Why Your Bar's Insurance Just Doubled — And What You Can Do About It with Lars Kristiansen

Why are bar insurance premiums skyrocketing—and is there anything you can do to protect your business?

If you’re a bar, restaurant, or nightclub owner, you’ve likely seen your insurance rates spike in the last few years. With more lawsuits, stricter laws, and fewer insurers willing to play ball, coverage has become more expensive—and more confusing. This episode gets into the weeds with an expert who knows exactly what’s going on behind the curtain.

In today's episode:

• Learn the four critical types of insurance your bar needs to carry—and why skipping any one of them is a risk you can’t afford.
• Understand why assault & battery and liquor liability are the real troublemakers in your premium hikes.
• Get the scoop on why hospitality-specific insurers can often save you money—and stress—compared to big national providers.

Listen now to get the hard truths (and some smart tips) on how to manage rising insurance costs before renewal season hits.

Learn More:
Email Chris
Schedule a Strategy Session
Bar Business Nation Facebook Group
The Bar Business Podcast Website
Chris' Book 'How to Make Top-Shelf Profits in the Bar Business'

Thank you to our show sponsors, SpotOn and Starfish. SpotOn's modern, cloud-based POS system allows bars to increase team productivity and provides the reporting you need to make smart financial decisions. Starfish works with your bookkeeping software using AI to help you make data-driven decisions and maximize your profits while giving you benchmarking data to understand how you compare to the industry at large.
**We are a SpotOn affiliate and earn commissions from the link above.

A podcast for bar, pub, tavern, nightclub, and restaurant owners, managers, and hospitality professionals, covering essential topics like bar inventory, marketing strategies, restaurant financials, and hospitality profits to help increase b...

Transcript

Chris Schneider (00:02.494)
So One of the things I've seen a lot of over the past year or so is conversations regarding insurance. And this is a topic that I've seen everywhere, whether it's Reddit, different forums, materials that are coming out for industry magazines, industry newsletters, and within the Bar Business Nation Facebook group. We're seeing this happen a lot, a lot of conversations around insurance. And so I had a guy reach out to me, Lars, who I'll introduce in a second, who is entirely focused on insurance for the hospitality industry.

And I thought, what a better way than to answer some of these questions by bringing on somebody that actually knows insurance. And so rather than just a bunch of bar owners sitting in a room taking guesses about things we don't understand, we can ask the guy that actually knows. So with that said, today joining us is Lars Kristiansen. He is the vice president of business development for KEL Insurance. And they entirely focus on bars, nightclubs, and restaurants. And they do that all over the country. They're licensed in 35 states.

So he has a wealth of knowledge, not just about insurance, but about insurance and our industry all over the country. So Lars, thank you for being here. And hopefully that did your background a little bit of justice, but is there anything you'd like to add?

Lars Kristiansen (01:13.838)
No, thanks for having me. Not much yet. We're your 100 % hospitality. So hopefully I can give you some good knowledge and you can walk away learning something today.

Chris Schneider (01:25.778)
Well, and I think for a lot of people listening this just so that you know, because Lars and I were talking right before we started recording. We know this is not an episode that necessarily is going to have answers everyone wants to hear. But I think it's really important because a lot of this information, there's a lot of rumor out there about insurance and there's a lot of crazy stuff going on. And so getting this understanding, I think, is really important for folks. So Lars, just to start us off, because I bar insurance, you would think everybody that's in the bar business knows exactly what we're talking about. But what

insurance does a bar actually need? What are the actual plans that we're talking about today?

Lars Kristiansen (02:00.172)
Yeah, so the main, we call it the main package policy is going to be general liability. General liability, an example would be like slip and fall on the premises of your bar or somebody twists an ankle. Liquor liability, that's if you're in a dram shop state, that's for over serving a patron. know, an example, somebody gets over served, gets in a car, hurts somebody, they can go back and sue the bar.

that we sub limit a lot and we do see a lot of claims come through the door is assault and battery. So that's your bar fights or if you have a bouncer, that's an employee and hurt somebody that falls under assault and battery. And then typically we'll do property coverage as well. That's we always, when I say contents, I always say to bar owners, if you flip the building over and you shook it, everything that fell out of it, those are your contents. And then any like tenant improvements,

So that's your main package. There are other coverages that some borrowers take, know, cyber liability, but yeah, those four are probably the main ones that you need.

