The hospitality industry in Alberta is on the ropes, as many restaurants and bars in the province are facing liquor liability insurance rate spikes.
According to Brennen Wowk, owner of Bo’s Bar and Stage and vice president of the Alberta Hospitality Association, liquor liability insurance rates were already on the rise prior to the pandemic, but prices have only continued to climb since.
Wowk told CBC News that last year, insurance for his bar jumped 150%, and that it climbed by another 30% this year.
“I went through insurance carriers that were quoting me over six figures for a year’s worth of coverage,” the bar owner and association vice president said, noting that his establishment nearly ran the risk of not securing insurance before the pandemic.
“I had to go pretty much throughout Canada to try to find [an insurer] that would cover me.”
Wowk noted that establishments that are focused on serving liquor, such as bars, live music venues and nightclubs, are often seeing insurance quotes between $50,000 and $100,000 a year for liability insurance. This, he said, hurts live music venues the most, since they have spent the majority of the pandemic completely shut down and without any profit to speak of.
“These companies are still having to fork out incredible amounts of money just to get their insurance,” he added.
Read more: What is liquor liability insurance?
Restaurants Canada western region vice president Mark von Schellwitz also warned that restaurants and bars not only have to address the rising insurance premium issue, but other business expenses across the board that have surged during the COVID-19 pandemic.
“And of course, that’s really difficult with the pandemic restrictions still in place to even generate pre-COVID revenue, never-mind the extra revenue that they’re going to have to generate to pay for these increased costs,” von Schellwitz told CBC News.
While late night venues eventually reopened, they were prohibited from selling liquor after 10pm, which only put more financial strain on their business, explained von Schellwitz.
“How likely is it with the extra debt that these surviving businesses are actually going to be able to pay their premiums and survive?” he asked, adding that about 80% of Restaurants Canada members are either currently losing money or just barely breaking even.
The Insurance Bureau of Canada (IBC) said that the spike in restaurant and bar rates is partly due to the rise in lawsuits and higher payouts. It added that commercial liability claims increased by 108% between 2013 and 2020.
Aaron Sutherland, IBC Pacific vice president, added that the bureau had observed a trend wherein when someone is injured or charged for driving while intoxicated, they will make a claim against the person or establishment that served them alcohol.
“When someone becomes intoxicated at their business, they’re being held liable for that and for any injuries — or at least a portion of any injuries — that intoxicated individual then gets into,” said Sutherland.
CBC News reported that liability claims in Alberta totalled $608 million in 2019, $537 million in 2018, and $337 million in 2017.
