Employers’ Liability

The Employers’ Liability (Compulsory Insurance) Act 1969 states that you must insure your employees in case of injury, disease or death arising from their employment. You must have insurance cover for a minimum of £5 million. In practice, most insurers offer cover for at least £ 10 million. You must also display a certificate of employers’ liability insurance where your employees can easily read it. You must retain copies of certificates of insurance for up to 40 years.

If you fail to arrange adequate employers’ liability insurance you can be fined up to £ 2,500 for any day you are without cover. You can be fined up to £ 1,000 if you do not display the certificate of insurance or refuse to make it available to Health and Safety Executive inspectors when they ask to see it.

Fixtures And Fittings Cover

It is important to have adequate insurance cover for your fixtures and fittings and equipment. Some people fail to insure these items adequately, which can severely limit any claim. (See section, ‘Under insured’ below, for more information.)

When setting up your policy, the broker will ask how much money you would like your fixtures and fittings to be covered for. You should remember that your policy must cover the cost of replacing these items as new. When your fixtures and fittings are valued on the day of ingoing, they will be valued according to their condition as part of a going concern, not on what it would cost to replace them. Some insurers suggest that you should multiply the value of your fixtures and fittings by 2.5–3 times, for a more realistic estimate of what it would cost to replace them. As a new licensee, you will be setting up the policy before you take over, and the fixtures and fittings may not have been valued at this point. In this case, you can use the estimated value multiplied by 2.5–3 times. (You can adjust this figure once the fixtures and fittings have been actually valued.)

It is important to remember to increase the cover of fixtures and fittings when you have added or replaced any major items. This can be particularly important when you have refurbished or extended your pub.

Redecoration

The cost of redecorating a pub can be very expensive and should be covered within your policy. Make sure you are adequately covered for this.

Stock

You can have a great deal of money tied up in stock and you will need to quote your maximum stock value to the broker, when setting up your cover. You may need to obtain this information from the brewery, pub company or outgoing licensee. Check also with your broker, that cover will take into account any seasonal increases in stock value, such as at Christmas.

Money

Pubs are cash businesses and you will require insurance to cover your money. Insurers will set limits on the amount of money they will allow you to claim. Furthermore, they will limit claims for money located in different places. For example, they will provide more cover for money locked in a safe than left out of the safe. They will also restrict cover for cash in transit and may even exclude money in amusement machines from cover, in some cases.

It is good practice to limit the amount of money you hold on the premises, and ensure that any money that is held is kept in a secure safe. This reduces the risk of theft and keeps you within the limits of your insurance policy.

Building Insurance

The premises need to be insured for the full cost of rebuilding, including professional fees and site clearance costs. This figure is likely to vary significantly from the market value of the property and you should obtain professional advice in order to calculate the level of insurance you will need. A chartered surveyor will be able to advise you of this.

In the case of a tenancy or lease, you are unlikely to be required to arrange building insurance yourself, but you should check this and your obligations to repair the property, with your brewery or pub company.