Howard Beck

By Howard Beck, CPCU, AU
Chief Underwriting Officer
Illinois Casualty Company

The liquor liability line of the insurance business has always been difficult.  Many carriers are reluctant to offer this product and even fewer are willing to make a commitment to it.  Since COVID, plaintiff’s attorneys have become increasingly creative and aggressive while juries cooperate with head scratching awards.  This combination of factors has caused a few traditional liquor liability carriers to withdraw from certain states or from offering liquor liability insurance completely.  The situation has reached a point in some states where bar owners are closing their doors because they can’t obtain insurance or afford the limited options that are available (e.g., South Carolina).

As the challenges increase across the country, license holders grow increasingly frustrated and feel that the situation is totally out of their control.  They actually have more control than they think if they are willing to view risk management differently.  With this mindset, they can control, and even lower, their liquor liability insurance premiums.

So, what does this mean for you, your employees, and your business? Here are some considerations on how to take control of your liquor liability insurance costs.

We work in an industry where people drink and often drive.  Sometimes those customers get into accidents, and innocent people get hurt.  When that happens, the insurance company takes over, investigates, applies the policy to the law, and strives for the most favorable financial outcome.

The best way to control the cost of liquor liability insurance is to do everything possible to prevent claims.

The next best way is to do everything possible to enable the insurance company to defend you.

How do you minimize the chance of a liquor liability claim?

• Make a true commitment to responsible serving!
• Train your staff repeatedly and consistently.
• Create a culture among your staff to recognize signs of intoxication and collectively cut off service effectively.

If there is a claim, how can you help the insurance company defend you?

• Invest in security cameras and long-term storage of recorded images.
  • Plaintiff’s attorneys will paint a very different picture of what happened.
  • Video doesn’t lie.
• Have documented procedures in place that detail your commitment to training your staff and not over-serving customers.
• Have a reputation for running a good business.

Recently, ICC settled a claim involving a patron who slipped on the stairs and faceplanted in the landscaping, suffering a broken nose and some broken fingers.  The establishment was sued for negligence. The patron claimed that the stairs were unsafe and demanded $150,000 as compensation for his injuries.

Fortunately, the business saved a video recording of the incident, which showed the patron fumbling in his pocket for his keys and failing to watch where he was walking.  Prior to trial, the case was settled for less than 10% of the demand.  Having recorded images of the incident made a huge difference in the negotiations, final settlement, as well as the claims history for the insured.

Plaintiff’s attorneys go after the easy money.  Businesses that don’t make these commitments are the desired target.  Avoid the claims, but if you have one, do everything possible for the insurance carrier to properly defend you and minimize the impact.

There are resources available to you through ICC or the Pennsylvania Licensed Beverage & Tavern Association.  We are here to help. Contact the Association or your agent for more information.

Editor’s Note: Illinois Casualty Company is the exclusive preferred vendor for liquor and business liability insurances. Qualifying Members can save up to 10% on their businessowners and liquor liability insurance. To find out more about these insurance programs and to locate an agent in your area, visit www.ilcasco.com/insurance-programs.

The following testimony was provided on March 26, 2024, by Jim DeLisio in front of the Pennsylvania House Republican Policy Committee. Mr. DeLisio is vice president of the Pennsylvania Licensed Beverage and Tavern Association and president of the York County Tavern Association. He is the owner of the Race Horse Tavern in Thomasville, Pa.

Chairman Kail, Representative Diamond, members of the Committee, good morning. I’m Jim DeLisio, owner of the Race Horse Tavern in Thomasville, York County. I’m also Vice President of the Pennsylvania Licensed Beverage and Tavern Association as well as President of the York County Tavern Association.

With me is Chuck Moran, executive director of the Pennsylvania Licensed Beverage and Tavern Association. Chuck will be available to help answer questions afterwards.

Let me begin by thanking you for inviting the Pennsylvania Licensed Beverage and Tavern Association to testify today. In the past I’ve enjoyed speaking with this committee on other issues so I’m humbled to be invited back.

Today, we’ll be talking about gaming in taverns with an emphasis on skill games. Gaming in general is a topic that I’ve testified in front of other committees in recent years, and I want everyone here to know that my establishment is one of a few Pennsylvania bars that has an active tavern gaming license. In fact, a license search conducted on March 11, 2024, shows there are only 39 of us with one.

For the sake of comparison, the most recent annual report from the PLCB shows there are slightly more than 11,200 R and H licensees in the state that could be eligible for a tavern gaming license. If you do the math, that’s about one-third of one percent.

