The problem
As a pub, hotel or restaurant owner, you are probably aware of the physical risks your establishment might pose to patrons - such as slips, trips, falls and sharp edges. But are you aware of emerging risks: passive smoking, alcohol health and liability for the actions of bouncers you employ? How do you minimise the risk of the public suing you, as well as mitigate rising public liability insurance premiums?
Expert advice
Bars, hotels and restaurants were traditionally perceived by insurers as low-hazard areas - claims resulted mostly from minor accidents such as slips and falls or snagging of clothes. However, as the blame culture becomes more entrenched in the UK, there is now an additional risk-management aspect to running such establishments.
It is important that risk management becomes more about managing the business rather than just the premises. Non-physical aspects of risk management include looking at an establishment's social responsibility towards its patrons and asking certain key questions:
- What smoking hazards are there, and have they been, or could they be, reduced in any way? By air conditioning, for example.
- Look at your promotion of alcohol - is it socially responsible or does it induce people to drink more in a shorter space of time?
- Do you target specific age groups or genders?
- Look at the firm of bouncers you employ. Is it licensed? Have you vetted it with the local police?
Buying public and products liability insurance helps towards mitigating the risk. It covers injury or damage to third parties and covers your legal liability and costs associated with any actions that arise out of that liability. However, as insurers view these social responsibility questions as key risk-management areas for the future, how an establishment answers them will directly influence the limits of cover insurers would be prepared to provide as well as the level of premiums.
The law
As yet, there is no set legal precedent in the UK regarding the extent of a hotel, bar or restaurant's liability to its customers. And public liability insurance for such businesses is not mandatory. However, the UK is following closely on the heels of the USA, where society is increasingly adopting a blame culture, with people seeking to gain redress and compensation through the law.
Establishments should take note of the UK's common law principle of reasonable duty of care. The crucial question for bars, hotels and restaurants to ask is: where does duty of care end and personal responsibility of the individual start?
In the USA it is increasingly commonplace for a person to take legal action for a perceived wrong or injury. To pre-empt being sued, organisations are taking preventive measures. For example, there are warning labels on drinks regarding the alcohol content, and smoking is forbidden in many establishments.
Check list
- Do a thorough assessment of all potential risks, from physical hazards - slips, trips, falls, snagging of clothes - to wider risks, such as potential fallout from enclosed smoking, bouncers, alcohol consumption, etc.
- Check the age group of your target market; make sure that you have proper guidelines in place for asking for evidence of age.
- What is your policy regarding persons under the influence of alcohol? Make sure there are procedures for determining at what point someone would cease to be served alcohol, whether they should be escorted off the premises, and whether their route or method of transport home is to be checked.
- Check whether you promote sensible drinking, especially for designated drivers.
- Set up a risk-management policy to cover all areas of perceived risk.
- Make sure that there are local staff responsible for the management of these risks and that all locations sign up to the risk-management policy.
- Set up guidelines for how such a risk-management policy is managed, enforced and audited.
Beware!
Without stringent risk assessment and proper risk-management policies, you may not be able to buy public liability insurance. If you are granted insurance, the cost of that insurance might be substantially higher than that paid by someone who does all the checks.
Contacts
John Inwood, Zurich London
020 7617 4346
john.inwood@zurich.com
Association of British Insurers
www.abi.org.uk
020 7600 3333