Terry's Restaurant Insurance Blog


North Carolina Liquor Liability Laws Highlighted in Recent Court Case

A horrific car crash in 2010 and the resulting lawsuit that followed in Charlotte, NC, highlights some of the issues and risks for restaurant and bar owners in North Carolina.  This tragic accident should be a wake up call for any establishment that serves alcohol and has no liquor liability insurance, or perhaps has insurance in place but doesn’t realize that they don’t have enough protection. 

On Oct 29, 2010, Matt Eastridge and his wife Meredith were just pulling away from an ATM and driving home.  Meredith was 6 months pregnant at the time.  Before they could react, their Toyota Rav 4 was hit by a drunken driver traveling more than 100 miles per hour.   Both of the Mr. and Mrs. Eastridge were hospitalized for a month following the accident and their unborn child was killed.  The driver of the other vehicle, David Huffman, had a blood alcohol limit of more than three times the legal limit at the time of the crash. 

Mr. Huffman, just prior to the accident had been drinking at Eddie’s Place, a restaurant and bar in South Charlotte.  It was later revealed that Mr. Huffman had been served at least 10 drinks.  Despite this, an investigation by the Mecklenburg County Alcohol Beverage Control Commission found that Eddie’s Place had not served alcohol to Huffman after he was visibly intoxicated.  It was also determined that this restaurant has worked hard to comply with the laws on not serving alcohol to people who are drunk or underage.  In fact, in this case the restaurant employees found Mr. Huffman a ride home with another patron that lived in his apartment complex and were unaware that when he left their establishment he chose to drive himself home.

Despite these facts, the jury found in favor of the Eastridge family when they sued Eddie’s Place for liability associated with this accident.  The jury returned a $1.7 million verdict against Eddie’s Place.  They found that the restaurant was negligent in serving alcohol to a person it knew or should have known was intoxicated.  There are different standards for civil and criminal liability in these cases but the Eastridges sued under the North Carolina law that establishes the liability of establishments that serve alcohol to clearly intoxicated patrons or to underage patrons who subsequently cause death or injury to others in alcohol related crashes.

The problem for restaurant and bar owners here in North Carolina is that there are a number of gray areas in the law.  The law states that you can’t serve someone who is visibly intoxicated when you have reason to believe that they are going to drive.  But that is a tall order for a wait staff or a bartender.  How can they know who is riding and who is driving?  It is not their duty to make sure that no one drives home who might have more than the legal limit of alcohol in their system.  But in essence, that is what this court case has decided.  This establishes the critical moment as the time when the bartender serves the client.  That is the moment of truth, should they serve them another drink or not?

For those that own a bar or restaurant that serves alcohol, there are a few hard lessons in this story.  First of all, make sure that you understand all of the applicable laws in your state and that you know exactly what is required of you to protect your business from liability.  Be sure that your wait staff and bartenders also know the laws and that they have good judgment in terms of how to apply those rules to their actions with patrons.  Secondly, review your liquor liability protection and be sure that you have the right protection and also that you have enough protection.  If you were satisfied with your $1 million policy limit before, how does that amount feel in terms of adequacy in light of this $1.7 million verdict?

Clinard Insurance Group is a niche player in the restaurant insurance market in North Carolina, South Carolina, Tennessee and Georgia.  We insure hundreds of restaurants across this 4 state region.   If you have questions about your restaurant insurance or your liquor liability protection and your establishment is located in one of these states, I hope you will call us for help at 877-687-7557.  


For Work Comp Insurance Claims, Restaurants Should Have A Plan In Advance

Accidents happen in restaurants every day.  As the restaurant owner you don’t get to choose when they happen and you may not necessarily be there every time someone is injured.   And even if you are at the restaurant when someone gets hurt, if you haven’t taken the time to analyze what your next steps should be, then you likely won’t immediately chose the best course of action to deal with that injury.

This discussion assumes that your restaurant has a workers compensation insurance policy in place.  If that is not the case, stop reading now and call our office at 877-687-7557 as no restaurant should be operating without workers compensation insurance. 

Workers compensation is an experience rated policy.   What this means for you is that your future work comp costs are directly based on the costs and the number of workers compensation losses that your restaurant experiences.  Without getting into a detailed discussion of how the experience modification factor works, just keep in mind that the more that is paid out for your workers compensation losses, the greater chance your rates will be higher in the future.  To read a more detailed description of how the experience modification factor operates on your workers compensation policy, please click here.

