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New outdoor dining structures pose new risks for restaurants

Restaurants are doing anything they can to survive the pandemic, but temporary structures could present a new peril.


By Bonnie Steen and Michelle Picklesimer

Restaurant owners need to ensure these projects comply with local regulations and will be covered by their commercial property insurance and commercial general liability (CGL) insurance. (Photo by Getty Images)

A brewery in Michigan recently opened several “craft beer shanties” where customers can be served outside while indoor dining is temporarily restricted statewide.

The owner of Brass Ring Brewing in Alger Heights reportedly modeled the enclosed wooden structures after ice fishing shanties and said they can be reserved in 90-minute blocks by groups of four, as long as the guests are from the same household.


The restaurant is one of many establishments in the U.S. and Canada building temporary outdoor dining structures in an effort to keep business flowing amid surging COVID-19 cases, new restrictions on indoor dining, and cooling temperatures. The options range from pole tents and igloo domes to more elaborate “streeteries” made from plywood and complete with lighting and heating.


The hospitality industry is really struggling


Restaurants are doing anything they can to try to survive the pandemic right now, to just make enough money to stay in business. Temporary structures could present a different kind of peril for these struggling businesses, however.


Restaurant owners need to ensure these projects comply with local regulations and will be covered by their commercial property insurance and commercial general liability (CGL) insurance. They will also want to keep coronavirus precautions in mind, especially as some experts question the benefit of moving customers to closed-off “outdoor” spaces that could nearly be considered “indoors.”


“Building a structure for guests to dine outside may defeat the purpose of being outside,” said Patricia Sheridan, CIP, director, commercial insurance, at Burns & Wilcox in Toronto.


“Before committing to the extra costs to build a structure, they need to make sure it is within government guidelines and advise their insurance company to confirm coverage.”

Structure design should adhere to fire codes, COVID-19 restrictions


In New York City, construction company DB Partners is in the process of building dozens of “streeteries” for restaurants after pivoting from office construction earlier this year. According to the owner, building an outdoor dining structure takes about three days and the cost ranges from $5,000 to $25,000.


To meet city regulations, structures built on the street get electric heating while sidewalk structures are heated by natural gas or propane. How these structures are heated is a serious consideration for restaurants and the contractors who build them.

Basic code compliance is one of the biggest exposures. Are the materials flame-retardant? Will the structure meet fire codes and what kind of heating are they using? What is the ventilation?


Contractors who get involved in this type of work should review their architects, engineers and contractors professional liability insurance and errors & omissions (E&O) Insurance to check for any exclusions on temporary structures.


Even if they were working on restaurants exclusively and then they are moving to temporary structures, it is a different exposure. Beyond standard code compliance, restaurants and builders need to keep up with regional guidelines related to COVID-19 that may dictate acceptable ventilation and other project components.


In Windsor, Ontario, Vito’s Pizzeria recently had its three plastic “dining domes” shut down after authorities said they did not comply with outdoor dining rules. The Windsor-Essex County Health Unit reportedly cited COVID-related guidelines that require covered outdoor dining areas to have at least two full sides open to the outdoors, and also noted concerns with fire safety codes and local bylaws.


“Most of these restaurants are already financially strained, so you do not want to do something like this that is not going to be allowed and then have to have it taken down, which is again an additional cost,” Sheridan said.

Once a business owner confirms that its outdoor dining plans meet government guidelines, the next step is confirming coverage for the structure under the restaurant’s commercial property insurance and CGL Insurance.


“The underwriters can then take it into consideration to see if it complies with their guidelines and what risk mitigation strategies might be recommended,” Sheridan said. “It is always in the insured’s best interest to let the insurance company know about any type of change or addition.”


Depending on the cost of the structure, one immediate impact may be needing to update the policy’s property value and business contents limit. If the outdoor structure is attached to the building and the cost is $50,000, then the price of the building just went up and they may have to adjust the amount of insurance they carry on the building.

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Bonnie Steen is VP, associate managing director underwriter, commercial insurance at Burns & Wilcox, and can be reached at bbsteen@burns-wilcox.com. Michelle Picklesimer, underwriting director at Burns & Wilcox, can be reached at MPicklesimer@Burns-Wilcox.com.

A version of the article was originally published by Burns & Wilcox.

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