that the chef used to be able to make an inappropriate comment to an employee or waitress. That’s no longer acceptable—more lawsuits are starting to come about. It’s a big exposure that restaurants right now are overlooking, especially when you’re employing 18-, 19-, 20-year-old women.

And then you could also have a patron who inappropriately touches or communicates with the wait staff, and if the owner or manager is not appropriately addressing it, that employee could potentially file a lawsuit against the employer.

Biggest restaurant challenges?

The one thing I struggle with is retention of restaurant clients because there are plenty of restaurant owners who view this as a commodity rather than a tool. When there’s a problem, insurance is going to be there to solve it, whether the kitchen catches on fire, or a customer walks out the door and gets sick because the food is bad, or a server wasn’t paying attention to a customer’s drinks and overserved them.

If you really sit talk and talk to somebody from a liquor liability perspective, you better remember, not only is the person who’s driving the car going to sue you because you overserved them, but if they hurt or kill somebody else, that other party is going to sue you as well. I try to talk people through a lot of these processes.

Some carriers will exclude assault and battery, or they cap it out at a low coverage amount. But restaurants look at the price and say they don’t care about that. Well, I say, “You don’t care about it until you get a claim.” There’s a reason why there’s a big cost difference. My challenge is to not make it a price thing.

Any advice for a fellow restaurant insurance agent?

Understand the equipment. The big thing I have to correct a lot of restaurant owners on is when they’re trying to do the replacement cost on stuff, a lot of the owners think they’re going to go and buy it like it’s used. They don’t realize, no—you’re buying as if you had to go and buy it tomorrow because you’ve got to get your restaurant up and running right away.

From a carrier perspective, when the inspections happen, most carriers want to know that there’s a sprinkler system—that’s a hot-button issue. If you’ve got habitational property above, the carriers won’t even write it unless there are sprinklers.

Favorite restaurant success story?

I insured a restaurant that evolved from a family-style establishment to where they’ve got a nice bar area and people come in to watch sports. At the time, I told the guy, “We’re going to buy this liquor liability policy. It covers you for assault and battery.”

He just had a claim back in December. They asked a customer to leave the restaurant who’d had too much to drink, the customer acted unruly, and another non-patron, a person walking down the street, punched this guy. He claimed assault and battery, and now his lawyer was calling my client, saying, “You’re liable for my client’s injuries.”

To me, the success was that we were able to cover it because we were watching out for the client. We understood the business, we understood what direction it was moving in and we therefore attributed particular importance to certain pieces of coverage.

Will Jones is the IA assistant editor.