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Insurance & Employee Benefits

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 Which types of coverage are important to consider?

Loss of Business Income

Employer Practices Liability

Valuable Papers & Records

Electronic Data Processing

Hired & Non-Owned Auto Liability

Pair or Sets Clause

Machinery & Equipment

Commercial Crime

Cyber Liability  

Inland Marine


Plate Glass


Dining Room Furniture

Insuring Liquor Stores, Wines & Spirits

Important Considerations in Choosing an Agent to Service Your Organization’s Insurance

Knowledge of the Industry

Experienced Staff

Fast Certificate Processing

Claims Representation

Billing & Finance Options

Support Backup

Access to Multiple Markets






Severe - Fire could destroy entire stock

Change in Temperature

Moderate to Frequent

Varies - Due to the amount of stock affected







Employee Dishonesty



the goodwill and reputation of the business?  Sometimes it’s easier to affix a dollar amount on a tangible item such as a bottle of wine, even if the value of the wine increases with age.  But determining the potential impact on the loss of revenues and how the goodwill is affected can more of an art than a science.  

Important points to consider when determining the amount of coverage and the time period would be the speed of permit approvals, efficiency of construction crews, ability to restore the inventory, and loss of profits due to loss of market and goodwill.  

Business owners policies most often offer loss of business income (previously termed business interruption) on an ‘Actual Loss Sustained’ basis (ALS) subject to the terms, conditions, and exclusions of the policy.  Generally the coverage pays for the continuing operating expenses and net profits before taxes due to a loss caused by a covered peril (read policy form). This coverage is usually granted for a period of one year.  On the other hand, the commercial package policy requires a specific monetary limit scheduled and a time period or term listed such as a period of three months.  Coverage is determined by the type of form selected such as basic, broad, and special for both the BOP as well as the CPP.  

Extra Expense provides for payment due to a covered loss to help mitigate the claim such as with the loss of business income.  This may include the rental of a temporary location and the cost to transfer the contents to the location to help resume operations quicker than if no measures were taken.  It may also include the payment for temporary help to expedite business operations.  

As with most retail businesses, liquor stores derive most of its income from walk in traffic therefore it is important to properly protect against the monetary loss of income due to a claim that can shut down the operations.   

Building Coverage

Building coverage is normally provided for each structure listed at each of the described premises.  It is usually subject to a specific limit and may be subject to a reduction due to depreciation.  Therefore it is important to understand how the recoverable amounts would be factored in the event of a claim.  The replacement cost or RC is generally the most common type of recovery method used and with good merit as the recovery from a claim bases the value of the building at the current cost to replace.   

If the building is covered by a BOP, the covered perils would be defined by the coverage form selected such as a standard or deluxe and generally not subject to the coinsurance requirements of most commercial package policies.  

Commercial Crime

Crime insurance is a general term used to describe acts of crime resulting from employee dishonesty, forgery & alteration, fraud, loss of monies and securities, etc.  It is generally excluded under a CPP, but often added as an enhancement with a separate limit.  If available under a BOP, it would be subject to the type of policy issued.   

Plate Glass Coverage

Most policies have limitations or exclusions relating the damage of plate glass.  This line of coverage can generally be added separately either by endorsement or as a separate policy.  The rating is normally based on the linear footage.  Many liquor stores are susceptible to the breakage of glass due to the large amount of glass windows showcasing its displays.  

Electronic Data Processing or EDP Coverage

Many retail liquor operations are automating their inventory control systems.  This usually requires an investment in expensive computer hardware and software programs.  Most policies limit or exclude coverage pertaining the loss of data, the expense associated with a computer related loss including but not limited to recovering, repairing, or replacing the systems or data on the systems.  EDP coverage can also cover items such as phone systems, facsimile machines, or components on equipment that process data.   

It is important to evaluate the limits on the hardware, such as the replacement cost of the computer systems, software, and any extra expenses to get the systems operating.  Loss of business income resulting from an EDP claim are many times excluded, so it’s important to examine this potential exposure.  Finally, many policies exclude or limit coverage for damage due to power surges from outside lines.  Usually this coverage can be purchase back by endorsement.

Mobile Equipment - Machinery & Equipment

Most policies exclude or limit the physical damage coverage for mobile equipment such as fork lifts and other machinery used to move stock. This line of coverage is generally written by endorsement but may be offered as a stand alone Machinery & Equipment policy .  

Inland and/or Ocean Marine

Covering contents in transit whether by air, land, or sea, is generally excluded or limited by most policies.  Policies that cover these exposures usually base the coverage on where the contents are located at the time of the loss such as in transit or at a temporary location. The coverage is determined by the form it is written on, the limits, and the terms and conditions, exclusions, and limitations.  Separate deductibles are common if it is offered as an endorsement.  

Pair or Sets Insurance Clause

In the event of a loss to part of a set or pair of items, many policies reduce the recoverable amount rather than adjust the claim based on the entire value of the set. An example would be a reduction of a claim if damage occurred to only one of two bottles of wine in a set.  An endorsement may be available depending on the carrier to cover the entire value of a set as it is often more difficult to sell part of a set.     