Chris Schneider (03:08.978)
And so I think, and tell me if I'm wrong here, the general liability is still pretty much the way it's always been. It's that liquor liability piece that has seen a lot of that movement with premiums in the last few years.

Lars Kristiansen (03:21.398)
Yep, the liquor liability rates are what's driving the cost and creating all the headaches across the country. And that's, you know, I always use drunk driving incidents because that's where we see it the most. But yeah, that's they continue to increase and that's why the rates are continuing to soar, unfortunately.

Chris Schneider (03:42.677)
And one other thing too, because it's interesting to me, because we've talked before and I, for whatever reason, you might have said this and I didn't pick up on it before, but you said that you're seeing assault and battery defense go up and claims go up. Now, is that because people are fighting more or they're suing more?

Lars Kristiansen (04:03.072)
I would say a mix of both. It's more common nowadays with just kind of the world we live in for people to have a little bit shorter temper and kind of just get into altercations and everybody knows the phrase drunk muscles. But then it also is paired with people being suing more and.

you know, there being a volume attorneys out there who probably are, you know, in their ear saying like, Hey, maybe you can get some money out of this. you know, so I think, we're just kind of at an age where there's less personal responsibility and more, can I blame? And, and so it's a, definitely a mixed bag.

Chris Schneider (04:49.108)
For sure. that's tell me if I'm wrong, but there's also part of what's driving up the liquor liability insurance is just more suits and more litigation that's going on when things happen.

Lars Kristiansen (04:58.678)
Yeah, it seems that way. again, I don't have like exact data on it. But from what I understand is, you know, even since COVID, a lot of these claims are coming about, but a lot of these like injury law firms are, you know, serving more and more people as over the past few years. So it seems like a double edged sword, from what I understand.

Chris Schneider (05:22.772)
And that would make sense to me. it, I mean, I probably should not say this publicly on a podcast, but lawyers kind of ruin everything. And so maybe your insurance is going up just because of the attorneys, but I didn't say that. talking about insurers real quick, because there's an interesting thing here. I know there are hospitality specific insurers and there are larger companies that also write hospitality. And when people are looking at getting insurance, what is the difference there? And what does that mean to them?

as the person being insured.

Lars Kristiansen (05:55.724)
Yeah, so there are hospitality specific programs and you know, we typically they they are only in selective states. So unfortunately, you could be in a state that does they don't have access or write that program rights. But typically what they have are third party administrators who are going to most likely defend the claims or put in, you know, protocols into the quote so that there is

you know, when something happens, are able to go back and say, this insurer did X, Y, and Z, and they can defend that claim. That's the main thing I think a bar owner should be concerned about. Now, typically those programs do have more competitive rates, but it's not a guarantee. And then you have, we call them like a larger conglomerate carrier, and they're...

insurance companies that write insurance for contractors, they write property insurance, they write across the board. So they have a diversified portfolio versus these programs who specifically are just doing the hospitality and manuscripting forms for that industry. So with them, they could defend claims, they do, but in my professional experience, it seems that they do have

know, deeper pockets and they do the math and it's, makes sense for them to just pay out. And it ultimately will hurt the bar owner in the long run. I've seen it happen where, you know, maybe a claim should have settled for, you know, $200,000 and somebody with, you know, just deep pockets pays out 500 or a million dollars. Now that bar owner has that sitting on their loss runs for five years and it just makes their rate go up. makes it.

extremely difficult for them in an already hard marketplace.

Chris Schneider (07:51.86)
So it sounds like in general, the more hospitalized specific you can get your insurance, the better off you are.

