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We are a full service law firm.  While we concentrate our practice in liquor law and PLCB (Pennsylvania Liquor Control Board) related matters, we also handle Civil Litigation (lawsuits) for plaintiffs and defendants, Insurance Coverage disputes, Contracts, Real Estate matters, and various other business issues. 

Our Team

 

Over the past quarter century we have developed strong and successful relationships with experienced attorneys in other fields of practice.  Together with these "Dedicated Referrals," we are able to handle just about any legal matter that comes in the door, from Personal Injury (car accidents, slip and falls, assaults, etc.), Estates (Wills, Trusts, Living Wills, Power of Attorney), Family Law (divorce, support, alimony, child custody), Criminal Law, Disability, SSI, Unemployment Compensation, and other matters.

 

We like to think of ourselves as a "family law firm" who will treat you like a part of our family.  Unlike many lawyers you may have dealt with in the past, we will treat you as one of us, and your legal problem as one of ours.  We pride ourselves on prompt service and personal communication.

 

 

       Contact Us

            FOR A FREE CONSULTATION

   #(215) 568-2235

              1806 Callowhill Street

             Philadelphia, PA  19130

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EMAIL

 

WBMorrin@aol.com

Areas of Practice


LIQUOR LAW and LICENSING

LITIGATION

INSURANCE DISPUTES​

CONTRACTS​​​​​

BUSINESS LAW

 

REAL ESTATE

 

​​​​​​REFERRALS FOR ALL OTHER LEGAL MATTERS

LEGAL NEWS AND ALERTS

PRESS RELEASE, June 17, 2016.

Copyright,  William B. Morrin, 2016

 

Gov. Wolf’s New PLCB Liquor Law:  A Swing and a Miss

Pennsylvania Governor Tom Wolf signed House Bill 1690 on June 8, 2016, which is due to take effect in 60 days.  His camp has touted it as the most progressive change to the Pennsylvania Liquor Code since Prohibition.  It is not.  This attempted swing at the fences toward privatization is in reality a total whiff.

Wolf said after signing the bill:   “This is truly a historic day for Pennsylvania and the most significant step the commonwealth has taken to reform our liquor system in 80 years.”  The bill promised substantial reform, more convenience for consumers, and financial benefits to business owners. The bill delivers nothing but a sell-out to the casinos, big business and the PLCB itself.

The new law, House Bill 1690, is advertised as allowing wine sales to some, and beer sales to others, in grocery stores, gas stations and other localized businesses, as a means to provide more convenience to consumers.  But behind the façade, the new law does little to achieve that lofty goal.

First, there is no new “beer license” for gas stations, grocery stores or convenience stores.  Anyone who wants to sell beer must still buy an “E” (Eating Place Retail Dispenser or beer-only) license on the open market, and apply to transfer that license into the location.  Nothing about that process has changed.  The only change is that gas stations, which previously were prohibited from applying for a beer license because of their proximity to “liquid fuels,” can now do so.  However, like everyone else, they will have to buy an “E” license on the open market, apply to the PLCB for transfer, deal with all of the zoning issues and community protests, and risk denial of the license due to community opposition. To propose that there is any real change in this area of the law is misleading at best.

As far as wine sales, only “R” licenses (restaurants) and “H” licenses (hotels) may apply for the “Wine Extended Permit.”  The new law will allow such restaurants and hotels, for a fee of $2,000.00 to start (there is an annual renewal fee equal to 2% of the cost of wine bought from the state store system over the previous year), to sell wine bottles for take-out at the rate of 4 bottles per person in a single transaction.  Sounds good, but think about it.  How many restaurants do you know that have the room to stock the amount of wine to satisfy the educated and sophisticated consumer of today.  It is impractical.  Further, the wine must be purchased from the state store system, so the mark-up will be minimal, and you cannot sell wine for take-out after 11:00 P.M.  Very few of the restaurants that I represent will find this concept economically feasible.  I truly hope I am wrong, and this becomes an economic boom for restaurants in this Commonwealth, but I sincerely doubt it.

