Terry's Restaurant Insurance Blog


The Actions Of Two Government Agencies Increase The Need For EPLI Insurance

Employment Practices Liability Insurance, called EPLI for short is fast becoming a must have policy for any and all restaurants with employees.  Our current economic environment of high unemployment is one of the driving factors but just as important are the actions of two of our federal governmental agencies, the Equal Employment Opportunity Commission and the Department of Labor.  Their recent actions have created a situation leaving any restaurant that has not purchased EPLI in a very precarious position.

EPLI is insurance designed to protect the employer against claims filed by the current or former employees for all types of discrimination as well as sexual harassment.  The discrimination or harassment can come from either the employer or from another employee.  While this insurance is not cheap, that is simply an indication of just how high the risks are now for employers.  Many restaurant owners simply are not aware of the risks, nor are they aware that there is an insurance policy out there designed to protect them.

We currently are seeing huge upward pressure on prices and deductibles for EPLI.  This pressure is coming from essentially three different places at once.  They are the high unemployment rate, the latest actions of the EEOC and the stronger enforcement stance of the Department of Labor.  Let’s take a look at each one of these separately.

The high unemployment rate has left a number of people without work.  Many of these formerly employed workers have come to the conclusion that it is easier and cheaper to sue their former employer than it is to find new work.  Recent court decisions have made this a juicy target for plaintiff’s attorneys and they are courting these kinds of claims with new vigor.  Many restaurants are finding themselves in situations where they have to lay off or even fire workers, and their lack of experience or know how in this sensitive area of the law is making them vulnerable to wrongful dismissal lawsuits.

The EEOC has also had a hand in this process.  They have been more and more aggressive in pursuing claims against employers; particularly discrimination claims.  2011 proved to be a landmark year for the EEOC which nearly 100,000 claims filed by disgruntled workers.  This is the highest number in their 46 year history and is a 31% increase over 2006.  The highest profile claim was a $20 million settlement paid by Verizon wireless for firing employees that missed work due to disabilities.  The size and scope of this claim shook the legal world and big employers have taken note.   Small businesses however are still mostly in the dark about the risks that they face in the employment liability arena.

Last of all we have the Department of Labor.  In 2009, their secretary, Hilda Solis announced that they are back in the enforcement business.  In particular they are strongly enforcing wage and hour violations.  Very few restaurant owners truly understand all of the employment regulations surrounding the correct classifications of independent contractors.  Also a significant number of employers are not in compliance with correct classifications for exempt and nonexempt workers.  The Department of Labor has stated that food service is one of the industries that they are targeting for misclassification of workers.  The bad news is that your restaurant is at risk and on the chopping block.  The other bad news is that more and more EPLI policies are beginning to exclude coverage for wage and hour and misclassification of workers. 

The take away for restaurant owners is that going without EPLI is really not a valid option anymore.  You are essentially self-insuring with no funding at all.  And each day the risks and the stakes get higher.  Give us a call today, at 877-687-7557, and let us help you understand EPLI and how it can help you sleep better at night.


Restaurant Workers Comp Insurance Rates– Death By A Thousand Cuts

Workers compensation insurance can be a significant expense item for most restaurants.  While the restaurant package insurance policy covering the property, and liability exposures of the restaurant is usually the biggest ticket item, workers compensation insurance can be a close second.  And with workers comp insurance essentially being rated based on a restaurant’s past losses, it often makes a lot of sense to do what you can to prevent the most common losses from occurring and driving up your experience modification factor and thus your costs.  With today’s article I want to take a look at a case study of an actual chain restaurant’s very experience with chasing down and reducing one particular cause of on the job injuries.  While the numbers may be much larger than those you experience in your one or two location restaurant, the math still works the same way and the numbers don’t lie.

This case study is based on a multi-location restaurant chain.  This restaurant was smart enough to have hired an insurance company that specialized in workers compensation coverage only.  This specialization meant that they were able to have a loss control consultant assigned to their account to keep an eye on any trends that might spell trouble.  Over time the loss control consultant noticed that the restaurant chain was seeing an increase in the number of finger cuts as the chain added locations and grew.  Over time these finger cuts accounted for almost half of all the on the job injuries for this restaurant chain.  Now, while the total costs of these claims was only about 10% of all claims costs, the sheer number of incidents was going to have a dramatically negative effect on the restaurant’s experience modification factor and that in turn would drive up their workers compensation costs dramatically.

