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Monthly Archives: February 2017

Exposures Pizzerias Must Address

All restaurants share similar exposures that if left unaddressed can cripple their operations. Pizzerias are not exempt from such risks and, in fact, carry a number of unique exposures of their own.

In order to protect your business, it is important to identify and address all risks related to managing delivery drivers, accepting online orders, handling food, liquor liability and more. Doing so can safeguard your operations from serious financial loss, business interruption or even legal action.


As a business owner, you are dependent on the property you own or lease to carry out your operations. This can include expensive items like pizza ovens, commercial ranges and coolers. If this property is damaged or destroyed, your business may be forced to recoup thousands of dollars in losses.

As a first step to protecting your pizzeria, it is critical that you evaluate your property and determine which pieces are most critical to keeping your business running. For many pizzerias, equipment such as ovens, refrigeration units, fryers and other commercial cooking units are the most necessary items they own. These units are often expensive and difficult to replace on short notice.

Next, it is important to consider which perils are most likely to cause damage to your property. Having to bake and freeze a large amount of food products means that fire and water are the most common sources of property damage for most pizzerias. Accordingly, it is vital that all large pieces of equipment that use water or heat are inspected and maintained on a regular basis.

It is important to determine the replacement cost of all of your property, including furniture, fixtures, goods, smallwares and equipment. Only after doing so will you know the amount of insurance cover you need to adequately protect your property and equipment.

Delivery Liability (Non-owned Vehicles)

One of the most unique exposures related to pizzeria operations relates to delivery drivers. Even if delivery drivers have their own auto insurance, restaurant owners can be held responsible for accidents that happen to drivers delivering their product. And these accidents can be costly—sometimes millions of dollars.

As such, pizzeria owners should take the following precautions:

  • Obtain a copy of relevant vehicle records for all delivery drivers at the time of hire and keep track of any violations that may impact your business.
  • Inspect the delivery vehicle to ensure it is safe. Specifically, pizzeria owners should check the horn, mirrors, brakes and windshield wipers.
  • Avoid instructing drivers to rush. While getting pizza to customers in a timely fashion is important, accidents are far more costly than late deliveries.
  • Hold regular safety classes for drivers.
  • Purchase non-owned auto insurance to insure bodily injury and property damage caused by vehicles not owned by your business. Or, if you have the funds, purchase vehicles and create your own delivery fleet. These vehicles could then be protected under a regular commercial auto policy.

For more protection, it is important to hire mature drivers with good driving records.

Food Safety

Food safety should be the number one priority for any restaurant, particularly because you are dealing with the health and safety of your customer base. Food poisoning caused by contaminated menu items can lead to widespread illness and even death.

Keep in mind that food poisoning can be caused by more than just bad product, and pizzeria owners will also need to take into account things like spoilage or contamination. Power outages and natural disasters can all cause food contamination, resulting in lost product or potentially harming your customers. What’s more, these events are often unpredictable and out of your control.

Ensuring that your pizzeria is clean and serves fresh, safe food to patrons is your greatest responsibility. To protect your business, consider doing the following:

  • Join your province’s restaurant association. Check the federal and provincial online resources regarding food safety rules.
  • Perform regular self-inspections of your operations. Some typical considerations include the following:
    • How are foods cooked, cooled and reheated? How often and in what way are temperatures recorded? Are thermometers functional?
    • How are potentially hazardous raw foods prepared and served?
    • What is your food labelling process?
    • Where and how is food washed and prepped?
    • When, how and by whom is equipment cleaned and sanitized?

Liquor Liability

Serving alcohol to patrons is a great way for pizzerias to increase their overall profitability. However, anytime a restaurant serves alcohol, new risks emerge. ​​​Anyone involved in the serving of alcohol could be held liable for damages or injuries that occurred when alcohol is deemed to have been a contributing factor in the incident.​ Your organization may be held responsible for the actions of others if people are served past the point of intoxication.

To protect your business and employees, it is imperative to establish procedures that ensure that patrons are never overserved. All servers, bartenders and managers should be trained to identify individuals who are intoxicated.

Customer Data Breaches

Pizzerias are unique in that customers may never have to step foot into a brick-and-mortar store, instead relying on ordering online. And while online ordering is quick and convenient, it opens customers and pizzerias to attacks from cyber criminals. Personal information, credit card information and more are all at risk.

As such, pizzerias should keep all firewall and security software up to date. Maintaining a breach response plan can also help you get back online faster in the event of an attack, limiting overall losses.


Owning or leasing a premise creates a range of exposures, including slips, falls and food-related illnesses. While general liability insurance will protect you if anyone is injured on your property, it’s important for pizzeria owners to take the following precautionary measures to limit risk:

  • Utilize security cameras to help document incidents and prevent fraudulent liability claims.
  • Document any and all incidences, noting the cause and what actions were taken.
  • Maintain a good relationship with a customer in the event of an incident.
  • Keep up with maintenance responsibilities outlined in leasing agreements, if applicable.

