The Risk Factors That Are Considered When Underwriting A Bar Insurance Policy

While running a bar can be a very rewarding business in a number of ways, the undeniable truth is there are numerous inherent risks that come with owning a bar. As a bar owner, it’s important that you do your part to limit these risks and minimize your exposure to protect your business interests. That’s why it’s so important to invest in a bar insurance policy that offers ample protection for your business.
When shopping around for bar insurance in Texas, it’s important to understand some of the challenges your business faces that can make it difficult to underwrite. That includes things like:


Bars have a high failure rate. Some analysts believe that around 90% of all bars fail within their first year of business. Whether or not this number is right is up for debate, but the fact is that running a bar is a high risk venture and that’s considered when applying for bar insurance.


• Bars deal with a lot of cash. This can make it difficult to fully estimate the actual exposure. Underwriters will likely want to see both the dollar amount of food and beverage sales and also the ratio of liquor to food sales. With cash transactions, this can be difficult to do as some sales aren’t properly recorded.


• Liquor liability vs. general liability. Sometimes, it’s hard to determine whether a loss is covered by the general liability policy or the liquor liability policy. Bars need both policies through the same carrier if possible to ensure full coverage and to prevent any complications with potential claims.


• State dram shop laws. Each state has its own “dram shop laws” that hold drinking establishments liable for damage and injuries related to the consumption of alcohol by customers. Texas dram shop laws hold establishments liable for selling and serving alcohol to patrons who are obviously intoxicated. Minors can also sue bars for an injuries they received from the sale of alcohol if they were intoxicated at the time of the transaction.


These are just some of the challenges and risks that come with running a bar, but when an insurer looks at your application, he will also consider some of the different factors that make your risks unique while also, of course, paying close attention to the challenges mentioned above.


Some of the things an underwriter will consider when rating your bar’s exposure may include:

• Hours of operation. The later you stay open, the greater your exposure.

• Location. Location matters. Not only does it influence the class of clientele you attract at your bar, but it plays a role in determine your risk for theft, vandalism, and other loss.

• Special events. If your bar hosts special events, promotions, and entertainment, this will be considered when underwriting your Texas bar insurance policy. Special events are designed to bring in more people than usual. This increases risk of loss.

• Years in business. We mentioned earlier that bars have a high failure rate, particularly early on. The more years your bar has been in business, the more experience you’ll likely have as an owner, and the less risky this will appear to an insurer.

• Alcohol serving training. Serving alcohol inherently comes with a laundry list of risks. It’s important for bars to have well-trained staff who know how to responsibly serve alcohol. Remember, dram shop laws in Texas can hold your business liable for serving to obviously intoxicated customers. Employees need to know how to recognize these types of patrons. Proper training limits your risk and could help reduce your bar insurance premiums.


Learn More about Bar Insurance in Texas

Do you have a question about bar insurance in Texas? For all your bar insurance needs, talk to the experienced team at Food & Beverage Insurance Agency. We offer bar insurance in Dallas, Houston, Austin, San Antonio, and across Texas. Visit to learn more.