The licensee blatantly left out of this new law is the “D” (Distributor) licensee.  Beer distributors are not qualified to purchase the Wine Extended Permit, despite the fact that they generally have the physical space required to maintain a sufficient inventory of wine product to satisfy today’s cultured wine consumer.  If the legislature truly wanted to allow private business to compete with the state store system, it would have allowed “D” licensees to sell wine, and even liquor.  It makes no sense.

The law also touts that “E” (beer-only) licensees will be able to convert their licenses into an “R” (restaurant) license, and therefore be able to sell wine, for a modest fee of $30,000.00, payable to the PLCB.  However, this does not apply to cities of the first class.  By the way, the only city of the first class in Pennsylvania is Philadelphia.  So, the only city not included in this new law is the largest city in the state, the City of Philadelphia.  Wow, really?  Philly is screwed again.

So, let’s take a real look at what the law does accomplish:

            *It expands the ability to apply for Casino licenses, for a modest $1 million application fee, with renewal fees of $1 million per year for the first few years and then $250,000.00 per year after that.  Most noteworthy, and disturbing, it allows Casinos to sell liquor, beer and wine 24 hours a day, 7 days a week, and to give away beer and wine free of charge at special events.  No other licensee in the state can do that.

            *It increases the fees and taxes for nearly all licensees and applicants for new licenses and permits, with those fees payable to the state general fund.  License renewal fees will increase by $700.00 per year.  Safekeeping fees increase from $5,000.00 to $10,000.00 per year.

            *It grants the PLCB new powers to discount prices and make more money for the state coffers. 

            *It allows the PLCB to now deliver products, taking away business from the Transporter for Hire Licensee.

            *State stores will have more autonomy in setting their hours.  No other licensees, except casinos and state stores, have been given expanded hours under this bill.

            *State stores are now allowed to sell lottery tickets, providing more money to the state.

            *Breweries and Limited Wineries and distilleries are given expanded rights (too complicated to describe here, and not applicable to the average licensee or the average consumer).

            *Special liquor order (SLO) mark-ups are reduced to 10% instead of 20%.  

The law does include some crazy “off the wall” provisions:

            *Canadian drivers’  licenses are now permitted as proof of age.

            *Licensees may now sell alcohol from 7:00 AM to 2:00 AM on Groundhog Day.

            * Mug Clubs are now permitted. This enables the licensee to charge an annual fee to members of the club, who can use designated drinking containers for beer at discounted prices, without impacting their “Happy Hour” or daily drink specials.  This raises serious health code issues as consumers may bring in their own “mug” to be filled with beer by the proprietor.

            *Powdered alcohol is now illegal.

            *A new “airport liquor license” is created, allowing alcohol sales from 5:00 AM to 2:00 AM.

            *Minors are now permitted to “frequent” ski resort licensed establishments.

There are a number of goofy additions to the PA Liquor Code which I will not discuss here, mostly because they do not affect the majority of the average consumer, or the average business.

 But, all in all, there is not much there to justify all of the hype.  The House Appropriations Committee has estimated that the bill will bring in an additional $150 million in revenue to the state, but the impact on consumers and private business is very hard to predict. 

In my view, this new law does little for the “mom and pop” bar or restaurant operator, who needs relief the most.  It also does very little for consumers, who patiently await a “new age of privatization.”  House Bill 1690 is, at its core, a failed attempt at real change, disguised as a political triumph.

I have said that the Pennsylvania legislature is engaged in a slow chipping away of the total control of liquor sales by the state, and that any change is a good thing.  But anyone who had read and understands this law knows that it is a swing and a miss.

By:  William B. Morrin, Esquire

 

PLCB ISSUES ADVISORY NOTICE ON BEER DELIVERY BY LICENSEES

 

 

     On March 11, 2015 the Pennsylvania Liquor Control Board issued new guidelines on beer delivery by licensees who apply for a “Transporter For Hire License.”