Lars Kristiansen (07:58.19)
I can't say for sure, like every situation's different, but what I can say is there are programs in some states that do this every day and only are looking to do hospitality versus a larger company who's saying, hey, we want this percentage of our book to be hospitality. So that's the differentiation between the two, the main, so.

Chris Schneider (08:03.38)
Absolutely.

Chris Schneider (08:26.292)
Sure. So that kind of gives us our overview of the landscape of what's going on here. And we've hit on some of the reasons why things are getting a little ridiculous on the price increases. to go back to where we started, the thing that has been interesting to me about insurance is just watching all these forums and watching everybody go year after year now post-COVID and say, oh my God, My insurance is up 20 % this year. It's up 50 % or it's up.

100, 200, 300%. Sometimes you hear stories like that. So What is going on here? Like what is the main driver here that's pushing these rates up?

Lars Kristiansen (09:05.294)
Yeah, so it's a mixed of a few things. So I mentioned earlier, A lot of these Drinking and driving claims are increasing and it does, as you mentioned, seems that a lot more lawsuits are coming through and insurance is based on what we call like the law of large numbers. So I get a lot of phone calls where it's like, well, I have clean loss history and I've been in business 20 years and I don't understand why my rates are going up. That's fine, but it's, you know, it's.

the way it does work is it's like one bad egg does ruin the batch. And so these carriers have loss ratios, And as that ratio goes up, they're paying out and the carrier is there to defend the bar owner, but obviously they don't wanna pay out. They wanna take on risks that are less risky and we're in a high risk industry. And so what happens is,

Chris Schneider (09:53.812)
Mm-hmm.

Lars Kristiansen (10:02.506)
they may pull out of that state creating less competition. And when there's less competition, very often, you know, rates will go up and there's nobody there to you know, to compete and push them to fight for that business. And the main thing that's really getting hard with that is, you know, a lot of new businesses who don't have like a paper trail

to go buy, people wanna like buy these bars. And something I try to reiterate to bar owners a lot is, I think that right now it's just in a tough market that insurance carriers are, they're more willing to decline than take the business because they don't want to add that risk to their portfolio. so it really is difficult already and it doesn't operate like car insurance. can't just like,

go into an app and go to like a progressive estate farm, you know, and just boom, get like five quotes from everybody. It's just a different marketplace. So it seems right now that, you know, there's just less and less competition, especially in certain states. And for that reason, it's just, yeah, that with the, you know, the incidents and the claims increasing is just making it really tough for everyone.

Chris Schneider (11:27.956)
So talking about that, insurance, I mean, we have to remember when we're looking at the United States, right, insurance is really a state by state game. is what's true in one state is not always true in the other. So what are you seeing as far as the different states that you're dealing with? Are some right now significantly better and easier or some significantly worse? And do you have any understanding of why that would be outside of just who wants to play in which states?

Lars Kristiansen (11:36.504)
We're

Lars Kristiansen (11:57.326)
I don't have that exact information, but it will come. I imagine it does come down to the claim payouts and where carriers are getting hit the hardest. there's also, and again, I'm not a lawyer, but there's also different laws. like, for example, and I'd have to check to see updates, how recently it's been updated, but South Carolina has been really tough.

Chris Schneider (12:06.132)
Mm-hmm.

Lars Kristiansen (12:26.894)
for liquor liability, because the dram shop laws are requiring a full $1 million of liquor liability coverage. There are now carriers who've paid out tremendously in that state since COVID, and they're saying, hey, we don't want to insure up to that limit. We'll do a reduced limit. And so it's really pinning a lot of bar owners between a rock and a hard place. There are some states that are

doing okay and like, know, I mean, across the board, would say rates are up everywhere, but you know, there are definitely states that are getting crushed and I'm sure you can tell bar owners are feeling it. So yeah, it's, yeah, it's gotten tough in some states, that's for sure.

