Nightclub and bar owners are frequent targets of lawsuits involving claims of over-serving alcohol as discussed in last week’s article Alcohol Accountability Behind the Bar, however assault and battery charges can greatly affect your business as well. The decisions you make today can greatly affect what happens when faced with this type of business risk. Therefore, we spoke with insurance experts at Indemnity Insurance Corporation (IIC) to find out the facts about how to protect your business.
You don’t want to lose your bar and everything you’ve worked for due to inadequate coverage or trumped-up claims. So, if you’re unclear whether you are properly protected against these risks the first thing you need to understand is the difference between patron on patron vs. agent on patron liability.
What’s the difference between Patron on Patron vs. Agent on Patron Liability?
With agent on patron liability, the allegation(s) stems from an employee of the venue causing injuring to a patron. “Vicarious liability, which is the responsibility of the superior for the acts of their subordinate(s), arms plaintiff attorneys with a cause of action to file against the venue, directly,” states Indemnity Insurance Corporation representatives. Liability of patron on patron violence is more closely connected to the allegation of failing to maintain a safe premises and negligent hiring of security (i.e., if your security was well trained, the patron never would have been assaulted). “It’s important for owners to be aware of the differences and how their policy will respond to each type of allegation. Do NOT assume that you will have coverage for either,” IIC continued.
How can owners protect their business, staff, and patrons from such risks?
Once you are well aware what type of coverage you have there are step that you can take to make sure that you’re protecting your business, staff and patrons. Having the necessary number of security/bouncers on premises, with respect to the estimated number of patrons, is a good start. “You should look at your venue as your home; not just from a welcoming, clean, and orderly standpoint but from an observational, protective, and defensive standpoint, as well. A proactive stance may aid you in any instance that you were unable to prevent, as it shows the steps, thoughts, and actions in place to protect your patrons. Remember, a legal synonym for “patron” is “invitee,”” said IIC.
What are the pros and cons of hiring outside security?
An owner isn’t a security expert. “Hiring outside security places the responsibility of protecting patrons in the hands of people holding themselves out as specialists. This third party security vendor may be responsible for: (a) security detail; (b) determining the number of security guard(s); (c) protecting the property and patrons; (d) verifying the certifications of their employees/contractor(s); and (e) the acts or omissions of each hired security guard. It has the effect of transferring the risks involved.”
By hiring such security, you’ve handed over the security to a third-party that you have no control over, and ultimately, for which you can still be held responsible. “The best way to protect yourself may be to do all of the following: (a) review the security vendor’s insurance policy in full; (b) execute a well-written contract that protects the venue completely from the security vendor’s acts or omissions; and (c) ensure the security vendor has coverage for additional insured(s) and require a certificate of insurance showing such addition on their policy.”
It’s important to note that there are a number of such security vendors in this market without the proper coverages. “For instance, there are endorsements that exclude coverage for any claim that arises from the security vendor’s services at a venue that sells alcohol. If an owner, in our industry, has hired a vendor with this exclusion on their policy, he/she should be aware that the security company’s insurer will NOT pick up coverage for any claims, regardless of the security contract, and that the bag will ultimately fall in the lap of the owner for the hiring of negligent security, amongst other allegations,” advises IIC.
What should an owner do when faced with a false claim?
The owner should immediately contact his/her insurance carrier. “Certainly, it’s frustrating when false allegations have been presented against an owner but any attempt to handle the claim(s) on one’s own could ultimately jeopardize the insurance coverage procured by the business. For instance, standard ISO General Liability Forms include a cooperation clause and an obligation to notify your carrier, as soon as practicable. If an owner begins to handle the “false” claim on his/her own and a plaintiff’s firm decides it has ANY leg to stand on, and pursues the matter, the owner may have violated his/her contractual obligation to the carrier and could ultimately end up in a precarious situation,” IIC stated. An owner will be better served by placing faith in his/her insurance carrier’s ability to handle meritless claims.
What are the three things that every owner should know about their insurance?
Let’s start with these:
- Know what’s covered and what is excluded within your policy. Assault and battery coverage may be your #1 consideration. Don’t take for granted that your policy provides such coverage because it may well not.
- The amount of your deductible. The upfront premium may be lower but it may entail a high deductible. When faced with inevitable claims, your overall out-of-pocket insurance costs may be higher than you ever imagined … and budgeted.
- The most likely causes of loss that can occur in your establishment. Great insurance carriers have expert loss control experts who can help identify areas of risk in your club and offer potential remedies before Assault and Battery incidents or Slip & Fall claims occur.