 

     Highlights of the guidelines are:

 

     * A retail licensee cannot accept payment for the malt/brewed beverage at the time of the delivery.  The sale must be completed on the retail licensee’s premises.

     * There are no limits on how much malt/brewed beverage a Transporter-for-Hire licensee can transport, but a single sale by a retail licensee cannot exceed 192 ounces (two six-packs).

     *Deliveries can occur at any time, but sales must take place before 2 a.m.

     * While food and non-alcoholic beverages can be included with the delivery of malt/brewed beverages, it is not required.

     *Deliveries can only include items that are preordered by the customer, so a licensed transporter cannot use his/her vehicle to sell other items with the alcoholic beverages at the same time. For example, a licensed transporter cannot use its vehicle as a food truck.

     * The person making the delivery must be at least 21 years old. There must be written evidence the driver is an employee or a contractor of the licensed transporter.

     *The delivery vehicle must be identified with the Transporter-for-Hire licensee’s name, address, license number and the licensing identification (LID) number in letters at least 2 inches tall on each side of the vehicle.  Magnetic signs are allowed.

     *The Transporter for Hire licensee is required to check the ID of the person accepting the delivery, and the licensee must maintain records documenting that verification.

     * The sale and/or delivery of alcohol to someone under the age of 21 years old or a visibly intoxicated person is a violation of the Liquor Code, and the retail licensee is liable for any violations.

     * A person or entity that holds multiple retail licenses needs only one Transporter-for-Hire license to cover all of its licensed establishments.

 

The text of the press release can be found at:

 

 http://www.lcb.state.pa.us/cons/groups/externalaffairs/documents/form/002566.pdf

 

     If you are interested in obtaining a license to deliver beer to your customers, call us at #(215) 568-2235 or email us at WBMorrin@aol.com.

 

NOTICE TO ALL

BUSINESS OWNERS:

 

Elections are coming!  I am tired of hearing from bar owners

and other business owners that they are not being represented,

or that laws are being passed that hurt them.  They drone on  endlessly

about how they are being maligned and down-trodden, over-regulated

and over-taxed.  And yet, they do nothing to support those running for office that have their interests in mind.  In this great Country, we elect representatives to speak for us, fromCity Council members, to State Representatives, to Congressional members, to Mayor, to Governor, and beyond.  If we sit back and do nothing, of course our grievances will be ignored.   If we act, with our voices and our pocketbooks, we will enact change.  I urge all business owners to take an active role in the political process to ensure that our voice is heard.  This involves much more than simply voting.  This involves active, aggressive support of those candidates that we believe will have the business owner's interest at the heart of their campaign.  In the coming weeks and months, I will be asking my clients, friends and colleagues, and their family and friends, to support those candidates that I believe will be friendly to the business owner when they take office.  I will insist, in return, that their political platform take into account the needs and desires of the business community, and the general welfare and financial health of the great City of Philadelphia and the Commonwealth of Pennsylvania. 

 

More info to come... Please email us at Wbmorrin@aol.com if you would like to join in our endeavor.

 

 

 

 

THE “TRANSPORTER FOR HIRE” LICENSE

 

     Wouldn't it be great if you could deliver beer with pizza or

other food being delivered for take-out to your customers’ homes?

The Pennsylvania Liquor Control Board now allows certain liquor

licensees to do this.  In fact, there is also a license which allows

you to deliver liquor and wine as well as beer to your customers’

homes. The license is called the Transporter for Hire License.

 

     The Internet is abuzz concerning what is perceived to be a new law, mainly as a result of a company called “Instacart.”  This ground-breaking company gained public recognition and viral internet status by attaining a license to deliver alcoholic beverages to clients’ homes without having a liquor license to sell. This is really nothing new. The laws relating to transporting alcoholic beverages for hire have been on the books for many years. It was only the recent publicity of Instacart that has brought this issue to the forefront. In point of fact, these laws have been on the books for many years. Instacart merely brought this service to the public eye, and opened the door for liquor licensees to take advantage of this mostly ignored opportunity.

