Liquor Liability FAQs
We have come across some of the strangest misconceptions about liquor liability insurance in South Carolina. Let’s clear some of these misconceptions up. This liquor liability FAQ section is meant to a very frank and straight forward discussion about some of the things we have heard and seen in our clients policies and interactions with their current insurance agents.
Do I have to close at midnight to get a good rate?
It is true that some carriers do not have an appetite for restaurants that stay open after midnight. However, there are some that do not mind if you stay open until 2am. The reasoning behind this decision is primarily in determining if your establishment is a “tavern/bar” or a restaurant. It seems like an arbitrary line in the sand, and we agree. Having an understanding of the details of your operations matter in this regard.
Will having pool tables or darts effect my rate?
Much like the closing before midnight designation, some carriers prefer that you do not have pool tables at your establishment. This isn’t and end all be all situations. We do have carriers that do not mind you having pool tables. The number of pool tables can become an issue. We will work with you to have an understanding of pool tables and dart boards to match you with the appropriate carrier.
Do I have to be below 50% alcohol sales?
This is a fairly hard line in the sand so to say. The vast majority of insurance carriers will deem your establishment a “bar/tavern” should your alcohol sales reach that 51% and above level. We like the take the lead here and help you understand what exactly insurance carriers are looking for and to help you implement strategies to get below that 51% level if you are in a reasonable range.
Should I under-report my alcohol sales to get a better rate?
Absolutely not. Period. We have run into many occasions where agents are misreporting alcohol sales in order to obtain more favorable rates. To put it simply they are not business owners and do not understand what they are doing. I know they will tell you they are business owners, they are in business for themselves, but make no mistake being a 1099 contractor does not make you a business owner. In under-reporting alcohol sales you are putting your business at risk in the event of a claim. You are giving the insurance carriers an “out” to deny the claim. We have seen under reported alcohol sales north of a million dollars per year. To be clear, knowingly signing the application or audit with under reported figures can be deemed as insurance fraud. Not smart and very short sighted.
Will live music make my insurance rate higher?
No. It is true that there were carriers out there that did not have an appetite for live music in any way. The good news is those carriers have left the market altogether so in South Carolina this really isn’t a factor anymore. However, the type of music can be an issue. Some carriers will not have an appetite for DJs or certain types of music such as hip-hop, hard-core rock or EDM. Carriers see these types of music entertainment as a sign of a “bar/tavern” designation. Again, working with us to fully understand your business operations will help us match you to the right carrier.
Are there really only 2 or 3 carriers writing liquor liability in South Carolina?
We have heard this a lot over the last 6 months. Yes it is true that a lot of carriers have left the market but there are several that are still writing liquor liability. This messaging that there are only 2 or 3 carriers is put out there by agents when in reality is there may only be 2 or 3 carriers that are appointed with to sell. A pretty substantial difference than claiming there are only 2 or 3 carriers. No matter your business operations we will always be able to give you a full list of carriers and what they rate your business, we will even let you know which carriers said no and why they said no.
What is this broker fee on my policy?
This is one of our biggest pet peeves. When looking at your policy docs, usually on one of the first few pages, you see things like premium and inspection fees. You may also see in a separate spot a line item called “Broker Fee” this is a fee added onto your insurance policy and directly compensates your insurance broker. Sounds fair right? Right up until you realize that this fee is in addition to their commission which is typically between 10% – 12%. We recently saw a broker fee on one policy of $5,000 with a Premium of $191,000.
So lets break this down. The client paid $196,000. The broker made a commission of $19,100 plus another $5,000 in fees for a total of $24,100. Why we have a problem with this is simple, as restaurant owners you are already facing unmanageable insurance rates so why add on more? We believe any agent that says they are here for you but then kicks you when you’re down is an agent that you don’t need to be working with.
We Can't Promise Much, But...
However, we can promise a few things. First, we promise to never add on broker fees to already expensive insurance policies. Second, we promise to give you all your options with pros and cons to each and let you make the best decision for your business. Third, we promise to help you to mitigate any factors that may be causing you to experience exceptionally higher rates or reduced amounts of quotes.