Insurance companies have to charge you somehow. The cleanest and most logical way to charge you is based off of your anticipated gross revenue over a yearly period to coincide with your policy period. An axe throwing venue bringing in a million dollars in sales over a year period has a much higher exposure than an axe throwing venue with a hundred thousand dollars in sales and as such they should pay more.
To formulate your premium, an insurance company will take your anticipated revenue broken down by certain streams and multiply each by a specific rate. The streams are as follows:
Each stream above will have a specific rate. The anticipated revenue times the rate equals the premium you have to pay. The rates for all of the different buckets above will all be different. For example, the gift shop revenue rate is a fraction of the axe throwing revenue rate. The chances that someone gets hurt and sues you from buying a t-shirt are pretty low as compared to someone getting hurt from an axe.
Rate calculations are proprietary information to an insurance company. The exact calculation is unknown, but the best explanation I can give is they have analysts who gather data from similar industries in similar areas and look at what lawsuits go for. A lawsuit in a major metropolitan area such as New York City is going to be substantially more expensive than a state like Indiana.
General Liability is auditable. Please refer to the audit section for further information.
All Workers Compensation premium (cost) is a function of your payroll as it covers injuries to your employees on the job. Workers Compensation is governed by National Council on Compensation Insurance (NCCI) in 36 states. They set the rates, class codes and other rating factors. The remaining states are on their own ratings systems, but the overall premise on how premium is derived is still the same. Each job duty has a specific rate. With most axe throwing operations, there are only two class codes (clerical and axe throwing coaches). To calculate premium, each class codes’ payroll is multiplied by a set rate. Workers Compensation is auditable. Please refer to the audit section for further information.
As noted under the section How is the Cost (Premium) Derived, the policy premium is based off of a projection for your upcoming policy period year. For example if your policy starts on April 1, 2018 and expires on April 1, 2019, you need to project what your revenue will be for each of those revenue streams and the insurance company will charge you the correlated premium. At the end of the year, the insurance company will audit you by asking for financial information to verify the numbers. If you do better than expected, they will charge you the difference (extra revenue times by the appropriate rate). However, if you go under, they will not give you money back. Why is that? The higher your projected revenue is, the lower of a rate they will give you. As such, you can cheat the system by purposely overstating your revenue projection. For example, you can state you will be bringing in one million dollars in revenue over a year period (when in fact you know you will only be bringing in one hundred thousand), obtaining a lower rate, and then getting money back at audit. With all of that said, I do not see major rate fluctuations unless the revenue projections are extremely material. In estimating your revenue, just do you best and after the first year you will have a much clearer picture or projection going forward.
All workers compensation policies are auditable. Your insurance company will request financial information to verify the yearly gross wages actually paid to employees. If your payroll is higher than your projections, they will charge you the difference. However, unlike general liability, if your payroll is smaller than anticipated, they will give you money back as long as it does not cross a minimum policy premium.
In short, most likely not. It is extremely important to clarify with your insurance company or read your policy for a specific exclusion limiting coverage. Please do not hesitate to reach out to me if you are unsure.
There are only a few insurance companies that will insure mobile operations. I am the leading expert in the field and in my experience, places that have mobile operations fall into one of four buckets:
Mobile operations can be insured, but there are severe limitations to it currently in the market place. This is an evolving market and this is subject to change.
You can obtain coverage for liquor liability (selling alcohol) and relatively inexpensive in my opinion as well as coverage for BYOB. It is extremely important to ensure your general liability policy does not have an exclusion for BYOB as many of them do. Please do not hesitate to reach out for free consultation.