 

     There are three kinds of Transporter for Hire licenses. These are Class A, Class B, and Class C.

For most licensees in the state, Class B licenses are the way to go.  A Class B license will allow you as a retail liquor licensee to deliver to your clients food as well as beer for take-out to their homes.  There are certain restrictions that apply. For example, the purchase of the beer as well as the food must be made over the telephone or in person at the liquor licensed establishment by credit card, debit or cash. That is the point of sale.  The goods, being the food and beer, can then be delivered to the client’s home. In most instances this involves a client calling up your establishment and ordering for example a pizza and a six-pack of beer. The customer pays by credit or debit card for the full amount of the food and beer. Your delivery person can then deliver both the food and the beer to the person’s home.

 

     The total amount of beer that can be purchased and delivered is the same as your take-out requirements which are currently: up to two (2) six-packs of beer, up to 16 ounces per container, or a total of 192 ounces of beer. Your delivery person can be tipped when he makes the delivery. The delivery person must also ask for proof of identity of identification to make sure the person receiving the beer is the same person who ordered and paid for the beer.  This will be done by asking for a photo identification card, such as a PA Driver’s License.

 

     One of the problems that have been encountered in these situations is the fact that the law requires that the delivery person’s vehicle be either owned by or leased by the licensee.  In other words, your delivery person must
drive a car or other vehicle which is either owned by you or leased by you. While most licensees do not have their own fleet of vehicles, this can be rectified by having a lease agreement executed by and between you as the licensee and your driver. The lease will provide a fee for use of the delivery person’s vehicle and will contain information such as the fee for use of the vehicle, insurance information, ownership information, and the like.

 

     There are a number of other restrictions that are necessary to be addressed and discussed with your attorney.     There are also a number of liability issues which should also be addressed with your attorney concerning the use of vehicles that deliver food or alcoholic beverages for your establishment.  You should discuss these with your attorney before engaging in any kind of take-out beer delivery.

 

     I will not in this article discuss the delivery of anything other than take-out beer. There is another license available for the delivery of liquor, wine and beer similar to what Instacart is doing, but I will not get into that at this time. There are many intricacies of the law which need to be addressed which I cannot address here. Feel free to call me if you are interested in this kind of an arrangement.

 

     If you are interested in a transporter for higher license or any other kind of license please feel free to call me for a no-fee consultation at #(215) 568-2235.  Bill Morrin, Esq.

 

 

 

 

 

 

 

NEW VIDEO GAMING BILL?

 

    We are still awaiting any real change to the laws regarding giving

bar owners the opportunity to operate video poker machines in their

establishments. 

 

Despite the hard work of such associations

as the Pennsylvania Tavern Owners’ Association, and with the support

of legislators such as Rep. Pashinski (D-Luzerne), we still have no new

​Video Gaming Bill which would  legalize the use of

video gaming machines for video poker, blackjack, bingo, keno,

and other games in establishments who hold a liquor license,

including restaurants, bars, taverns, hotels and clubs.

Regardless of your political affiliation, or your views on gambling,

​it is imperative that you contact your local representative

(councilperson, representative, congressman, mayor, senator

or governor), and state your firm belief that reform in this area 

should be passed. 

It is not the total answer to our problems, but it is a first step in

assisting bar owners to remain viable and competitive

in this difficult economy.   

 

 

 

 

 

 

 

  NON-RENEWALS, CLA’s AND OIC's

 

 

          The Pennsylvania Liquor Board, as part of its “nuisance bar program,” has

          been issuing objections to the renewal of liquor licenses throughout

          Pennsylvania. The nuisance bar program has been in existence for        

          many years, but more recently, they have stepped up the program and have placed

          licensees under more strict scrutiny than ever before. Each time a licensee files

          for renewal of its liquor license, the PLCB reviews the operating history of the

          licensee to determine whether or not the PLCB feels that the licensee has abused

          the licensing privilege, and therefore, should not be renewed for the next term. 

