Nightclub pinch points business owners need to know
Knowing the possible gaps, or “pinch points”, in a nightclub insurance policy can help nightlife business owners understand what to look for when selecting a nightclub insurer and broker. How to assess your current insurance arrangement is imperative to getting the best result and to staying best protected.
At NDML, we’ve picked out some niche areas of popular nightclub insurance policies which are often queried or require explaining. These instances or exclusions may be present in your current policy, or are commonplace in a competitor’s policies, and are therefore worth discussing with NDML.
We believe in full transparency and doing the best by our clients. We’ve often seen clients unhappy with their previous broker because they didn’t know about pinch points like these. Therefore we hope by elucidating them, that club owners will understand how they are covered and also emphasise the importance of robust tailored cover.
What additional policies and exclusions should nightclubs owners be aware of?:
Assault and Battery Exclusions
Some policies for nighttime businesses exclude liability cover for physical altercations. There is a significantly higher likelihood of assault and battery instances at nighttime businesses and nightclubs. Therefore nighttime owners should ensure they have assault and battery liability in place. Without it, there is a high risk that your nighttime business could incur hefty costs due to claims involving physical alterations.
Assault and battery exclusions are often hidden in the fine print, or not mentioned at all. They will therefore require an add on, or an additional policy. Review you insurance and Contact NDML for an confidential review of your cover.
Alcohol liability cover
Also known as liquor liability, liability for alcohol consumption should be considered. This covers the risk of customers causing damage to property after being over-served with alcoholic drinks. Many owners do not realise their insurance can include exclusions which involve not properly cutting off patrons and foreseeing risks.
To manage legal and compensation costs, business owners should have alcohol liability in place. Alcohol liability or additions with the same end should be named as part of your nightclub policy.
Property damage underinsurance
Good nightclub policies have increase limits for property damage and contents cover because of the likelihood of costly sound systems, amps, lighting rigs, and decorations. Standard contents cover policy limits will not adequately cover these high-value items. Furthermore, loss of items such as sound equipment will cause business interruption.
Underinsurance is important to watch out for and is why valuations of your property, premises and content should be done annually. Having a low Sums Insured will result in business owners incurring hefty costs in the event of a claim. To prevent underinsurance of your property and equipment, contact NDML for a review.
Business Interruption
However a nightclub is forced to close for a period of time – a theft, a flood, broken sound equipment – business interruption insurance covers the lost revenue. Without sufficient business interruption insurance, nightclubs can quickly leak funds, making their temporary closure permanent.
Business interruption cover needs to be strong enough to allow nightclub to get back on their feet after a lengthy spell on the sidelines. Review the details of this cover, and keep your broker updated on your annual revenue to ensure your business doesn’t result in forced closure.
Public utilities cover
Nightclub owners should check whether their policy makes specific mention of failures on the part of public utilities such as power, gas or water. A power cut can effectively shut down a large-scale late night event, causing business interruption. Public liabilties cover can be found as an extension of a business interruption policy, however public utilities need to be specified, and will most likely include hefty exclusions.
Details to look out for include the origin of the failure of public services for the cover to be triggered, such as damage to a sub-station. Exclusions also include a time restraint, such as a 12 hour grace period before any business interruption can be considered. For this policy to be activate, damage would have had to have taken place.
Terminal Ends cover
Terminal Ends cover protects businesses from losses due to power outages, water shortages, poor gas supply or interrupted telecommunication. The fault must occur at terminal end – the service provider’s feeder to the premises. This fault could be a failure between the supplier’s conduit and the nightclub’s premises, or if a contractor negligently cuts your individual power supply. Then this policy will be activated and provide cover. At NDML, we have seen some business interruption claims be rejected because of the necessity of Terminal Ends cover.
Circumstances where the power goes out because some wiring on the property has been sawn – this would fall under material damage, and would be covered. However if the power shorts, no damage can be found, and it is deemed a result of wear and tear, then this would not be covered. Examples of exclusions and case studies provides all the more reason why nightclub owners should organise a dedicated broker to review their insurance.
Noise complaints
At NDML, we have seen a rise of noise complaints sector-wide. With an increase in rental housing post-lockdown, and landlords increasingly converting buildings to tenanted properties, noise complaints have risen. We have seen closures happen due to lengthy legal disputes over noise complaints. Effective legal expenses insurance should be in place.
Some late-night business owners do not know how to properly react when they are subjected to a noise abatement notice. Learn more about How Nightclubs Should Manage Noise Complaints with guidance from a dedicated broker.
Cyber cover
An overlooked but essential cover type, nightclubs need cyber insurance to protect themselves from the consequences of a data leak or stolen funds. Whether it’s a cyber attack which causes your systems to go down, or a cyber crime where funds are stolen from your accounts – cyber insurance is designed to keep your business protected in the even of digital incidents.
All businesses record data, therefore all business need cyber cover. The reputation damage and legal expenses resulting from a data breach are significant. Contact NDML to learn more about cyber cover.
The above pinch points are areas nightclub owners should be looking out for when reviewing their insurance. At NDML, our Account Handlers are experts are knowing exactly what’s needed in a nightclub insurance policy, and also what’s not.
It’s true that each nightclub policy is different, as it should be tailored to the venue. Therefore as well as a visitation, our team will conduct a thorough audit of your current insurance arrangement. This will be confidential and have no effect on your arrangement or relationships.
To contact us and talk to an Account Handler, see here.