Commercial General Liability

Liability insurance provides coverage for third party liability losses due to bodily injury, property damage, and personal injury (hurting of the persona) caused by accidents and/or acts of negligence by a named insured.  The coverage is subject to the terms, conditions, limitations, and exclusions of the policy and within the covered territory.  Generally, liability insurance provides coverage for premises hazards, such as trips and falls; operations hazards such as injury resulting from the delivery of stock; completed operations such as injury caused by the installation of the goods; and personal & advertising injury such as copyright & trademark infringement and other acts of damage to the persona of an individual or entity.

Policy Rating

The premium for general liability insurance is usually rated differently between a business owners policy and a Commercial Package Policy. In most cases, the liability under a BOP is rated based on the amount of property being covered or the square footage of the premises.  The rating for a CPP is most often based on the sales volume, payroll, or any combination of factors.  On larger accounts, many carriers prefer rating risks this way as there is more control of the premium.  On smaller accounts, the expense of auditing the books to ensure accurate figures were initially provided can be cost prohibited which is why a BOP form is often preferred.  Most carriers have sales volume limitations for a BOP consideration.

Common Exclusions

Most liability policies, whether written as a BOP or a CPP exclude coverage for auto, pollution, liquor liability, employer practices liability, or EPLI (i.e. discrimination & sexual harassment), expected or intended injury, cyber liability, and any worker related injuries.

Liquor Liability

Many liquor stores offer tasting events and provide samples to their patrons.  Ironically, liquor liability is often excluded and host liquor liability is limited in coverage on business owner’s policies.  If during a tasting event, a patron became intoxicated and caused harm to another or their property, the store owner could be held liable for contributing to their intoxication.  Therefore it is important to secure coverage for liquor liability or modify the liquor liability exclusion depending on the situation.   

Workers’ Compensation

Most states have laws requiring a method for covering losses resulting from employee injuries.  Typically workers compensation insurance would be the vehicle to fund for the medical expenses, loss of compensation, and any employers liability relating to the injury of the worker while on the job.    

Liquor stores are no different than any other type of retail operation with respect to covering the injuries of its employees.  In fact the exposure can be greater for a liquor store with respect to the heavy lifting that may result from the delivery and moving of the stock.  Back injuries are often the most common culprit of unfavorable loss experience for liquor stores as well as any other business with heavy lifting involved. Therefore safety precautions should be implemented to prevent and control claims.  This can help reduce the experience modification factor that can adversely affect the workers comp rating.

Some states may require statutory disability benefits provided to the employees for off the job injuries and illnesses.  Currently CA, NY, NJ, HI, RI, & PR require this coverage.  The enforcement of disability benefits is usually administered by the states’ workers compensation boards.

Commercial Auto or Truck Insurance

Commercial Auto & Truck Liability

To protect for liability exposures relating to the operations of a vehicles used in the course of a business is normally covered by a commercial auto or truck policy.  This may include coverage for auto and trucks that are owned, borrowed, or hired for the operations of the business.  It is important to cover all types of vehicles including those that are not owned by the company as the liability exposure can extend to those driving their own vehicles during the course of business operation.  This coverage is often referred to as hired & non-owned auto liability.  

Commercial Auto & Truck Physical Damage

These policies generally offer coverage for physical damage losses due to comprehensive or collision claims.  Comprehensive, sometimes referred to Specified Causes of Loss, generally provides payment for loss or damage due to claims not resulting from a collision.  If specified causes of loss is used, then the covered items would be specific to what is listed in the policy.  Collision coverage is the act of colliding with another object or the vehicle overturn.  Most often, separate deductibles can be applied to the comprehensive or collision.

Commercial Umbrella or Excess Insurance

An umbrella policy typically adds an additional layer of liability coverage over the underlying or base limits.  A follow form umbrella generally matches the coverage including the limitations and exclusions whereas an excess liability policy defines what is covered that can deviate from the underlying policy.    

By William F. Schaake, CIC, CRM © 2012 All rights reserved

Liquor, Wine & Spirits Insurance

Risk analysis is important when examining the exposures of various businesses.  This important step takes into account the potential losses and how it can affect the business, such as damage caused by fire.  It includes defining the potential perils, any exposures that increase the likelihood of a loss, what the impact of the loss would be on the business, and to quantify the impact of a claim.  

Business Personal Property or Contents Coverage

A  liquor store has many property exposures such as damage to the stock or inventory, the buildings occupied, electronic equipment such as computerized registers and servers, monies & securities, improvements & betterments, etc.  When evaluating the exposures of a business it is important to list the hazards of the industry.  Liquor can be flammable. Therefore the exposure to the peril of fire is increased and the potential damage is greater than insuring an ornamental concrete yard.  Fine wines are subject to damage caused by change in temperature.  Hence, listing the possibilities and the impact of these exposures should be the first step.

Business personal property or contents coverage protects against the financial loss of the stock, inventory, equipment, supplies, liquor, and other movable items used for the business operations.  It is normally provided as a separate limit at each of the described premises and may be subject to a reduction due to depreciation.  As with the building coverage above, it is important to understand how the recoverable amounts would be factored in the event of a claim.  

If the contents are covered by a BOP, the covered perils would be defined by the coverage form selected such as a standard or deluxe and generally not subject to the coinsurance requirements of most commercial package policies. The CPP usually allows for greater flexibility in defining limits and methods of insuring exposures.

Loss of Business Income & Extra Expense or BI & EE

After quantifying the financial impact caused by a direct physical loss, the time element exposures should be examined. If a fire were to destroy the building and all the contents, how much time would be required to either relocate or reconstruct the premises?  How much income would be lost?  What about

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