How much does hospitality insurance cost?

What insurance does a venue have to have?

Only one policy is a legal must for most venues: employers’ liability insurance, from the day you employ anyone. You need at least £5 million of cover. You can be fined up to £2,500 for every day you’re not properly insured, and up to £1,000 if you don’t display the certificate or show it to an inspector.

Public liability insurance is generally voluntary, but it covers claims from customers and the public, and the ABI says businesses should consider it. The rest, such as buildings, contents, stock and business interruption, depends on your venue and your lease.

What affects the price?

The Association of British Insurers lists these among the factors insurers look at:

• The kind of business you run. A late-night bar and a daytime café can carry different risks.
• How many people you employ. This matters for employers’ liability in particular.
• Your claims history. Insurers look at the claims you’ve made before.
• What your building would cost to rebuild. Insure buildings for the rebuild cost, not the market value. The ABI says getting that figure right has a significant impact on the premium.
• Your stock. Insure it at cost price, and allow for the extra you carry at busy times such as Christmas.

Insurance Premium Tax at the standard rate of 12% is added to most policies.

What is business interruption cover?

It covers lost income while you can’t trade as normal. It usually only pays out when the cause is damage from one of the perils the policy names, such as fire, storm or flood. Cover for closures without damage is usually an add-on and can cost more. In January 2021 the Supreme Court substantially allowed the FCA’s appeal for policyholders in a test case over Covid closure claims. It’s a reminder to read exactly what your policy covers.

How do you check who you’re dealing with?

A firm that advises on or arranges insurance must be authorised or registered by the Financial Conduct Authority, or be an appointed representative of an authorised firm. Check them with the FCA’s Firm Checker or Financial Services Register. Make sure the contact details match, because fraudsters set up “clone” firms. If you deal with an unauthorised firm, you lose access to the Financial Ombudsman and the FSCS.

How can we help?

We don’t advise on insurance. We can introduce you to the FCA-authorised broker on our partners page, who gives the advice and arranges the cover. Opening a new venue? See the bar opening checklist. Insurance is one of the costs we can look at alongside the rest: here’s how to cut your venue’s costs.