The loss control consultant visited a number of the restaurants in the chain and decided to try some training, some signage and the use of anti-laceration gloves.  Then they ran the numbers to see what kind of impact this could have on the loss costs and the experience modification factor and thus the costs of workers compensation insurance for this chain over time.  This restaurant was paying about $615,000 per year for workers compensation insurance.  The consultant calculated that if they could reduce the number of laceration injuries by 25%, then the restaurant would save about $42,000 or almost 6.8% per year in workers compensation costs.  Reducing the number of laceration claims by 50% would generate a savings of nearly 8.5% and cutting the number of finger cut claims by 75% would generate savings of $62,500 or over 10%.

These numbers were enough to convince the restaurant management team that they should try to enforce the use of anti-laceration gloves in the places in their product creating process where it made sense to do so.  Six months after they rolled out the program, their finger cuts were down by 45%.  After they added additional signage and training, they were able to reduce the number of finger laceration claims even further.  Since implementation, all finger laceration claims have occurred only when the anti-laceration gloves were not being used.

There are two messages that the small one or two location restaurant can take from this example.  First of all, selecting a workers compensation insurance company that specializes in workers compensation insurance only can give you the professional help and expertise that you need to cut your workers compensation rates now and in the future as well.  Secondly, being open to possible injury prevention tools, like anti-laceration gloves might help you better protect your employees and your bottom line at the same time.

At Clinard Insurance Group we insure more than a hundred restaurants all across North Carolina and South Carolina.  We want to work with you to help you reduce your insurance costs as well as your injury rates.  If you would like to save money on the restaurant insurance for your NC restaurant or your SC restaurant, please call us, toll free, at 877-687-7557.


No Work Comp On Your NC Restaurant? Might Mean Jail Time In Your Future.

On April 4th this blog reported that Governor Bev Perdue was on the warpath to improve the compliance rate for businesses that are required to purchase workers compensation insurance but don’t currently do so.  This law has been in place since the 1930’s but has never been much enforced.  That is all changing and now with high power jobs on the line at the NC Industrial Commission, we are seeing swift and certain action.  If you are still trying to avoid buying a workers compensation policy for your restaurant, your time is running out and your risks are going up.  And those risks now include jail time.

The NC Industrial Commission has the power to require proof of work comp insurance coverage from businesses operating in the state.  The commission has never enforced this power and has in fact relied on the NC Rate Bureau to tell them who is insured.  In NC it is estimated that there are tens of thousands of business who are operating without workers compensation insurance in violation of the law.  And while the commission is starting with those who have outstanding claims, they will soon be turning their attention to those who don’t have a policy but have not had a claim filed against them yet.

The law states that if you don’t buy as workers compensation insurance policy and one of your workers is injured, then you stand in the place of the insurance company and you are responsible for paying the claim yourself.  In practice this has meant that many uninsured claims have gone unpaid.  Business owners have even filed bankruptcy to avoid paying an injured worker.  The new message from the Industrial Commission is pay up or go to jail.  More than a dozen business owners with outstanding claims have been contacted by the industrial commission to report to a hearing on May 22 to settle outstanding claims.  Officials now say that law enforcement will be sent out to arrest those who don’t show up for the hearing.  In addition, about 125 uninsured employers who have ignored the commission’s earlier request to pay claims will be called back as well.

The NC Industrial Commission has now requested that the NC Rate Bureau send them a report any time that a workers compensation policy has cancelled.  They can then either verify that the coverage was replaced, the company no longer has enough employees to be required to carry the coverage, or that the employer is in violation of the law.  Despite this first step, Chairwoman Pamela Young indicates that there are still difficulties for the Industrial Commission in finding the businesses that are breaking the law by not purchasing a workers compensation insurance policy.  That said, I think it is just a matter of time until all businesses will have to prove they have coverage on a regular and consistent basis, just as drivers have to prove that they have auto insurance in place.

One thing is certain, the NC Industrial Commission now has in place a contempt process to put offenders in jail.  With that in place the next step is to locate the offenders.  If you have been avoiding purchasing workers compensation for your restaurant, you should know that it is starting to look like the risks are now not just financial for you; your very freedom could be at risk.

Clinard Insurance Group is a North Carolina independent insurance agency with a niche specialty in restaurants.  We insure more than 100 restaurants all across NC and SC.  If you would like to discuss your restaurant insurance, or your workers compensation insurance options, please call us, toll free, at 877-687-7557 or visit us on the web at


Restaurant Insurance – Don’t Get Tripped Up By Delivery Issues

More and more restaurants these days find themselves searching for ways to pick up additional revenue.  One of the easiest ways to do this is to add food delivery as an optional service.  Done correctly, it can be like expanding your dining room seating capacity without paying additional rent.  If you have added delivery service, or if you are thinking of doing so, don’t forget about the insurance issues associated with this service.

