What types of insurance do I need to open a bar/grill?
Question Details: We are planning to buy a bar/grill which has been closed for almost a year. We will be purchasing the building and the half acre it is on. We will be paying with cash. The previous owner still has a couple of pending lawsuits from when she owned the bar and a couple of people got hurt. We were told that if we pay cash that is the only way those lawsuits will not follow the building or make our insurance outrageous or almost impossible to get. Is this true? Also, what types of insurance do we need and what other legal processes do we need to be aware of. Do we need insurance on the building and separate for the business itself? Is there specific insurance for bars or bars/restaurants. Are there certain things that will make our insurance more affordable. Such as people with certain certificates or training. Do we need to have an attorney on retainer at all times? Is it best to have one locally or is there an online place to do it for cheaper and have them take care of everything and make sure we have everything needed to cover our butts in any situation. Are there any other questions that I haven't thought of that I need to be aware of?
How you pay (cash vs. mortgage) has NO bearing on whether the lawsuits will "follow the building" or impact your insurance: payment form is always irrelevant to issues like this. Whomever told you that is misinformed him/herself and/or is deliberately misinforming you.
Whether the lawsuits will "follow the building" depends on too many different issues for us to offer an opinion on, such as:
1) Are any of the suits relating to title of the building?
2) Are your buying an LLC or corporation in addition to the building, etc. and, if so, are suits against the LLC or corporation?
3) Are you purchasing for less than fair market value, so that the sale to you could be seen as a way to defraud creditors, which in turn allow recourse to the assets (the building) you. bought.
4) Has any "lis pendens" (a notice of litigation possibly affecting title) already been filed against the building?
5) Are any of the suits by contractors for work done on the building, who could put a lien on it?
6) Any suits by lenders who have a security interest in the building (like for unpaid contruction loans or mortgages) who could foreclose?
You need to retain a local attorney, one you can consult with in person, about this situation in detail to understand your liabilities, risks, and options.
As for insurance: speaking as someone who owned a small publishing business in addition to being an attorney, the best way to understand your insurance needs and the impact of litigation on insurance costs is to consult with a reputable local insurnance agent who handles insurance for restaurants or bars. If you know any restaurant or bar owners whom you trust, ask them for a recommendation to their insurance.