          As I am sure you are aware, if your license is not renewed, you are out of

          business.

 

    

 

     In the past this has involved nonrenewal of liquor licenses where the licensee has engaged in “egregious activity.”  For the most part this involved bars that have had numerous police incidents such as fights, shootings, drunkenness or visibly intoxicated patrons, noise complaints, service to minors, service after hours, and things of that nature. Generally, licensees who were placed on the nuisance bar list and subject to nonrenewal of their liquor license have had a long history of violations of the Liquor Code resulting in citations, and numerous police incidents. However, more recently, the PLCB has been objecting to the renewal of liquor licenses where the licensee merely has two or more citations in the previous two years. Licensees who fit within the PLCB’s limited criteria will have to go before a Hearing Examiner appointed by the PLCB who will take evidence and testimony as to whether or not the licensee has abused its liquor license privilege and therefore should be denied renewal of its license.

 

     This is of significant importance to liquor licensees throughout Pennsylvania because accumulating just two or three citations within a two-year period of time can result in the non-renewal of your license and the closure of your business.  

 

     It is therefore very important that if any citation is issued against you, you should contact a qualified attorney who deals with PLCB related matters to represent you to possibly defend against the citation. In previous years it was customary to waive the hearing on a citation and pay the penalty recommended by the Commonwealth prosecutor (usually a fine or a suspension) rather than fight the citation.  However, because of the current strict nuisance bar policy implemented by the PLCB, it is imperative that each and every citation be considered as being one which will lead to the closure of your business. Thus, each and every citation should be considered as do-or-die.

 

    Also, it should be pointed out that in cases where a licensee has a number of citations pending against its record, and the PLCB has objected to the renewal of the liquor license, the PLCB may propose to the licensee that it enter into what’s called a Conditional Licensing Agreement or CLA.  A CLA is an agreement whereby the PLCB imposes certain conditions or restrictions on the operation of the licensed establishment. Such conditions may involve a restriction on operating hours, limiting entertainment, hiring security, installing security cameras, installing metal detection, and a myriad of other restrictions on the operation. It is easy to fall into the trap of entering into one of these CLA’s because it resolves the underlying nonrenewal matter. However, if any of these CLA restrictions are violated, the PLCB is given additional power (as if it does not have enough!) to shut down a licensed business because of an alleged violation of the CLA. It simply gives more power to the state. Now, I’m not saying that CLA’s are a bad idea.  I am saying they are not for everyone. You should not enter into a CLA or any other type of agreement without consulting with a qualified attorney who deals in these matters. This is your livelihood, and it can be taken away if you are not careful and diligent.

 

     Another matter worth mentioning is what is called the Offer in Compromise or OIC program. The OIC program involves an agreement with the PLCB that you will sell your licensed business to a neutral third-party in an arms-length transaction, so as to get a fresh start, so to speak, with respect to the ownership and management of the licensed business. The idea is that if the PLCB feels that the citation history of the existing licensee is so bad that the current management and ownership should be divested, or relinquished, it would be in the best interest of all concerned that the business be sold to an independent third-party. If this OIC is approved by the PLCB, a transfer application would be filed to the new buyer and the license would be transferred to that buyer free and clear of all existing citation history.  In essence, the license will get a clean slate. However, the new buyer cannot have any relationship with the previous owner, or any of its officers, directors, shareholders or manager.  This is considered to be a last resort for licensees that have such an egregious citation history that there is really no option but to sell the business.

 

     In summary, licensees today must be more diligent than ever before, to make sure they are in compliance with the vast array of PLCB laws, regulations and restrictions on their operation.  A few citations in a short period of time could result in the loss of your business.  It is more important than ever to retain a qualified liquor law lawyer to represent you in an effort to avoid citations, and to deal with them as they occur.  As the axiom says, “an ounce of prevention is worth a pound of cure."