Chris Schneider (13:19.7)
Well, and the thing is, I mean, as much as we can try to have a positive conversation, there's not really what we're really talking about. This is not positive news for anybody, right? Because it's kind of like, it's going up and yeah, that's the way it is. I mean, how do you exist in a state like you're talking South Carolina? So you need a million dollars worth of insurance to legally operate, but no one wants to give out a million dollars worth of insurance. So I assume that means to get that million, now you have to pay through the nose for it.

Lars Kristiansen (13:27.266)
Right, right.

Lars Kristiansen (13:48.61)
Yep. Right.

Chris Schneider (13:48.975)
if you can even get it. And then I'm assuming the state hasn't really, the politicians probably haven't started to worry about bars closing due to not being able to pay insurance. I'm sure that's way down on their radars. But is there anything, you know, that as an operator you can do? Because I feel like so much of this stuff we're saying, okay, this is totally out of your control.

Lars Kristiansen (13:59.64)
Right.

Chris Schneider (14:17.032)
And is there anything or is this just one of those things where you have to understand it? You have to learn it and you have to realize, OK, sometimes depending on the state, depending on what insurance I need, depending upon what my landlord wants or whatever I'm trying to get for whatever reason, I'm going to kind of get bent over a barrel and that's just the cost of doing business.

Lars Kristiansen (14:34.324)
Yeah, well, I can make two points. One that I can definitely speak more to because it's the knowledge that I have. And then I'll make a second point, which I'm always happy to go out and try to find more information to bring to you guys. So step one is kind of more in like the near is like the near term thing, right? It's like, what can I do right now as a bar owner to help? So there are even though rates are increasing and like collectively, there's not much you can do in that end.

you know, as a bar owner, one thing is when we are submitting to these programs, they are asking, you know, there are questions that will give you like points towards your rating, you know, for example, with nightclubs, right? If you're running like a third party security, they want to know, you know, do you have video surveillance? Is that surveillance being held for 60 days or more, right?

If that third party security firm, do they carry their own insurance? So there's transfer of risk. Do you have a contract between that security firm? Because then what happens, right? If you get a really bad assault and battery claim and you go to court, you have everything documented that they can go and defend you guys, you know, from and say like, here's the contract, here's who the liability is on, here's the video evidence of what's going on. So like that...

in the underwriting process will, now it's not gonna knock your rate completely down, unfortunately, but the underwriters are taking that into account, stuff like that. Or for a simpler example, fire, if your building has a sprinkler system, I mean, it's just lessening the risk of it burning to the ground. So in that sense, I think it's really important, and I'll segue into, it's really important to,

Chris Schneider (16:21.46)
Mm-hmm.

Lars Kristiansen (16:34.232)
go through all these things with your agent and not just trying to sell myself here, but I do think that what's important is if you really do feel you're unsure about your insurance or the agent that you're currently with, my suggestion would be to do some homework, go online, go to find podcasts like yours, find Reddit feeds, find Facebook groups, talk to your neighbors, find out who they're using and then

make a few calls, maybe don't try to get a quote from all of them, but maybe just talk to them and just kind of get a vibe check, like is this person here to serve me? And then give them a shot and give them the information. Because, you know, I can't speak for others, but I've been in the industry long enough to know that people kind of find us and we can kind of...

help them, they stay because they feel that they understand that like, hey, we're here to help. We're trying to help you the best we can. Like we're the messenger, right? We're the broker. between, we have to keep the carrier happy. We have to keep you happy. But I think people like knowing that at least like, hey, if this is the information, at least I know that you're doing the due diligence to do the best you can for us.

The second point that I would speak to, and I would need to get more information on this, but if you look at Washington DC, I believe recently some of their tort law had just changed, and DC was a really tough area to get insurance in recently, and I think collectively, I don't know if it was all bar owners or whoever was involved, some legislation did get passed that has now alleviated.

Chris Schneider (17:57.973)
Second point that I would like to speak to, and I could even get more information on this,

Lars Kristiansen (18:26.562)
that area. if that's something you want to Google and I can find more information for you. But I think like, you know, collectively, you know, bar owners definitely should not be in competition with each other and maybe be more information sharing and be a team and see what routes they can take, you know, as far as like legislation within their state.