As background, the Pennsylvania Licensed Beverage and Tavern Association was established in 1941 and today represents small business bars, taverns, and licensed restaurants throughout the state. Our perspective comes from the so-called “mom-and-pop” businesses that own either an R, H, or E liquor license. For the most part, we are your local bars, taverns, pubs, and licensed restaurants. We do not actively recruit large chains, grocery stores, or convenience stores that have R licenses.

Based on past Membership studies, about 63 percent of our member’s business is alcohol sales and 37% of sales are from food. Our average member employs about 16 individuals including the owner and family members. They serve less than 4,000 customers every month. If you count the chairs and barstools, throughout my Member establishments, you’ll find less than 100 per establishment.

The Tavern Association has a general position on gaming. We believe our Members should be allowed to offer legal forms of gaming in their establishments to entertain their patrons. That extends from tavern gaming to any other forms of gambling, including VGTs and video skill games.

As you know, small business bars have been hit hard for about the past 8 years. Our financial struggles began in 2017 when Act 166 of 2016 officially went into effect. That act stole an exclusive right that bar owners had … the right to sell six-packs and growlers to go. Act 166 gave beer distributors the right to sell to consumers any amount including amounts below a case down to a growler.

That in combination with other alcohol sale changes through Act 39 drove a stake through the heart of small business bars. Our membership studies show that during that time, 85 percent of our Members saw a decrease in beer sales. And, 30 percent of our Members saw a decrease between 11 and 20 percent. That adds up to thousands of dollars in lost revenue.

Clearly, small business bars became collateral damage of Acts 39 and 166.

We know that was not the intent of the legislature when it passed those bills and Governor Wolf signed them into law. But, you need to know that past legislative actions seriously damaged many small business bars across the state and we hope to work with you to correct the situation.

With revenue dropping as a result of those Acts, bar owners began to look at other options to fill their income void and stay profitable. Bars were locked out of the opportunity to have VGTs in their establishments when truck stops got them. So VGTs were not a legal option, although we wish they were.

That’s when video skill gaming entered the picture – and at least for now, court decisions have declared them not to be slot machines.

I can’t tell you how many skill games are in Pennsylvania bars at this time. That data is not something we collect. Businesses that sell and distribute skill games should have data on how many they’ve put into Pennsylvania.

But I can tell you based upon conversations I’ve had with colleagues at other establishments and across the state, skill games filled at least part of the void. Those with skill games are using the profits to pay bills, upgrade establishments to compete with newer license types, or offer benefits to employees.

We certainly hope this legislature will take action soon to finally put to bed the debate on whether or not skill games are legal, and whether skill games and VGTs should be in Pennsylvania bars. We do, however, need to remember lessons from the past including those from tavern gaming and the current situation with skill games.

First, tavern gaming did not take off and the state did not generate the revenue that it had projected. As mentioned earlier a shockingly low number of licensed establishments chose to offer tavern gaming. Why? There’s little profit after taxes and payment of supplies. I can talk more about that during the Q&A.

Any legislation that you would write to allow skill games and VGTs in bars would need to be careful not to carry a high tax. Also there can’t be a small cut for the bars.

Second, the current distribution of skill games is questionable. Unlike VGTs in truck stops that are regulated and monitored, skill game distributors have put their machines in locations that are easily accessible to anyone including minors.

There are also issues related to security and safety of some locations where these machines have been placed. You probably saw recent news articles out of Philadelphia that indicate the city has taken initial steps to ban skill games. Apparently, players have been robbed after winning.

I’ll conclude by thanking you for the opportunity to represent small business bars, taverns and licensed restaurants today. Chuck and I will be happy to answer any questions you may have at this time and in the future.

By Tawnya Dinh
Property Claims Representative
Illinois Casualty Company

In this industry, we are always amazed at the new methods criminals can devise to steal money! Recently, I handled an interesting claim that involved employee theft.

The employer’s POS machine had a tab called “On Account” that was not utilized by the business in its regular operations. An employee figured out that they could purchase gift cards “On Account”, then use those gift cards to pay for a customer’s cash order and pocket the cash.

The theft went on for many months and resulted in over $35,000 in stolen funds.

Interestingly, the theft was not detected by the business but was unveiled by the employee, who could not help but brag to a friend who also knew someone at the business. The employee was confronted and eventually confessed.

The business owner was unaware of the “On Account” tab. Once the employee’s theft was discovered, the owner immediately contacted their POS vendor to have the tab removed.

