Legal Q&A: Insurance for pubs

Related tags Insurance Real estate

Pub insurance advice for licensed premises
For any pub or licensed trade premises, insurance is essential. Some forms of insurance are compulsory for licensees and others are optional, though all help in providing financial protection against a wealth of situations. Here are some answers to a few common questions regarding insurance.

1. How does insurance vary for freehold, leasehold and tenants in the pub trade?

For pub owners that own the freehold, the responsibility for all business insurance - public liability, employers' liability, contents, buildings, stock - lands at their feet as they have outright ownership of the property and business.

For leaseholders and tenants, it all depends on the contract between you and the landlord. The landlord may provide buildings insurance as they own the property, while the lessee/tenant has to pay for contents insurance, stock insurance, money insurance, public/employers' liability and more. The landlord may also ask the tenant to contribute towards the payments of buildings insurance.

Always check the state of ownership and any contract to determine what insurance falls under your jurisdiction.

2. Will I be covered for loss of earnings due to extreme circumstances?

If licensees have business interruption/loss of income insurance​, yes.

Let's use the example of a burst pipe forcing the pub to close for two months. As the pub doors are shut for an extended period of time, much-needed cash flow is nixed until the pipe is repaired. With interruption/loss of income insurance the profits, fixed costs, temporary expenses and additional expenses are all covered by the insurer.

Check existing insurance documents to see if loss of income has been bundled as part of a policy package.

3. Do I need to insure my stock?

Legally this is not compulsory, but your contract with the landlord may stipulate stock insurance as a requirement. Stocks in pubs tend to be valuable, making them a big target for criminals, so stock insurance can cover financially anything stolen.

Licensees should always calculate and include the full amount of stock in their insurance premium - any case of under-insuring and it is unlikely insurers will pay out the full value.

4. What about goods in transit?

Again, similar circumstances. Goods in transit insurance is not compulsory but may be required by the landlord under the terms of the contract. If you're using a van to deliver goods to the premises, goods in transit insurance can cover commercial goods, the vehicle used and all liability involved in the process. Most insurers provide covers for goods left in a vehicle left overnight, depending on the vehicle's location.

5. Do I need to have employers' liability insurance?

For the vast majority – if not all – pubs, this is a huge action point. If a pub - or any business, for that matter - employs one or more staff, employers' liability insurance is a legal requirement​. If an employee becomes injured at work or falls ill as a result of working for you, they may be entitled to claim compensation. Employers' liability insurance acts as financial cover when defending against this claim. It also covers claims for illnesses that manifest after that person has left their employment.

Licensees that do not take out employers' liability when employing staff face risks of heavy fines for each day they do not possess the correct insurance.

This article was supplied by independent brokers Business Insure.

Related topics Licensing law

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