Chris Schneider (18:54.236)
I mean, I hate to say it, but I've never known bar owners to be particularly organized and forming PACs and political action committees to go after issues. But to your point, I mean, if it really is the difference in some of these states between being able to operate and make a profit and not being able to operate and make a profit, and everybody's aligned on that, that's not a bad idea, right? Because any state where the laws are what's causing your expenses to go up, you might want to look at changing the laws. Now, something that we

Lars Kristiansen (18:57.934)
Right.

Lars Kristiansen (19:01.454)
Yeah.

Lars Kristiansen (19:11.308)
Yeah.

Lars Kristiansen (19:21.228)
Yeah.

Chris Schneider (19:24.402)
didn't hit on that I kind of want to circle back to is cash flow. Because right now, I talk to folks all the time and between inflation and labor costs going up and everything else, cash is really tight right now. And if I look at the kind of the standard on what people were earning throughout the year, last year, seems like profits just dropped all year on average. So cash is tight and insurance, one of the problems with the product you sell.

A lot of these companies like yes, I'll ensure you it's $25,000 for the year. You owe me that today. So what are their carriers? They become a little bit better with cash flow. Are there ways that bars can address this short of just saving throughout the year knowing that they need the big check at the end of the year?

Lars Kristiansen (20:10.67)
Yeah, so most hospitality policies are gonna be 25 % minimum earn, which means you're typically responsible for the first three months. Going back to the like part when I said this isn't like car insurance, like one thing that bar owners do wanna be careful about is they don't wanna cancel policies, they don't wanna switch policies midterm and they don't want to lapse in coverage because carriers are always gonna...

especially now like are gonna wanna see loss runs and see a paper trail. again, we're kind of in this place where they wanna be more selective and they can say like, why is there gaps in your coverage, this and that, and then they will back away, right? So as far as like that on their side alleviating some of the costs, I don't think there's really anyone out there in this industry.

It's not like car insurance, it's just like month to month. Those big down payments upfront are definitely, especially within the last few years have been a huge pain point for bar owners. Agencies like mine, I can't speak for other agencies. We typically work with finance companies who work in tandem with the carrier and...

You should talk to your agent and just say, look, like I can afford the insure. Like if you're not saving, know we talked about before you're like, I just always put money aside and just paid it all in full. unfortunately not every bar owner is in that situation. So definitely talk to your agent about, know, getting flexible with the financing. you know, can you lower, you know, go into the finance company and making requests to lower those down payments, maybe extending.

the monthly installments out an extra month or two if possible. Those are ways that agents can possibly help borrowers. can't speak for everyone. But on the carrier side, I don't think you're gonna see it happen, unfortunately.

Chris Schneider (22:14.43)
So basically you just got to figure out how to come up with cash or finance it.

Lars Kristiansen (22:17.326)
Yeah, well, and yeah, and, and, and definitely can one thing to especially if to new owners, when we're rating, right, we get your sales, right. So we always say you want to be as accurate as possible. And what some people try to do is they try to lower their sales so that they're paying less, but then they're going to get crushed on the backside with an audit. And so now you're paying this big down payment.

and then you've got to come up with this audit for the carrier and it's just like a lot of money at once. So it really is best to just communicate with the agent. know like there can be that like trust barrier between an insurance person and you know, clients, but honesty really does help you. It's really in your best interest and just being accurate there. And yeah, I would just always plan like, if you're really, I would,

Personally, if I was a bar owner, would do either quarterly or six month audits on myself and just say like if I'm like, all right, I'm kicking ass, like we're really making money. I would just start thinking like they are gonna come, they're gonna audit. And we always say, insurance companies, they're very quick to take your money, very slow to give it back. So it's just the nature of the beast. Yeah.

Chris Schneider (23:36.692)
Well, it is. They're kind of like the government in that way, right?

