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 Most people are very polarized about insurance. If they have just made a successful claim then they love it. If they haven’t made a claim in years then they question why they even need it. It’s the product that you pay for and hope to never use. However you feel about it, insurance is an expensive part of running a restaurant, costing between 1% to 2% of revenue. To find out more, we spoke to Beth Berardi, one of New England’s best known insurance specialists.
Q Beth, why is insurance really important to restaurateurs?
Insurance is important in the event of a loss. You need to be financially whole despite that loss. So, as Christopher Myers says, “It [insurance] pays in spades in the event that you need it.”
Q What about the insurance industry in general? How do you view it?
Insurance in general? In my experience, people hate insurance. Restaurateurs hate it. The general public hates it. They view insurance agencies and insurance agents right next to used car dealers.
It’s a product that you pay for year in and year out. You may use it or you may not use it. But, you are definitely going to need it. And then it becomes something very real. The concept of insurance is not just a maintenance policy it’s for catastrophic loss. Very sophisticated restaurateurs understand that. They understand that insurance is a key component to running a restaurant, and they view their insurance professional as an advisor more than as a sales person. We want to add to their success. We want to help them in any way that we can to avoid catastrophe. Sometimes you’ll have a client that will not value your opinion at all. Although sometimes, you know, that’s fine too. We aim to provide the best possible service and the best possible pricing that we can, no matter what.
Q When I think of insurance, car insurance, home insurance or business liability insurance comes to mind. There is a whole range of insurance types that a restaurateur must consider from the moment that they stick a spade in the ground for their new restaurant. Can you describe them?
Well every project is different and unique. Some could be building a restaurant from the ground up as in a major construction project, and others could be going into owned space and gutting, rehabilitating, and building it out. So, there are various products that take the restaurateur through the process.
If they are building out a space, whether or not it was a restaurant before or if it had some other use, they are going to probably hire a contractor. That contractor has his own insurance. However, the restaurateur needs to carry property insurance and liability insurance for that project as well. That type of insurance is uniquely different from the insurance that is used once the restaurant is opened to the public and in full service.
The companies that write insurance for restaurants while they are open do not want to take on the risk of a construction project. It’s very clearly defined that the carrier wants the restaurant to be opened prior to the binding of coverage. But, there are exceptions to that. We have been successful in having carriers look closely at a project and be comfortable with the construction phase of it, and then offer a package policy prior to its opening. But, in order to qualify for that, the restaurateur needs to produce an abundance of information so that the underwriting team can make a decision (whether or not they are comfortable with that exposure). They want financials. They want a business plan. They want menus. They want biographies of all of the key people involved in the project. They also want the contractor’s certificate of insurance as proof in the event of a loss so that his insurance would be primary. Many restaurateurs don’t understand that providing all this information is necessary. They think that their information is personal and they don’t want to share it.
At the end of the day, insurance is a lot like banking. Some restaurateurs think of insurance as just another vendor item - almost like their tablecloth provider. They send it out to bid and move it around all the time, but, that’s really not the goal of insurance. Once it is put in place, insurance is a program and it becomes a very large line item, financially, on a restaurateur’s profit and loss statement. It’s very important that it is reviewed, and that premiums are kept as low as possible year in and year out, and that the coverage is the best coverage affordable in the market place.
Q As a restaurant insurance specialist, what can a restaurateur expect from you?
A restaurateur can expect that I am not biased to any carrier in the market place, that I will market his or her particular project or insurance submission to all of the carriers available, and that I will do a comparison of pricing. I will present it to them and we’ll go over it, together choosing the best program.
Q What else is important about the way you handle insurance for your clients?
In addition to marketing the insurance for a client, there is also the servicing of the account. A lot of agencies will have a customer service representative that handles the account once the account is written. So, now that you’ve got your insurance you’re going to talk to Susie all the time and Susie will handle anything that you need. I personally take calls all day long for certificates of insurance, claims, and whatever the need might be for an account. I think that adds to the value of what I bring to the table because we discuss claims instead of just calling and reporting a very small claim. We discuss it and I say, “It’s probably not going to be a good idea for you to submit a $50 dry cleaning bill for a patron that you took care of, because we’re interested in preserving the account and keeping the premium as low as possible, and a big part of that is keeping the account clean.”
Q If I decided that I wanted to do a restaurant project, where would you start me? How would we kick off the process? What would you expect from me?
We would sit down and discuss the nature of the project; where it is going to be located, etc. We would then fill out the applications together. Insurance carriers have organized and standardized questions. We would gather the information necessary so that we could market that risk to various carriers. This would let us see what’s available in the market place in terms of product and pricing.
Q You indicated that insurance is a fairly large line item. What percentage of a restaurant’s operating revenue goes to insurance?
It’s usually 1 to 1.5 percent. That is the number that has been accepted in the industry for quite some time. Often when I look at a project, or a risk that comes in front of me, I take that number of 1 percent. I start at one and I say, “How much lower can I get? Can I cut that in half?” Going as far below 1 percent as I can is usually my goal. Then, I send it to the insurance companies. It’s funny, most of the companies come over that number. I say to them, “You’re out of the ball park. Where are you getting the numbers that you’re rating this at?” They don’t use a 1 percent target. They have rating formulas that they use in-house, and they come up with whatever number they come up with. There are carriers that are just so far off that they might as well double or triple that 1 percent.
Q So, are you implying that as a skilled practitioner who sees lots of different policies written, you’re in a position to go back to them and say, “That’s too much”?
Right. Having written a significant amount of restaurant insurance, I already have profile accounts that have x amount of property insurance, x amount of sales, and x amount of premium, and we’ve gotten it down as far as we possibly can. I might review a file, go back to the underwriter and say, “You know you’re at $40,000. Well, I’m already writing an account with the same profile for $22,000.” And give them that information. So that’s part of the skillset; working with several projects and working with several clients, and knowing what range the premium should fall within in order to protect them and constantly drive it down.
Q So why did you choose the restaurant industry to specialize in?
I chose the restaurant industry because I grew up in an insurance family. I’m the only daughter of a very entrepreneurial father who is in the insurance industry and I also happen to be a huge ‘foodie’ myself. I grew up in Boston and watched the restaurant landscape change and develop over time. I studied French language in France where cuisine is a very large part of culture. So, it all came together and it affords me the ability to do what I truly love and to combine my passion with a skillset.
Beth Berardi can be reached at 617-775-2869.
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General Business 
