Misclassification Could be Costing You Thousands on Insurance

Rising insurance costs are putting added pressure on restaurants and bars already squeezed by higher food and labor expenses. But for many operators, the problem isn’t just inflation, it’s misclassification.

In a recent article published in Bar and Restaurant News, Shawn Holland of CIC Services discussed how Traditional insurance carriers often group establishments into broad, oversimplified categories such as “sports bar” or “full-service restaurant.” While convenient for underwriters, these labels rarely reflect the actual risk profile of a business. A quiet wine bar with limited hours and seated service can end up paying the same premiums as a late-night nightclub despite vastly different risk exposures. As labor costs have climbed 31% and food costs nearly 29% in the past four years, inflated insurance premiums can make the difference between sustainable profit and financial strain.

When classifications miss the mark, operators lose financial flexibility. Inflated premiums divert funds from staffing, menu innovation, and growth. Without transparency in underwriting, many business owners are left guessing why their premiums increased and how to fix it.

By documenting operations, maintaining safety records, and communicating proactively with brokers, restaurant owners can help ensure their coverage reflects actual risk. Misclassification may be common, but it’s not inevitable. Operators who take a proactive approach by sharing detailed operational data and adopting preventive risk management practices can reduce premiums and strengthen protection.

Read the full article here to discover how CIC Services is transforming insurance for restaurants and bars through precision underwriting and collaboration. If your business is feeling the strain of misclassified risks and rising premiums, now is the time to explore a smarter, more equitable approach to managing risk.