 

 

    

     Many people ask me whether or not they actually need an attorney who specializes in liquor law to represent them in the purchase or the selling of a liquor licensed business.  Many times, a business owner will list his business for sale using a broker or real estate agent who will have him sign a real estate commission agreement or a brokerage agreement, providing that the agent or broker will receive a commission or a percentage of the sale price upon completion of the sale.  There is nothing wrong with that.  Brokers and real estate agents are very good at finding buyers.  However, the problem comes where the agent or broker attempts to draft the agreement of sale, or even represent the seller in the sale process.  Often, the agent or broker does not tell the seller that he needs a liquor lawyer to represent him in the PLCB approval process.  The agent might even tell the seller that he does not need a lawyer, yet alone a liquor lawyer.  In even worse cases, the agent will attempt to represent the buyer as well as the seller, and not advise the buyer that he should hire his own liquor lawyer to represent him in the license transfer process.  This is an accident waiting to happen.

 

     First, let me say that I do not have anything against real estate agents or business brokers in general; they serve a valuable function, and I have a great respect for, and a long-standing business relationship with many of them.  However, in any sale involving the sale of a liquor license, both the seller and the buyer need to be represented by a qualified liquor lawyer.    

 

     Real estate agents and brokers are not licensed attorneys.  While they may have skills in finding buyers and sellers, they are not lawyers.  More importantly, they are not trained or educated in the intricacies of the laws, rules and regulations of the Pennsylvania Liquor Control Board and the Pennsylvania Liquor Code as they relate to the sale and transfer of a Pennsylvania liquor license.

 

     I have been personally aware of situations where a real estate agent or broker will tell a seller or a buyer that they do not need an attorney.  This is very bad advice.   It is extremely important that when you are planning to sell your licensed business, or if you are looking to purchase a liquor licensed establishment, you need to seek the advice of an attorney who knows the ins and outs of the PLCB transfer process.  A standard, form real estate agreement or business sales agreement is not sufficient.  There are many contingencies that must be included in the agreement of sale, both for the buyer and for the seller, to ensure that both parties are protected.  For example, what happens if the PLCB does not approve the transfer within a certain period of time, or denies the application outright?  What happens if a neighborhood objection or protest, or a “Petition to Intervene” is filed?  What happens if there are zoning issues?  What happens if the new owner has a criminal record, or his finances cannot be verified?  What happens if there is a Conditional Licensing Agreement (CLA) imposed on the liquor license?   What happens if a citation is issued against the license while the transfer is pending?  What happens if the seller or the buyer cannot obtain tax clearance?  What happens if there are liens against the liquor license?  What happens if the buyer does not get financing?  What happens if the buyer does not get a lease? 

 

     All of these contingencies, and many more, must be addressed.  A transfer application to a new entity or buyer is not guaranteed.  There are many conditions, and a myriad of rules and regulations, that must be addressed before the transaction will be approved.  The sale is not legal unless and until the Pennsylvania Liquor Control Board approves the sale.  This approval process takes several months and involves a great deal of paperwork, financial documentation, an interview with a PLCB analyst, criminal record checks, and a wide array of other requirements.  Only a Pennsylvania liquor lawyer can advise you as to what you need to do in order to legally transfer a liquor license in the Commonwealth of Pennsylvania.

 

     It should also be pointed out that attorneys are subject to specific ethical requirements to represent you in a zealous and competent fashion.  We are required to undergo extensive annual Continuing Legal Education (CLE) to make sure that we are up to date with all of the current laws, regulations and procedures.  We are also subject to discipline by the Pennsylvania Supreme Court Disciplinary Board in the event that we fail in this endeavor.  Real estate agents and brokers, although they can be very helpful in advising you with regard to the sale of a business or real estate, are not subject to these same stringent requirements.

 

     Buying or selling a liquor licensed establishment is a complicated and serious endeavor.  It is fraught with pitfalls and risks.  It should never be taken lightly, and it should never be done cheaply.  As the axiom says:  “You get what you pay for.”  You can do it on the cheap, and pray that nothing goes wrong, or you can do it right, and sleep at night. 