The employee turned out to have a lengthy history of prior criminal activity. This history went undiscovered due to a lack of background checks completed by the business. Unfortunately for the business owner, the Employee Dishonesty limit was insufficient to cover the extent of the theft.

In addition to the importance of having a full understanding of the components of the POS machine, this claim highlights how important it is to conduct background checks as part of your hiring process. With the current labor shortage, it may seem necessary to skip this step and get positions filled. Doing so could cost you and your business a lot more in the end.

Editor’s Note: Illinois Casualty Company is the exclusive preferred vendor of the Pennsylvania Licensed Beverage and Tavern Association for liquor liability insurance. Learn more about ICC by clicking here.

VGTs and Skill Games will help family-owned taverns, bars, and licensed restaurants hurt from losing exclusive six-pack sales

The following is a statement from Chuck Moran, executive director of the Pennsylvania Licensed Beverage and Tavern Association. The statement concerns Governor Shapiro’s 2024 budget address and gaming expansion into bars.

(Harrisburg, February 6, 2024) Today, Pennsylvania Governor Josh Shapiro in his annual budget plan indicated his interest to legalize, regulate, and tax skill games that can be found throughout the Keystone State.

Specifically, his plan calls for “A tax of 42 percent on the daily gross gaming revenue from electronic gaming machines that involve an element of skill and are regulated by the Pennsylvania Gaming Control Board.” (https://www.budget.pa.gov/Publications%20and%20Reports/CommonwealthBudget/Documents/2024-25%20Budget%20Documents/2024-25%20Budget%20in%20Brief%20v.1%20wCovers.pdf, page 31).

Legislative leaders from all four caucuses appear to indicate some interest in addressing the skill games issue that has been lingering and has faced legal challenges.

The Pennsylvania Licensed Beverage and Tavern Association (PaTaverns), founded in 1941, believes the time has come for it to be resolved. Our Association supports gaming expansion into Pennsylvania’s bars, taverns, and licensed restaurants including video gaming terminals (VGTs) and skill games.

But, let’s learn a lesson from the current tavern gaming laws that have been a disaster with so few participating. The tax structure on those games just isn’t attractive, and is a major reason why there is an extremely low number of active tavern gaming licenses … and thus tax revenue from those games. So a 42% tax might not work.

However, there might be a nugget in all of this that could create a win-win situation for Pennsylvania taxpayers and Pennsylvania tavern owners.

It’s very evident that Pennsylvania’s family-owned taverns have struggled since the state took away their exclusive right to sell six-packs of beer to go. A past survey of our members clearly shows how the expansion of six-packs-to-go sales several years ago hurt small businesses bars throughout the state.

Legalizing gaming expansion into bars through VGTs and skill games could help that situation while generating new revenue for the state. There already is precedent through tavern gaming laws that allows gaming in bars where such activities can be closely monitored, regulated, and taxed.

So let’s create a win-win situation for Pennsylvania taxpayers and family-owned PaTaverns by wisely expanding gaming via VGTs and skill games in bars.

PaTaverns thanks Governor Shapiro for raising this issue and supports gaming expansion of VGTs and skill games into Pennsylvania’s bars, taverns, and licensed restaurants.

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The Pennsylvania Licensed Beverage and Tavern Association is the statewide political voice for small business taverns and licensed restaurants. Based in Harrisburg, the Association formed after Prohibition in 1941, reorganized in 2019, and today advocates for best practices and rights within the industry as well as best experiences for patrons. To learn more, visit www.pataverns.com or follow the Association on Twitter via @TavernPA.

Photo by Dietmar Rabich, Wikimedia Commons

by Vince Mayer, Loss Control Specialist
Illinois Casualty Company

Many business owners believe that putting up decorations will create a warm and inviting atmosphere that will draw in customers and increase profits throughout the holiday season. Until the 19th Century, it was customary to attach small candles to tree branches with pins or melted wax. Thankfully, this tradition (and extreme fire hazard) is no longer popular. There are still a number of risks that come with putting up lights, garland, trees, and inflatable decorations in and around your business. Here are a few tips to help you decorate safely this year and decrease your risk of electrical fires.