With all of this in mind I want to point out a scenario that we see replayed over and over by a number of our restaurant clients.  Often the restaurant owner is not working at night when an employee gets injured.  The manager of the restaurant has not had a conversation with the owner about what to do when someone is injured.  If they can’t reach him on the phone right away, then they typically take the injured person to the nearest emergency room for treatment.  Emergency room treatment is notoriously expensive for small cuts or for slip and fall injuries which are most common in restaurants.  A better option is to visit one of the walk in clinics, often referred to a doc in a box. 

Here’s a recent case that happened to one of our clients.  A waitress slipped and fell, bumping her elbow hard on the tile floor.  Because the owner was not available, and because no procedure had been established in advance, the waitress was simply taken to the emergency room.   Once the emergency room staff learned that this was a workers compensation insurance claim, they decided to not only x-ray the arm, but they also performed an expensive cat scan as well.  As you can well imagine, this procedure was many times more expensive than the treatment she would have received at a nearby walk in clinic.  And in the end, our client will have to pay more for workers compensation insurance as a result of this decision.

My recommendation is that you take about ½ hour now, and make a plan for where the minor injuries should be taken for stiches, x-rays etc.   Get it in writing and make sure that your managers all understand these procedures and that they know where to find the written instructions in case they can’t remember exactly what you told them to do.  Things can get a little panicked right after an accident occurs so you want to make this process as smooth as possible.  Taking care of this little detail could mean the difference between a huge workers compensation insurance rate increase in the future and no increase at all.

Clinard Insurance Group, located in Winston Salem, NC insures hundreds of restaurants all across North Carolina, South Carolina, Georgia and Tennessee.  If you need help with your restaurant insurance, or if you just need an insurance second opinion, please feel free to call our office, toll free, at 877-687-7557.


Employment Practices Liability – The Risks And The Rates Are Increasing

For most restaurant owners, employment practices liability insurance is not one of the insurance policies in their risk management quiver.  There are many reasons for this from ignorance of the risk exposure itself to a lack of understanding about what is covered by which policy.  There will come a time when this policy is as common in the restaurant industry as fire insurance or workers compensation insurance.  Unfortunately, by the time that happens the costs of these policies will be even higher than they are today.

ihopLet’s take a quick look at a few high profile restaurant employment practices lawsuits that have been in the news recently.  The owner of 7 IHOP restaurants in New Mexico recently agreed to pay $1 million to settle a lawsuit.  This lawsuit had alleged sexual harassment of at least 22 women employees by one of his managers.  The lawsuit alleged that these women employees were subjected to sexually offensive comments, innuendo and unwanted touching.  Can you safely say that every manager in your company is doing all that can be done to prevent your store from being dragged into a lawsuit of this nature?  There is just too much room for errors in communication that could lead to these types of allegations at any business.  Without proper EPLI coverage, you are leaving your livelihood wide open to attack.

In September of this year, a number of employees of Olive Garden, and LongHorn restaurants, part of Darden Restaurants, Inc. filed suit against their employer, accusing the employer of violating federal labor laws by underpaying thousands of servers in many of their locations.  The suit alleges that some servers showed up on time for shifts but were not allowed to clock in until customers began arriving.  Some were also alleged to have been forced to clock out while being required to continue working.  Are you following every detail of wage and hour rules to the letter of the law?  Are you vulnerable to an EEOC or a Department of Labor challenge?

So, we have a trend of larger and larger lawsuit settlements, along with a trend for the Department of Labor to be more involved in stricter enforcement of the rules, alongside more and more EEOC suits.  Add in to the mix that more and more trial attorneys are beginning to salivate over this new and fertile area of the law.  Last of all, we see a strong increase in the pricing of Employment Practices Liability Insurance across the nation.  All of these trends point to increase risks for the restaurant owner.  If you don’t have an Employment Practices Liability Insurance Policy in place, then the forecast for future risks are clear – they are going to increase and could cost you your very business.

Don’t wait until it’s too late to protect your restaurant.  Call your insurance agent today and ask him or her about EPLI.  If you can’t get answers to your questions, please feel free to call Clinard Insurance Group, at 877-687-7557.  We insure hundreds of restaurant all across North Carolina, South Carolina, Georgia, Tennessee and Virginia.  We would be happy to take as much time as you need to chat with you about your employment practices liability exposure and to help tailor a solution that suits your needs and your pocketbook.


The Big Hole In Your Cyber Security – People

If you follow my blog you will note that I have written more than a few articles on the risks of cyber theft that restaurants face.  Your data has value to thieves and they will use nearly any means possible to get it.  Primarily, these thieves prey on restaurants with a weak link somewhere in their cyber security that they can exploit.  Today I want to discuss one such link that every restaurant has to contend with: the human factor.