Employment Practices

Pizzerias are often small operations, making them a higher risk for employment-related liabilities. In fact, more than half of all claims filed for employment-related liabilities are against employers with fewer than 50 employees.

Employment-related claims can be extremely costly, especially in cases that drag on for years. Lawsuits filed for wage and hour violations are especially common for restaurants. Accordingly, it is important that your organization understands and complies with all applicable labour and employment laws.

More Information

While pizzerias are not unlike other restaurants, their unique exposures must not be overlooked. Contact your broker for assistance with finding the appropriate insurance coverage.

© Zywave, Inc. All rights reserved

Ways to Avoid Employment-related Liability

Employment-related lawsuits can occur for a variety reasons. Even something as common as a disgruntled employee who has been terminated for legitimate reasons can trigger legal action.

The fact remains that litigation can occur at any time, most often without warning. Employers who are not prepared for this could face expensive and embarrassing consequences as a result of a lawsuit.

To protect themselves, organizations should keep in mind the following tips to avoid employment-related liability:

  • Review and update your employee handbook. In the event of legal action, outdated employee guidance can create inconsistencies with your policies, which can look bad during a lawsuit.
  • Train supervisors and managers so they know how to respond in certain situations—particularly if workplace harassment is reported or observed.
  • Review your exit interview process to ensure they are conducted in a fair manner and are designed to gather vital information related to turnover and workplace culture.
  • Conduct wage audits and conduct performance evaluations to ensure that employees feel valued and that you have a system in place to provide fair compensation.

© Zywave, Inc. All rights reserved

4 Tips for Maximizing Insurance Recoveries After Severe Weather Events

Severe weather, such as winter storms, hurricanes and floods, can cause devastating and costly damage to any business. In fact, on a global level, extreme weather events are projected to cost the global economy $700 billion annually by 2030, according to the Climate Vulnerability Monitor.

To best protect themselves, most businesses, both large and small, prepare themselves with insurance policies that account for their unique needs and exposures. However, these same businesses often take a “set it and forget it” approach to severe weather coverage, which can leave them out in the cold when disaster strikes.

To minimize a storm’s financial impact and to maximize insurance recovery, businesses must remember to do the following:

  1. Review your policies. Long before a severe weather event has the opportunity to ruin a business, you should take the time to review, understand and retool your policies. When doing this, it’s important to remember that different policies may respond to disasters in a variety of ways, so it’s important to do the research upfront to ensure that you are prepared. In addition, remember that some policies may feature exclusions that void coverage in various scenarios. Reviewing these coverage features with your insurance broker will ensure that you know what type of protection to expect following a disaster.
  2. Have a contingency plan. Once your insurance coverage is in place, you’ll want to prepare for the worst and have a contingency plan for your business. These plans should include insurance policy files, inventories of all owned property, a list of suppliers and contact information of key stakeholders. It is also a good idea to have a disaster response team in place. This team should include company leadership, risk management personnel, insurance coverage counsel, brokers and forensic accounting experts.
  3. Be proactive. Once you are aware that a storm is imminent, you can mitigate potential damages by securing material assets. This can involve things like moving materials and property to safe locations, securing your facilities and more.
  4. Notify your broker and insurance company. If your business is impacted by severe weather, it’s critical to notify your insurance broker and company immediately, as this will ensure that your coverage will kick in. This typically involves providing specific details regarding the loss. Be sure to document any losses as well to ensure you are getting the most for any damages.

© Zywave, Inc. All rights reserved

5 Common Types of Construction Fraud

Fraud of all kinds is prevalent across every type of construction project. And while cases of construction companies defrauding their clients are the most reported, it is the companies themselves that often lose money to fraud perpetrated by employees, contractors and partners.

To protect themselves, businesses should be aware of the following most common fraud schemes:

  1. Non-payment of subcontractors and material suppliers done by delaying or falsifying lien waivers, or using project cash receipts to pay bills for other projects.
  2. Billing for unperformed work—often by exaggerating the units of production accomplished or the labour and equipment actually used.
  3. Manipulating the schedule of values (SOV) and contingency accounts in one or more of the following ways:
    • Failing to update SOV line items
    • Charging phony bills
    • Failing to associate subcontractors or vendors with SOV items
  4. Substituting or removing material. This can include doing things like installing low-grade materials that would require future repairs.
  5. Stealing tools or equipment from a worksite. This is often done by billing for equipment or tools for the jobsite that are then used for other subcontractor projects or personal use, or billing for unnecessary tools.

For further protection, it’s a good idea to implement a compliance and ethics program, set up an anonymous reporting system, properly define project scopes and ensure segregation of duties.

© Zywave, Inc. All rights reserved.



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