• Plan ahead for a safe holiday season – make one person responsible for overseeing the decorating at your business.
• Most cities do not allow the use of real trees, wreaths, or decorations made from them to be used inside commercial buildings because of their extreme fire hazard. Likewise, electric lights should not be placed on metal trees as there could be a potential shock hazard. Check with your local authorities on their requirements before starting your decorating.
• Check all lighting cords and light sockets for any damaged or frayed wires and/or broken or damaged light sockets and discard them.
• Check all lights and decorations to see if they are approved for outdoor use or indoor use only. If you are purchasing new lights or decorations, make sure they are UL approved. Never use interior type items outdoors.
• Keep use of extension cords to a minimum and only use the appropriate listed extension cords for exterior use.
• Follow the instructions on connecting consecutive lighting sets to avoid exceeding the maximum allowed.
• Do not plug all of your decorations into the same outlet to avoid overloading the circuit.
• Turn off or unplug lights and decorations when they are not in use.
• Keep all cords off floors and walkways where possible. Walking on cords breaks down the insulation on the wires leading to short circuits and potential fires. Never tape cords to floors or hide under carpets or mats. Do not run cords across sidewalks or steps to prevent tripping.
• Never run cords through doorways or windows where the cords can be pinched, as this can significantly damage the cords and may lead to fires.
• All decorations should be kept away from any heat sources and must not block or cover any exit signage or emergency lighting. Keep exits and stairways clear at all times.

Have a safe and happy holiday season!

Editor’s Note. Illinois Casualty Company is the exclusive preferred vendor for businessowners and liquor liability insurance for the Pennsylvania Licensed Beverage and Tavern Association. Qualifying Members can save up to 10% on their businessowners and liquor liability insurance. To locate an ICC agent in your area, visit www.ilcasco.com.

By Paul Worzella, SCLA
Liability Claims Supervisor
Illinois Casualty Company

Fire is used by many people as part of leisure activities and for entertainment. Occasionally, businesses in the hospitality industry have incorporated the use of fire to add to the experience and ambiance of their establishment by serving flaming drinks or food, such as flaming shots, bananas foster, crepes Suzette, or individual tableside hibachis.

Unlike some policies, ICC does not exclude claims resulting from the service of these products. However, in many cases we will advise the business to discontinue the practice. If they choose not to stop the service, Underwriting may decide not to insure that business.

Serving flaming drinks or food has the potential of resulting in serious injury to customers. Bad burns are among the most painful types of injury and may include permanent scarring as well as long-term anxiety and emotional issues. ICC has experienced a number of premises liability claims resulting from flaming foods or drinks. Typically, in those claims, the flaming drink or food was sloshed or spilled onto a customer, or liquor, used to fuel the flames, left its container, and the flames followed.

Consider this scenario
You and your family are on a much-needed vacation. You, your spouse, and your young child are hungry, so you stop at a local restaurant to have lunch. Since the weather is nice, you decide to eat outside. Before you order your meal, you both decide that you want to try their specialty drink called the Flaming Dr. Pepper. As the waitress brings your drinks to the table, she trips over a chair leg and spills the flaming drinks on your young child, burning her face and hands with second-degree burns. Not only that, but the restaurant’s wood deck now catches on fire due to the flaming alcohol. The fire spreads quickly and burns the restaurant to the ground. Your vacation is over in an instant as you rush your child to the Emergency Room for treatment. Could this scenario have been prevented? Absolutely.

Although ICC does not exclude claims like this one, it is not our intent to insure businesses that serve flaming food and drinks.

Regardless of insurability, if an establishment chooses to serve flaming items, there are some recommended safety considerations to protect customers and employees:

• Prepare the drinks or food away from the customers, preferably in the kitchen or behind the bar.
• Make sure lit drinks are filled below the rim to prevent the drink from spilling and spreading the flame.
• Have a server lead the bartender or cook to the table to clear a path and help deliver the food or drink safely.
• Refrain from serving flaming drinks or food outside, as seeing a flame on a sunny day is more challenging. If it is windy, the flame could be blown onto a flammable object, like a napkin, potentially causing property damage and injury.

In our experience, these types of claims are costly to settle, and often, the business is held liable for the injuries sustained. While the excitement of flaming drinks and food may draw attention to the business, those same drinks and food can cause irreversible damage. To avoid the risk, it is best to leave these items off the menu.

Editor’s Note: This story ran in the August 2023 edition of Pennsylvania Beverage Media, the official monthly magazine of the Pennsylvania Licensed Beverage and Tavern Association. Illinois Casualty Company is the exclusive preferred vendor for liquor liability insurance. Qualifying Members can save up to 10% on their businessowners and liquor liability insurance. To find out more about our insurance programs and to locate an agent in your area, visit www.ilcasco.com/insurance-programs.