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What Types of Insurance Does a Hookah Lounge Need?

What Types of Insurance Does a Hookah Lounge Need?

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What Types of Insurance Does a Hookah Lounge Need?

Hookah Lounge Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Hookah Lounge Need?

Hookah lounges are social establishments that regularly draw individuals, couples, and groups into the business. A hookah lounge provides a place to gather, socialize, enjoy hookah, and in some lounges, eat or drink.

On some level, most businesses have risk exposures that could result in lawsuits. However, a well-prepared company will have insurance to cover its risks. Likewise, hookah lounges need insurance to cover their risks and protect them from financial hardships and lawsuits.

Related: Guide to starting a hookah lounge

What Are Some Risks for a Hookah Lounge?

Hookah lounges serve many customers and, in some cases, provide additional services, like food and drink. Patrons come on-site to enjoy the lounge’s amenities, which inevitably introduces various risks. Some examples of the lounge’s risks include the following:

  • Selling tobacco or liquor to minors
  • Customer injuries
  • Employee injuries
  • Fire damage

Selling Tobacco or Liquor to Minors

Hookah lounges have considerable risk when selling tobacco or liquor products to minors. This is because the legal ages for tobacco and alcohol sales are different, and lounges serving both products will have a substantial responsibility to follow all the relevant laws and regulations.

If a minor is provided with tobacco or liquor by the hookah lounge, the lounge may be named a responsible party in ensuing litigation. Additionally, selling faulty products that result in illness, to people of any age, may lead to a lawsuit or insurance claim.

Customer Injuries

Hookah lounges operate by having customers on-site. Often customers will be on-site for extended periods. The lounge may also experience crowds during peak times and for special events. Because of this, the lounge will have an increased risk of customer injuries—the most common claims are injuries from slips, trips, and falls.

In addition to slip or fall injuries, customers may also be injured by broken hookah glass. Also, in poorly ventilated lounges, carbon monoxide levels may reach unhealthy levels, causing illness or respiratory issues.

Employee Injuries

Like customers, employees may also be injured from slips, falls, and cuts from broken glass. Employees are also exposed to the smoke-filled lounge, but often for more extended and more consistent periods, so respiratory irritation is likely more significant for employees.

Employees also have other regular workplace hazards, such as injury or muscle strain from lifting heavy objects and performing repetitive motions. In addition, employees working in kitchen areas have an increased risk of injuries from burns and cuts.

Fire Damage

Lounges have a substantial fire risk because there will be multiple ignition sources inside the lounge. For example, patrons and employees frequently use lighters inside the lounge, which can become a fire hazard when a lighter is misused. The lounge may also sell other products that are fire risks, like cigarettes, cigars, and lighters.

Other fire risks include ignition sources in kitchen areas from grills, burners, greasy exhaust fans, and malfunctioning equipment. Unfortunately, a fire not only causes significant damage to the building and equipment, but it can also render the business inoperable during repairs, meaning the lounge loses patrons and valuable income.

Hiscox.com

What Types of Insurance Policies Should a Hookah Lounge Consider?

Although various risks expose the lounge to losses and liabilities, insurance is designed to protect businesses from such hazards. So, hookah lounges should consider the following insurance policies:

  • General Liability Insurance – Products and Completed Operations
  • General Liability Insurance – Premises and Operations
  • Liquor Liability Insurance
  • Workers’ Compensation Insurance
  • Commercial Property Insurance

General Liability Insurance – Products and Completed Operations

General liability offers coverage for bodily injury and property damage claims resulting from the sale or consumption of the business’s products. For example, this liability policy can cover liabilities resulting from the sale of tobacco and liquor products to minors. A liquor liability rider (aka an added line of coverage) may need to be purchased to bolster the general liability policy to have adequate coverage.

General liability for products and completed operations also covers illness or injury resulting from the business’s product sales. Usually, a general liability policy will pay for the following claim expenses:

  • Medical payments
  • Property damage repairs
  • Legal defense costs
  • Settlements

General Liability Insurance – Premises and Operations

General liability for premises and operations differs slightly from product liability. This line of coverage insures injuries or property damages occurring on the lounge’s premises or due to its operations. For example, customer injuries from slips and falls would be covered under a premises and operations liability policy.

This policy covers medical expenses, property damage repairs, legal defense costs, and settlements—similar to product liability coverage. Often, both liability policies are provided by the same insurance company in what’s called a business owner’s policy.

Liquor Liability Insurance

If your lounge will also sell alcohol, liquor liability coverage will also need to be added to the insurance policy. Businesses that serve alcoholic beverages can face potential lawsuits for the actions of their patrons while in the lounge or even in the parking lot. 

Liquor liability insurance, also known as dram shop insurance, is a specific type of insurance that covers property damage or physical injuries caused by patrons who have been overserved or injured due to a fight.  It’s important that your policy includes assault-and-battery coverage, as your lounge may be held liable, as it will be argued that patrons weren’t kept safe. 

Workers’ Compensation Insurance

A workers’ compensation policy covers an employee’s expenses following an injury or illness at work. For example, an employee who slips and injures themselves on a slippery floor may incur medical expenses and be unable to work for a time. However, a workers’ compensation policy helps cover the employee’s medical bills and lost income. This policy also covers ongoing rehabilitation care, disability income, and funeral expenses.

Many states require businesses with employees to carry workers’ compensation insurance. Although regardless of whether it is required, hookah lounges should consider this policy because it covers an employee’s expenses and protects the business from potential lawsuits.

Commercial Property Insurance

Property insurance is a core policy for hookah lounges because it protects business-owned structures and property (i.e., furniture, equipment, and inventory) from a variety of hazards. For example, a property insurance policy typically covers the lounge’s property for the following hazards:

  • Fire
  • Wind
  • Hail
  • Theft
  • Vandalism
  • Water from leaking pipes

A hookah lounge’s building, furniture, inventory, and equipment can easily be one of the largest business assets. So, it is essential to have ample coverage to protect the structure and property, shielding the business from economic loss following an accident.

Property insurance covers the structure up to an agreed policy limit, determined by the structure’s value and condition. Similarly, business property is covered up to an agreed limit for its replacement value or actual cash value. Normally, property insurance policies include a deductible, and sometimes there are different deductibles for specific hazards. For instance, wind and hail hazards usually have a separate, higher deductible.

How Much Does Hookah Lounge Insurance Cost?

Insurance costs vary depending on individual lounges’ coverage limits and exposure risks. For example, a hookah lounge renting space needs less property coverage than a lounge that owns space. Additionally, larger buildings, more employees, and higher customer traffic drive up the lounge’s exposure risk, requiring a higher limit of coverage (which generally brings up the overall cost).

Some ways to reduce insurance costs include bundling policies into a package or insuring with one company. Many insurance companies offer discounts for doing so. Additionally, opting for higher deductibles helps reduce insurance premiums.

When insurance companies quote a policy, they consider several factors to help determine proper coverage amounts and risk exposures. For example, insurance companies may consider the following elements:
– The size, condition, and value of business-owned structures and property
– The number of employees on the payroll
– Employee training and safety procedures
– Fire suppression and alarm systems
– Any past or current lawsuits or insurance claims

The best way to determine how much insurance will cost for your hookah lounge is to contact multiple insurance companies for a quote. This way, you can compare coverage amounts, discounts, and pricing, allowing you to choose policies that are the best fit for your lounge’s needs.

What Types of Insurance Does a Hookah Lounge Need?

What Types of Insurance Does a Hookah Lounge Need?

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