 

     Another matter is worth mentioning.   Never be rushed into signing any legal document.  Whether it be a listing agreement, a letter of intent, or an agreement of sale, you should always seek the advice of a qualified attorney to advise you.  The more pressure you have to sign a document, the more trepidation you should have.  Whenever someone tells you that you don’t need a lawyer, a red flag should go up automatically!

DO I  NEED A LAWYER?

PHILADELPHIA LIQUOR TAXES

 

The City of Philadelphia charges a 10% tax on liquor sales in bars and restaurants.  Due to its budget crisis, the City is cracking down on collecting this tax, and in some cases, is conducting audits of liquor-licensed businesses.  The City is also revoking the business licenses of tax delinquents, which in effect closes you down.  Make sure you have a good accountant who knows the City and State tax system, and pay your taxes on time.  Many of the businesses who fail do so because of City, state or federal tax issues.

 


 

ARE YOU ADEQUATELY INSURED?

 

 

 

 

 

     We live in a highly litigious society.  People today tend to sue every time they are injured, regardless of the circumstances.  Bars, restaurants and other business owners are particular targets for lawsuits.  The number of lawsuits tends to rise in a difficult economy.  I personally have seen the number of “frivolous” lawsuits increase in recent times.  As a result, it is very important to be adequately insured.  

 

     Business owners are often unaware that the insurance that they have is inadequate.  They pay for insurance year after year, and are shocked to find that when they have a claim the insurance company denies coverage for one reason or another.  Below I have outlined some of the available business insurance coverages and how they may be applicable to your particular business:

 

Property Insurance

 

Property insurance covers the building and its contents. It insures against fire and other casualty. There are different forms and types of coverage, such landlord and/or landlord and tenant coverage.  For the business owner, this policy is usually secured as part of a standard business owner's policy, tailored to fit your individual business.  You need to make sure the amount of your coverage is sufficient to cover the value of the building and its contents.  You also need to look into whether you will need glass breakage coverage, signage and landscaping.  You also need to look into coverage for wind, flood, natural disaster, earthquake, wildfire, and other risks that may affect your area.  Almost all policies exclude coverage for nuclear accidents, terrorism, and the like.  Also, make sure your deductible is appropriate. The higher the deductible is, the lower your premiums will be; but be sure that you can afford the deductible in the event of a loss.

 

Of primary concern is whether the policy covers replacement cost or actual cash value.  ACV covers only the depreciated value of the item of property, whereas replacement cost covers the actual cost to replace the item.  Obviously, replacement cost coverage is much more expensive, but it is preferred if you want to replace the lost or damaged items at today’s current cost.  You also want to explore whether the policy covers necessary upgrades caused by new building code compliance.  For example, the City of Philadelphia Building Code is periodically updated, and in the event of a loss you will have to comply with the new Code when re-building.

Liability Insurance

 

Liability insurance is the most expensive type of coverage.  This type of coverage insures you against claims and lawsuits for injuries to patrons and other persons on or about your business.  In Pennsylvania, a patron is called a “business invitee,” and is owed the highest duty of care.  Because you are profiting from that person being in your establishment, you are required to exercise reasonable measures to insure that person’s safety.   A business owner may be held responsible for injuries to patrons due to slip and falls, defects or dangerous conditions on the premises, injuries due to assault and battery, etc.  Insurance for these types of claims is called “General Negligence” or “General Liability” insurance.  Bar owners may also be held liable for injuries occurring on or off the licensed premises if a patron is served while “visibly intoxicated.”  These are sometimes called Dram Shop claims.  Insurance for these types of claims is called “Liquor Liability” insurance.  Liquor Liability insurance is the most expensive type of insurance, but it is a must-have if you sell alcohol to the public.

 

General liability policies usually contain a Liquor Liability Exclusion, which means the policy does not cover Dram Shop claims.  You must have separate Liquor Liability coverage to gain this protection.