The most important step to take when adding delivery is to bring your insurance agent in on this decision.  You want to keep your insurance company informed of this change in your business and you may need to add some additional insurance protection to keep your restaurant safe from some of the hazards of delivery service.

Perhaps the most important restaurant insurance issue that delivery creates is the need for some automobile insurance protection.  Most restaurants simply let delivery employees use their own vehicles to deliver their food to customers’ homes and businesses.  This makes a lot of sense from the standpoint of avoiding the costs of buying, insuring and maintaining a fleet of vehicles.  But how do you protect your restaurant from risks of financial loss stemming from an accident caused by one of your delivery employees?

Protecting your eating establishment from losses caused by your employees in their cars running deliveries, requires some type of non-owned auto insurance coverage.  Non-owned auto liability can often be added to your restaurant insurance package at very low costs.  Now be careful, some policies will only add this coverage with a low limit of protection.  You should evaluate your limit of coverage very carefully to be sure that you have enough insurance to protect your restaurant from the most serious accident.

Non-owned auto insurance is typically an excess coverage.  This means that the claim will only be paid when all primary insurance in force has been exhausted.  Your employees’ personal insurance policy will usually be seen as the primary insurance and should provide a bit of a buffer between you and the loss in most cases.  With this in mind, I suggest that you establish a system for obtaining a copy of each driver’s personal auto policy.  Make a note of when the current policy will expire and make sure that you have a system in place to check to be sure that your employee renewed his or her personal auto policy and that you obtain a copy of the renewal.  It is also important that you study the limits of liability on these primary policies that your employee’s provide.  The higher the limits that you can require them to carry, the larger that buffer of protection before your non-owned auto policy has to be activated on a claim.

Restaurant insurance is complicated and requires that you choose and agent with a great deal of experience in writing restaurant insurance.  Once you have found that agent, make sure that you keep him or her in the loop about any and all changes that you implement in your restaurant.  You never know when some change you put in place might leave your restaurant exposed with no insurance coverage.  If you need any help with your restaurant insurance or if you just have questions you would like to ask, I hope you will feel free to call Clinard Insurance Group, toll free, at 877-687-7557.


The Double Edged Sword Of Social Media

As a restaurant insurance agent I am the person who works as a go between for the restaurants seeking a great restaurant insurance rate and the underwriter who is trying to decide how low he is willing to go on his rates in order to write a specific restaurant account.  Underwriters are by nature very cautious and mistrusting in their analysis of people and the world.  They gather information from me, but also seek to find out as much about a restaurant as possible from other sources.  One of their new favorite sources is the social media universe.  And what they see there can really skew their opinions of your restaurant.  This is the back side of the double bladed sword that is social media.

Social media to a savvy restaurant owner is a place where he or she can work on free publicity for their company.  These are tools that you use to entice your patrons to come back more regularly and to convince new customers to try you out.  To do this, most restaurant owners want to post photos and videos as well as other information that makes it look like visiting their restaurant is going to be huge fun.  I don’t blame them.   This is the right way to entice more people to join in on the action – make it look like more fun than they can resist.

So while you are creating your restaurant’s social media persona, be sure to consider how that persona might look to those with a more boring outlook on life; insurance underwriters.  So what are the pitfalls that you want to avoid.  Well, first of all, if you are a restaurant with liquor sales at 20% or so of your gross receipts, then your facebook photos should not be all taken at the bar with a bunch of drunks hanging around waiting to fall and get hurt so that they can file a claim on your insurance policy.   Be sure to include enough shots of people actually eating their meals and placing orders and doing some of the other more mundane activities of eating out to balance the message.  Also, if you rarely have live music or entertainment in your restaurant, it would be wise for you not to overly publicize the one time you let your nephew’s band play there late one night.  And take a moment to study what is in the background of any photos of your restaurant that you post.  Is there anything there that might scare an underwriter because it suggests the possibility of a dangerous accident or fire occurring?

The real truth in protecting your social media image in terms of your restaurant insurance policy and rates is that you must take control of the social media plan yourself.  Don’t just pass the job on to one of your wait staff and forget about it.  You need to monitor what is being said by you and about you on these sites so that you don’t suffer some misunderstanding with a stodgy underwriter later.

If you would like help with your restaurant insurance policy, please call us if you are located in North Carolina or South Carolina.  We insure more than one hundred restaurants all across these two states and we would be happy to put our experience and our volume of accounts to work for you to help you get the coverage and protection that you want at rates that will simply amaze you.  Give us a call today, toll free, at 877-687-7557 or visit us on the web at