Owning and running a nightclub can be an exciting and extremely lucrative business. However, it is not always about the party and the glamour. Nightclub owners can face a range of exposures. People selling/using drugs, violence, intoxicated patrons, under age patrons not adequately identified at entrance and theft by staff are a small example.
Insurance premiums in the Australian market reflect the perceived exposure. In fact, most Australian insurers do not have an appetite for the nightclub business. Therefore most insurance for this type of business is arranged via Lloyds of London.
What are the exposures?
From a risk perspective, the insurer will generally look at the moral exposure, who owns and operates the business, has there been issues with the law, the market reputation, news headlines, type of clientele that frequent the premises and the financial ability of the business?
When considering the property insurance such as the building, stock or contents, most insurers will consider the geographical location of the premises and its construction, security, whether the premises are sprinklered and if a fire service agreement is in place to systematically manage fire appliances.
Liability, and in particular assault related incidents, have always been a major concern in this market with many nightclub owners in Melbourne, Sydney and Brisbane outsourcing their security requirements to professional security companies.
Staff issues are not uncommon in this market, with claims against the owners for failing to act on sexual harassment claims by peers or unfair dismissal types of claims.
A qualified insurance broker specialising in this market should always be sought. Our team of insurance professionals have serviced the insurance needs of the night club industry since the 1970’s.
What can go wrong?
An intoxicated patron was refused further service of alcohol at a Melbourne nightclub. After numerous arguments with the bar staff, security escorted the patron and his partner outside the premises.
The patron continued with abusive language and threw a punch at the security guard who retaliated, knocking out the patron’s tooth.
Action was brought by the patron against the nightclub owner and claims were settled in mediation for $70,000 against the nightclub owner.