12 classifications describe restaurant exposures

By Linda D. Ferguson, CPCU

Drive thru 1 Eating out is the great American pastime. Recent studies have revealed that we eat more of our meals out than at home. Why are we eating out so much? All of us have different reasons for different occasions.

Sometimes we desire a dining experience where we can savor an excellently prepared meal in elegant ambiance. There is a lot of appeal to personalized service after a hectic life of serving others. On the other end of the spectrum are meals that are purchased out of necessity as we rush from one place to the next. Often the only memory of these meals is the ketchup stains on the car seats and the smell of onion wafting throughout the car. Another reason we eat out is to accomplish two tasks at one time. We need to eat and we need to meet clients, so restaurants can be a pleasant way to satisfy both needs at the same time.

Since we have different reasons for eating out, industrious entrepreneurs have developed need-specific restaurants to capture a specific customer. No one restaurant can meet all of the needs but with so many people eating out, restaurants can afford to specialize.

ISO recognizes the different types of restaurants, too, and the very different exposures they present. Twelve different classifications specifically describe restaurants, and additional miscellaneous classes describe other eating and drinking places. This month we will begin looking at the many classifications that are available. The first group will be the ones where food is a necessity and the dining experience is quick and then over. These are the "eat and run" restaurants. The next group, to be described more in next month's column, is the one chosen more for atmosphere and the dining experience.

The most basic of all "eat and run" restaurants is not classified as a restaurant at all but is actually called a concessionaire. This classification is code 11168, and the footnote states that all food and beverages must be sold through hawking or peddling. Normally the food is sold at sporting events, parks, and exhibitions but could also include your hot dog vendor and others who willingly sell you food on the run so that you don't have to slow down the pace of the day. The drink can be alcoholic since there is no restriction in the classification.

The next two classifications are not what they may first appear:

* Restaurants - operated by concessionaires - Not-For-Profit only - 16820

* Restaurants - operated by concessionaires - Other than Not-For-Profit - 16819

The reference here to concessionaire is more of an outside contractor who contracts with a business to provide food service to the place of business. The footnotes explain exactly how these classes are to be used:

1) The restaurant must be located in an office building, industrial building or similar place of business and can have any type of service including cafeteria or smorgasbord.

2) The restaurant must be for the use of employees and their guests only.

3) A concessionaire must operate the restaurant.

Many businesses have chosen to use concessionaires to provide the food service to their employees. These codes recognize that and provide the pricing for it. It is important to note that there are two codes since a nonprofit organization may provide the food service.

If the company chooses to use its own employees to provide food service, the appropriate restaurant classes would be used instead of this one.

The next type of restaurant is a refreshment stand or drive-in:

* Restaurants - refreshment stands or drive-ins with tray service - Not-For-Profit only - 16822

* Restaurants - refreshment stands or drive-ins with tray service - Other than Not-For-Profit - 16821

Here again the footnotes provide the information needed to appropriately classify:

1) There must be less than 500 square feet of seating or no seating at all.

2) If the risk has no seating but seating is provided in a common area, it remains a refreshment stand.

3) If there are hawkers or peddlers, the risk is a concessionaire, not a refreshment stand.

The first footnote describes a restaurant where you don't sit down--unless you are in your car. This is the local "dairy bar," or the drive-in restaurant with curbside service. It even describes the drive-through-only restaurant.

The second footnote describes a restaurant located in a food court in a mall.

The third footnote removes the hot dog street vendors from this classification and moves them to the appropriate concessionaires classification.

The risks described can be either not-for-profit or for-profit.

The next group of restaurants is the largest category since all fast food restaurants and cafeterias are included. These restaurants do not provide standard waitress service but, instead, have the customer place the order without the assistance of a waiter or waitress.

Restaurants - self-service or self-ordering - including cafeterias and smorgasbords - Not-For-Profit only - 16824

Restaurants - self-service or self-ordering - including cafeterias and smorgasbords - Other than Not-For-Profit - 16823

These classifications do not have any footnotes applicable to the general liability class, so the reader must define the classification based on the language in the classification itself. Self-service would mean that customers must serve themselves without any employee assistance. Self-ordering would mean that customers would place an order to an employee at a counter rather than to someone coming to the table. There is no restriction on size and no restriction of foods or drinks served. It is important to note that there is also no restriction to waitress/waiter delivering food to the table.

These are the more common restaurants that we see as we drive around town with our family. Restaurants where we are treated like royalty and pay for the service will be covered in next month's column. *

The author

Linda D. Ferguson, CPCU, has 30 years of underwriting experience with national commercial lines carriers. She now operates a consulting business, Pleasant Street Consulting Company, in West Union, Ohio.