October 2008
by Charles Y. Hoff, Esq., Taylor Busch, Slipakoff & Duma, and David Mathews, CPCU, Pritchard & Jerden, Inc.
Restaurants hire contractors for various reasons including maintenance, cleaning, landscaping and entertainment. Obtaining certificates of insurance from contractors is critical in protecting your assets.
A local restaurant had a fire start in the ductwork of their kitchen. The fire caused $15,000 worth of damage and closed the restaurant for two weeks for cleaning and replacement of damaged property. Upon investigation, it was determined that the oven hood cleaning company did not properly clean the hood and the built-up grease caught fire, causing the damage. Because the restaurant hired an insured contractor (and received a valid certificate of insurance), the restaurant was reimbursed by the subcontractor’s insurance company.
Another restaurant wasn’t so fortunate. They hired a jazz band to entertain its guests on the weekends. The restaurant did not ask the band for a certificate of insurance and assumed they had insurance coverage. One night, the lead singer stepped off the stage during a break and tripped over an instrument stand, which caused the stand to fall onto a patron who was sitting at a nearby table. The stand fell on the patron’s head, and he blacked out and cut his head. During the investigation, it was determined that the band had no insurance coverage. The restaurant’s insurance company is paying the claim with minimal chance of recovery from the band.
Any time a contractor is hired, a certificate of insurance should be required and include evidence of workers’ compensation, general liability, auto liability and other insurance based on the type of work the contractor will be performing. Furthermore, work with your attorney to draft a contract between yourself and the subcontractor for additional protection.
Keep in mind, requiring certificates of insurance from all contractors and having appropriate contract language in place will protect your restaurant, its assets and your insurance program from potential loss.
Taylor, Busch, Slipakoff & Duma LLP (www.taylor-busch.com) is a full-service business law firm in Atlanta. Charles Hoff serves as the GRA general counsel and manages the Taylor Busch hospitality team. Charles can be reached at (678) 336-7135 or choff@taylor-busch.com. Pritchard & Jerden is a risk management and insurance services company in Atlanta and a member of the GRA. Dave Mathews can be reached at (404) 949-1075. â–