Lars Kristiansen (23:39.106)
Hopefully they don't see that part, it's all right.

Chris Schneider (23:43.689)
Well, I mean, here's the thing, because at the end of the day, mean, because like I've said a few times throughout this, none of this is really like happy stuff to talk about, but it's things people need to know. And unless you understand, yeah, they're going to take your money and they're going to want it up front and you better have that ready to go. And it makes it way easier if you just understand that, right? Because if you don't have it, it's really hard to stroke a check for money you don't have.

Lars Kristiansen (23:52.3)
Yeah.

Lars Kristiansen (24:04.727)
Yeah.

Lars Kristiansen (24:08.876)
Yeah, I agree. And I think, you know, like we know where the thorn in people's side where the expense that nobody wants to pay or the necessary evil, whatever you want to call it. But, I think, you know, bar owners are frustrated because they're just left in the dark, right? They just, they don't understand insurance. They don't want it until they have to use it. And so, you know, that's why I'm here with you. I just want to like, you know, Hey, here's the information. It's not what you want to hear, but at least now, you know, and it's like, you can take.

Take it and do what you will with it.

Chris Schneider (24:41.776)
Absolutely. So we're getting close on time for the day. Is there anything else you would like to add to the conversation we're having?

Lars Kristiansen (24:54.328)
There's definitely a lot. think, again, going back to bar owners, I encourage bar owners to always, every few years, quote unquote, shop insurance. what I think you really need to be careful with, you have to also step into the carrier shoes as well. You have to understand where they're coming from and what their limits are. And you know,

Maybe talk to a bunch of different agents, find the one that works, you know, works well with you. You feel that it's protecting your business. Cause what you don't want to do is you don't want to shop out with like five different agents and then get, and then the carrier is getting all these different submissions. And then there's a lot of like confusing information. They'll back away. We're just kind of at this marketplace right now where it seems like it's very difficult just for approval. And so anything you can do to like work with your agent to whether it be like even just like

looking at your online presence, your social media, have your agent go through, go with it through that online presence with your agent over the phone and do like a self audit. Just kind of look, reevaluate everything, your operations and ask them like, if I do this with my business, where does that classify me, know, insurance wise? And specifically what I'm talking about is like with security, like live entertainment, there's different classifications for the type of business you're running.

So a lot of times I'll get like, well, I'm a restaurant. And I'm like, I know, but on your Instagram, you've got live bands every Saturday. And, you know, I can't, you know, like it can't just be like, Hey, yeah, this is a, this is a fine dining restaurant. And it's like, no, you've got bands on Facebook. So I think, you know, as bar owners, it's, I think you should just do some homework, take the time to reach out and just get the conversation going and seeing.

where maybe there are these minor gaps or cleanups you can do to help yourself.

Chris Schneider (26:55.838)
Cool, and I'm sure a lot of people as you were saying that were thinking, okay, if I need to get talk to different agents and see how I get along, I want to go talk to Lars. So how can people get a hold of you and your company?

Lars Kristiansen (27:06.712)
Sure, yeah. Well, our website is KELInsurance.com. Everybody calls it Kel. Right there, there's a contact form or we have an online application. If you just wanna call me directly, my cell phone should be on the website there or you can just do our main contact form, put your name in and I'll call you as soon as I get it.

And then, just I tell everyone, even if I can't help you, if you want to pick up the phone and just chat and I can evaluate your situation, I'm going to be very honest with you. I'm not going to make you promises. I can just look at your situation and just say, hey, look, you're good where you are, or maybe we can help. And that's it.

Chris Schneider (27:52.968)
Well, perfect. And just to make it easy for everybody, we'll put all the links to the website and everything in the show notes so you can just scroll down as you're listening right now and click that. But with that, Lars, thank you so much for being in here. Thank you for demystifying insurance a little bit and hopefully giving people some information they didn't have before that they really need.

Lars Kristiansen (28:11.884)
Yeah, thank you for having me.