Nightlife Venue Diversification requires due diligence
Many of our clients are diversifying and updating their venue in order to boost footfall and revenue. As the UK’s most popular nightlife insurance broker, insuring more than half of the UK’s nightclubs, we are able to see what’s trending and what ideas are being replicated up and down the country. However, many of these trends will impact a business’s insurance policy, whether it’s a necessary limit increase or a risk that needs to be addressed.
To bring to the attention the severity of the issue, NDML have listed the most popular nightlife trends, and how they could possibly impact or invalidate an insurance policy. The below will benefit nightclub and bar owners, by firstly illuminating what’s popular in the sector and is proving successful for businesses, and also what conversations need to be had with insurers to ensure a business is full covered.
6 Nightclub Trends which may impact insurance
1. Serving Food and Deep Fat Fryers
Many nightclubs or bars when considering how to diversify will firstly think of their menu. By adding a better and larger food offering, they see guaranteed income at a minimal change to business practices. Yet, the insurance risks that arise from food service and upgraded kitchen facilities are severe.
Deep fat fryers, used for chips, fish or chicken, are a common problem area for insurers. Venue owners must understand the insurance restrictions surrounding deep fat fryers before installing one at the premises. Deep fat fryers, as with many kitchen facilities, require an extension to a venue’s business insurance and must be specified in the policy – Failing to meet policy conditions can invalidate insurance.
Deep fat fryers, as well as air fryers, kilns, furnaces, pizza ovens, and the kitchen extraction systems, will likely have specific conditions that will be applied within the insurance cover which would need to be reviewed carefully to ensure that maintenance, cleaning regimes, thermostat controls, emergency power supply cut-offs and external deep cleaning contracts are all able to comply with the relevant insurance stipulations.
NDML recommends that before any kitchen facilities are altered or installed, check in with your insurance broker.
2. Upgraded sound systems
When updating an entertainment venue, operators often start by upgrading the sound system. They then know to inform their insurance broker that the value of their contents has increased. This ensures businesses are not underinsured, safeguarding finances in the event of a fire or theft.
However, many nightclub owners upgrade their sound system over time. They add and replace little by little. Yet effectively, over time, the sound system has been completely transformed, and so the club’s contents will need to be revalued.
Hospitality and entertainment venue should be informing their broker of updates every renewal, or upon a major change. This should include the brand and value of the kit, as it will impact the Sum Insured if a claim is made.
3. Venue improvements, including pagodas or marquees
As the UK’s most trusted insurance broker, one trend NDML have identified is the erection of pagodas or marquees. Sheltering areas of the premises from the rain or sun, bar and nightclub owners have used outdoor structures, temporary or permanent, to build out additional sitting areas and dancefloors.
Such large changes to the structure of a nightclub or bar will certainly affect the businesses Sums Insured. It will also impact liability concerns, such as security, disposal of glassware breakages and the need for signage. Any new areas customers can enter will need to be included in your business’s incident report, and involve updated CCTV surveillance.
For any improvement which impacts the rebuild cost of your venue, insurers should be immediately informed. For structural changes or large equipment purchases, it is recommend you receive guidance from your insurer before making the final decision.
4. TENs notice events can impact insurance
When planning an event, perhaps a celebration or a seasonal affair, nightclubs will need a TEN (temporary event notice) to extend their licensing hours. Nightclubs with a TEN will be permitted by their council to execute licensable activities, which includes playing music, live shows, alcohol sales and serving hot food.
Indeed, events which are permitted under TENs can still impact a club’s insurance. Capacity spikes can exceed capacity limits stated on the business insurance policy, hence if a claim were to happen such as a slip or injury, coverage could be voided. Also TENs events often take place outside adjacent to the venue, yet these areas may not receive the same level of cover incase of an incident.
Insurance covers may have specific restrictions on the type of events they will, or will not, accept. It would be prudent for venue owners to contact their insurance broker for guidance before hosting the event
5. Sparklers in drinks
As a nightclub insurance broker with over 25 years experience, never before have NDML seen so many claims related to drinks sparklers. What are essentially indoor fireworks, these sparklers are extreme fire hazards, posing burn injuries and fire risks. Large drink sparklers placed in champagne bottles and buckets can burn at over 1,000 degrees Celsius, easily igniting ceilings, clothes or spilt alcohol.
Following some high profile incidents related to drinks sparklers and other similar effects some insurers are taking steps to manage, or exclude, the use of these items. Sadly, alcohol consumption, busy environments, basements and enclosed spaces, lack of employee training, and toxic fumes are a dangerous mix if there are any issues with the use of these items.
If your venue uses a bottle sparkler then the purchase of higher-quality more reputable products is advised and suitable safeguards should be in place with specific staff training and risk assessments in place to manage any potential issues along with having proper fire protection systems in place, such as fire extinguishers, in case a sparkler ignites a fire.
6. Mechanised equipment, such as bucking bronchos and surf machines
Anything that increases the risk of injury for customers or staff needs to be address and noted to a business’s insurer. Rodeo bulls are high risk activities, as are bucking broncos, surf machines or any mechanical party simulators. These motorised machines need specific risk assessments carried out and regular maintenance.
Any similar activities which help diversify the venue but pose significant risks will need to be noted to the business’s insurer. Additional high-risk leisure cover will likely need to be purchased, including contents insurance and equipment breakdown cover. NDML have seen increasing trend of liability coverage being refused by insurers due to the discovery of the injury resulting from an undisclosed piece of equipment present at the venue.
NDML will be able to provide guidance on how best to manage preventable risk in relation to these machines, including providing templates for liability waivers and advice on how to execute staff training.
Michael Dawson, NDML Account Executive:
“It’s all about disclosure! By notifying us of any changes to your business, we can help and provide a suitable insurance solution. We do not want clients to jeopardises themselves but we do want them to thrive and diversify. By staying in close contact, we can deliver the guidance and experience required to support a successful growing business.”