The human factor adds risk to your cyber security in that it can involve every person who works for you.  In addition, it can even involve those who don’t work for you but have access to your restaurant, like suppliers and inspectors, or even IT workers or remote software installers.  In short, you have a lot of holes to plug.

The problem is not just that these people can make a mistake, or even that they may be dishonest themselves, but rather that they can be vulnerable through their gullibility or their lack of awareness that an attack is taking place.  There are a number of techniques that cyber criminals use to pivot on the gullibility of your employees.  One such tactic is to pose as an IT information officer, or a network security person.  When utilizing this technique, the criminal often offers to help fix a problem on the computer that may or may not exist.  After running your nontechnical employee through a few harmless computer screens, they may offer to just fix it themselves if the employee will share their password so that they can get in to the system and make the changes.  Of course it is only a few hours later that your client data is for sale to others.  Another scam was done with criminals simply putting on clothing with corporate names and logos like Cisco or some other trusted brand name to gain access to your restaurant premises to steal your data. 

The lesson in all of these stories is that security goes far beyond simply having the right technology.  It also requires training your employees with the proper mindset and attention to detail as well as a clear awareness of these possibilities.  And of course you can’t think of everything that might happen so my advice to all restaurant owners is to strongly consider purchasing cyber liability insurance to protect your restaurant from losses that you might be forced to pay for if you are attacked and your client data is successfully stolen.

Clinard Insurance Group is an independent insurance agency located in Winston Salem, NC.  We insure hundreds of restaurants all across North Carolina, South Carolina, Georgia, and Tennessee.  If you have questions about restaurant insurance, or if you would like help with your restaurant insurance needs, please feel free to call us, toll free, at 877-687-7557.  We look forward to helping you.


What Do Fed Remarks Have To Do With The Cost Of Your Restaurant Work Comp Insurance?

Workers compensation insurance, while generally one of the least expensive of the many forms of insurance that restaurants need to purchase, is nonetheless getting more expensive all the time.  There are many factors that affect workers compensation rates in various states from the political and regulatory environment to medical costs to even the benefits allowed in each state.  But one factor that has an impact on your workers compensation rates comes from a source that most might find a bit strange:  The comments of the Federal Reserve chairman.

For sure, the one huge component of workers compensation rates is medical costs.  We all know that medical inflation has been running at many times the rate of inflation for other goods in our economy and sadly we are probably starting to get used to these annual increases on our health insurance policies.  But with workers compensation insurance, the medical expense is only one component of the claims cost picture.  Another huge component is the disability payments.  These are paid out often over a very long time frame and this is why workers compensation is referred to as a long tail line of insurance.  This simply means that the final payment and settlement of a claim can take quite a long time to develop and finish out.  This means that investment return becomes a huge factor in the costs of this kind of insurance policy.  The higher the investment returns that an insurance company can receive on its surplus, the less they will have to collect in premiums to pay these long tail claims.

With this in mind, now enter the Fed comments.  Several workers compensation insurance carriers are now saying that statements from the Federal Reserve earlier this year may have fueled an uptick in workers compensation pricing.  The comments in question?  Well the Fed indicated that interest rates were not likely to rise for the next two years.  This comment removed any residual optimism that workers compensation carriers had for greater interest rate income to improve their surplus positions.  When that happened there was a noticeable shift in the underwriting credits on new accounts with a definite tightening there.  Next to be impacted will be renewal pricing. 

One effect of this that agents are reporting is that their underwriters are less willing to listen to the specific details of an account and price it according to this additional information.  The impact of long term lower interest rates has resulted in underwriters being given marching orders to achieve a certain percentage increase in premiums without regard to the individuality of a specific customer’s situation. 

These kinds of knee jerk reactions are often softened over time but for the near future we can all expect tougher underwriting and higher pricing for workers compensation insurance.  If your restaurant buys workers compensation, and it should, then it becomes even more important for you to carefully select the right agent to help you with your workers compensation insurance needs.  Your agent should have a large enough book of restaurant insurance business that he or she can have an impact on the relative pricing for your policy and he or she should also represent enough workers compensation only insurance companies that he or she will be able to offer you options should plan A go awry.

Clinard Insurance Group is an independent insurance agency located in Winston Salem, NC.  We insure hundreds of restaurants all across North Carolina, South Carolina, Georgia and Tennessee and we would be honored to have an opportunity to answer your questions about restaurant insurance.  Please call us, toll free, at 877-687-7557 or visit us on the web at