August 14, 2022

You’re the Boss: Things to Know About Insurance

Start-Up Chronicle

The question I now hear most often is: Do you have insurance? More experienced folks ask: Do you have business-interruption insurance? That is, recoupment of operating expenditures or lost revenues, maybe even payroll during this unplanned hiatus. The answer is that I am not quite sure; nothing about insurance is sure — not the amount or the timing or the results of investigations or who is suing whom. Every claim is contested; every cost is subrogated. You never know how good your insurance is until you try to cash in your chips.

There are three general areas that my insurance should cover: rebuilding that which was damaged, replacing lost inventory and business interruption. It could take one month or six to collect any money. The policy could pay in full or not. If the outcome is infelicitous, lawsuits could follow. The whole mess could get even messier, and I still have much to learn, all of which I would rather not be learning. This is the wisdom the serpent promised.

In the meantime, here are five things I think I know about insurance.

1. Honesty Is Best for the Policy

When in the course of insurance events, you are asked to estimate the value of your property, the contents therein, and the projected revenue, be honest. Not too high, not too low. Walk the middle path. Positive projections will cost you more each month in premiums, but negativism will catch up with you when calamity strikes. For $1,000 a month, I carry two insurance policies: one for the restaurant business and one for the property upon which it sits. I was guessing at some of the numbers when I signed up, for they preceded the actual opening. If you say all the plates are worth a mere hundred bucks, the premium will be lower, but you will collect less when all the plates break in an earthquake; more than likely, if the insurance investigator thinks you low-balled the value, he will deduct that much from the eventual payout. In his eyes, you were cheating the insurance with each premium, so they are entitled to collect that before paying out.

2. Coping With Copious Records

You think you’re compulsive? Find someone more compulsive, and put that person in charge of keeping records. This person will drive you crazy until money is missing or a delivery is questioned or invoices are misplaced. Then the handiwork will restore sanity, for he or she will have kept records of every napkin, every fish head, every inspection, every warranty, every spec sheet, every beer keg, every reservation, every e-mail, every hour logged by every employee. You cannot possess too many records. Or backups of those records. Computers fail. Files disappear. Restaurants burn.

3. Preparation for Reparations

Pretend you are located near a nuclear power plant and a tsunami is brewing off the coast. Your employee manual should outline the responsibilities of every person on site in case of any emergency: escape routes, gathering places, location of fire extinguishers, contacts for the alarm company and police department. Like kids in elementary school, you and your employees should have practice drills. What do you want your servers to say to guests? Who grabs the money? Who saves the records? Insurance companies want to know what preparations were taken before the emergency occurred.

4. Brokers Will Help You Go Broke

When Jeffrey Littman, mild-mannered public adjuster, reads over my policies and says, “I am not an insurance broker, but I wouldn’t have written it this way,” you know you have just lost money. You ought to consult an adjuster before you sign your insurance policy, not after the ruinous incident occurs. Then it’s too late. Adjusters know how these battles are fought and won. They live in the trenches. They are not concerned with selling insurance, they negotiate with insurance companies and collect money. They know which companies pay swiftly and which companies dawdle.

5. Only You Can Prevent Kitchen Fires

A lesson that has been smoldering for two years finally ignited along with the fire: I am responsible for this restaurant. Not the chef, not the town planning board, not the fire marshal, not the carpenters, not Jesus. Me. I am responsible for the freshness of the fish and the currency of the Web site and the selection of affordable wines. Not managers or attorneys or reviewers or some guidebook to a successful restaurant. Me. I am also responsible for the joy of the guests and the safety of the employees and the combustibility of the walls. The buck not only stops here, it started here, it pauses here for succor and it laughs when it flies out the door, or up the chimney or into the coffers of town hall.

As an owner, nothing is outside your purview. Including the interior of the kitchen walls. I have done just enough research since the fire to realize that the wall behind the four ovens and one fryer was insubstantial — it may have been up to code, well constructed, handsome and properly alarmed, but it combusted. To paraphrase George W. Bush, start a fire in my wall once and you burn me; start a fire twice and I burn myself.

On the subject of presidents, Abe Lincoln built his cabin from wood. Has there been no advancement in construction materials since then? You won’t find many structures in Europe being made from wood, or in American metropolises either, but the Hamptons is a world unto itself, quaint in the best and worst ways. We like our barns and clapboard houses and cedar shingles. Bricks and concrete blocks and steel would make more sense in a wall behind a line of appliances that heat up to 450 degrees, but one is bound by what is available, what codes mandate. Local contractors are comfortable with wood, so it remains well stocked and and fairly inexpensive. But the stuff is flammable.

Had I done my homework, I would have found the fire code for Irvine, Calif., is not atypical:

“All new back walls for commercial kitchen cook lines, regardless of construction type, shall be noncombustible construction, i.e. masonry, concrete, steel studs. No wood blocking or other combustible material shall be used within such walls.”

I also would have known more about the fire-coded wall board that was immediately behind the stainless steel wall. After the fire, I read the specs provided by the manufacturer, USG Corporation:

“Firecode C Core 5/8″ Type C Gypsum Panels Specially formulated mineral core provides fire resistance superior to that offered by Firecode Core gypsum panels… Limitations 1. Avoid exposure to sustained temperatures exceeding 125˚F (52 ˚C).”

That’s the very definition of our kitchen: sustained temperatures exceeding 125 degrees. The staff starts cooking at noon and doesn’t stop until near midnight. In the summer, that will be every night. I never should have allowed metal screws that hold up the shelf that holds the pots and pans; they penetrated the wall and reached into the cavity of the wall. And the ovens should not have sat so close to the wall, even if Garland stoves sanctions such proximity.

Here are five changes that we will make when we build the new wall:

1. Double the thickness of the 1/8-inch stainless steel wall.

2. Move the stoves four inches away from that stainless steel wall.

3. Remove the shelf and the screws that penetrate the wall.

4. Replace the wall board with Durock cement board.

5. Replace all wooden studs with steel studs.

Risking the altogether likely possibility of being permanently branded as arrogant and egotistical — What? Too late? Oh. — I have come to the dispiriting conclusion that I now know as much about preventing fires in my own wall as anyone connected with its reconstruction. Why not? It is my sleep being lost and my energy and my money and my staff. Before the flareup, what I knew about the science of fire could not fill an ashtray: it cooked food, it once destroyed San Francisco, it provided warmth for Neolithic man 9,000 years ago, and Icarus’s wings were inflamed because they were built from the wrong materials.

Surprise lesson: Greek mythology can inform construction.

Bruce Buschel owns Southfork Kitchen, a restaurant in Bridgehampton, N.Y.

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