 

Make sure the amount of your coverage is appropriate.  Your lease agreement may dictate the minimum amount of coverage you must maintain.  Again, make sure your deductible is appropriate. The higher the deductible is, the lower your premiums will be; but be sure that you can afford the deductible in the event of a loss.

There a number of exclusions contained in liability insurance policies that you must be cognizant of.  The most important exclusions to look out for are:

 

Assault and Battery Exclusion.  This exclusion provides that no coverage will be afforded if the injury to the patron arises from an assault, such as a fight between patrons, or injury which occurs while a patron is being evicted, or a stabbing other intentional injury.  Since most claims against a bar owner involve either intoxication or an assault, you should make every effort to obtain this coverage.

 

Firearms Exclusion.  This exclusion has been appearing in more and more policies lately, and many business owners are unaware of it.  This excludes coverage for any injury that occurs as the result of the discharge of a firearm, whether intentional or accidental.  Given the fact that more and more people these days seem to be settling their differences with a firearm, you should seriously consider this coverage. 

 

Punitive Damages Exclusion.  This excludes coverage for punitive damages that might be awarded against the insured for willful or egregious conduct.   

 

     CAVEAT:  Insurance companies often take the position that no coverage will be afforded to a bar owner in a case where a patron is injured by an assault or a firearm by someone who is intoxicated, even where there is Liquor Liability coverage, if there is an Assault and Battery Exclusion or a Firearms Exclusion contained in the policy.  That is, even though the patron was intoxicated, if the injury resulted from an assault or a firearm, no coverage will be afforded.  Given that most claims against bar owners these days result from an assault or a firearm, the insured must be acutely aware that these exclusions exist, and should make every effort to obtain these coverage endorsements.

 

Employee Theft Coverage

 

This type of coverage insures you in the event that an employee steals from you.  Given the unfortunate reality of employee theft, this coverage should be considered.

 

 Workers Compensation Insurance  

 

This type of coverage is required of most employers by state law.  It requires you to purchase insurance in the event of an injury to an employee.  If an employee is injured while on duty, and you do not have this coverage, not only will you be held liable for his injuries, wage loss and medical bills, but you could be criminally charged for not carrying this insurance.

 

Business Interruption Insurance

 

This insurance covers your loss of business income in the event of a covered casualty, such as a fire.  Given that property damage claims can take months to resolve, you may need this coverage to recoup your business losses while the claim is being adjusted and construction is on-going.

 

 

DENIAL OF COVERAGE, BAD FAITH and DECLARATORY JUDGMENT ACTIONS

 

            An insurance company is required to act in good faith in covering

claims under an insurance policy, and to defend the insured if they are

sued in court.  If the insurance company fails in this duty, they can be

held liable for damages in a lawsuit brought by the insured for

“bad faith.”

 

            Recently we have seen a drastic increase in insurance companies denying claims outright, or attempting to get out of coverage after they initially provide coverage and defense.  There are four (4) options for an insurance carrier once they receive notice of a claim.  These are:

 

             1.  Coverage.  They can cover the claim, and defend against the claim if a lawsuit is filed against the insured. 

 

             2.  Non-coverage.  They can deny the claim for one reason or another.  Reasons for non-coverage include raising one or more exclusions contained in the policy, alleging that the policy expired or is somehow void or not in effect (for example non-payment of premium), or alleging that the insured misrepresented some fact in the application process thereby voiding the policy. 

 

             3.  Coverage under a Reservation of Rights.  This is where the insurance company provides coverage, but sends a letter to the insured that it is reserving its rights to deny coverage later if it is determined that a policy exclusion or some other reason for non-coverage applies. 

 

              4.   Declaratory Judgment Action.  In this case the insurance company initially covers the claim and defends the insured, but then files a lawsuit  asking the court to “declare” that the policy is void or does not  provide coverage for some reason.

 

            If the insurance company chooses options 2, 3 or 4 you need to contact an attorney immediately to protect your interests.  We have over a quarter century of experience in defending lawsuits and going against some of the largest insurance companies in the Country.

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