Insurance Company Inspections

After binding your coverage, the insurance carrier(s) providing coverage have the right to inspect your premises and examine your financial records. Many companies don't, but many do, mainly so that they know the risk that they were presented on the application accurately reflects the actual risk they are now covering. Here are some guidelines for handling company inspectors:

--A company inspector will almost always call you to set a date and time to meet with you. If, after a few attempts at setting a meeting, the inspector cannot make an appointment your company will issue a cancellation notice for 30 days.

--We strongly advise that you personally meet with the inspector. They will probably ask some questions that your staff will not be able to answer for them, or your staff will offer responses that are misinterpreted by the inspector. Allow them full access to your premises and don't leave mid-inspection or try to run them off before they've finished. Doing so will almost guarantee you of getting an unfavorable inspection. Be as helpful and courteous as possible.

--Have your premises as clean as possible. Housekeeping is a big concern with inspectors and a disheveled bar, kitchen or dining room can taint the overall impression of your establishment in the inspector's mind. If you can, set the inspection for one of your less busy times of day.

--Have your sales tax return (ST-1) forms from the last 12 months available. The inspector will want to double-check the total sales and breakdown that your agent reported on the application.

--They will probably double check your liquor license (if you have liquor liability) to ensure that the business they have listed on the policy matches the business that is licensed for operation.

--They may also check for property tax filings (if you have property coverage) to make sure the property policy protects the person or entity that actually owns the building.
 

Liquor Control Commission Inspections

Liquor commissioners have the right to show up at your business whenever they want and are allowed access to whatever they want according to most state laws. Failure to comply with them could result in you or your staff being arrested and/or fined. Here are some tips to be prepared for a liquor control inspection.

--Liquor Control personnel will almost always show up unexpectedly. They don't want you to know they're coming, so they just pop in.

--Your liquor license must be framed and hung "in plain view, in a conspicuous place" on the licensed premises.

--In states where dram shop or liquor liability coverage is mandatory (IL & IA, not MO or IN) they will look for proof of liquor insurance. The most common forms being a policy itself or a certificate of insurance.

--You are required to keep liquor receipts for the last 90 days on premises - they will want to see these. Alcohol cannot be purchased via retail, it must be bough wholesale (from a distributor). They'll go through your stock and the receipts looking for evidence of resale of retail goods.

--Illegal gambling has been a subject of a number of stings in many states. They'll search for a record, logbook or advertisement of payouts on gaming machines and the like.

--In Illinois, we've heard from our clients and the folks at the Illinois Licensed Beverage Association that Liquor Control personnel have also been looking for missing "required postings" during their inspections. Minimum fines are $500. Here's a link to the Illinois Department of Labor's webpage on the various posters you may need to have (depending on business type and number of employees) and where to get them.  Here's the link to Indiana's webpage.  And here's Missouri's required postings.