What Liquor Liability Insurance Is All About:
Often times, when a person thinks alcohol, they think celebration. We drink on birthdays, holidays and at college graduation parties, but the truth is if your business serves alcohol you could be at risk.
Trouble comes when patrons get into a fight on your property, drive drunk and cause an accident, slip and fall, among other things.
A single claim could ruin the business you’ve worked hard to build.
So, how do you protect your company from the accidents that come with serving beer, wine or spirits? Enter Liquor Liability Insurance.
Bottom line: You’re not in control of your patrons, but you can take steps to protect yourself. In other words, getting the right insurance policy means you can relax while the party rages on.
Read on to understand if this insurance type is right for your company.
What Is Liquor Liability Insurance?
At the highest level, this insurance protects a company that manufactures, sells or serves alcohol, against claims that occur when a patron drinks too much and injures himself or someone else.
Unfortunately, this means that if you sell alcohol or liquor on site, then you could be held liable for your patron’s actions and wrongdoings. The issue is, that alcohol can impair the judgement of the consumer and if your business is serving it, it’s important that you are prepared for what may happen next. Restaurants, clubs, taverns and bars that serve alcohol in any form, including wine, beer and spirits could end up footing the bill for damages done by an inebriated patron.
While it may seem unfair, your establishment could be sued if someone drinks at your location and then goes on to cause an accident, damage property or cause injury to themselves or others. Liquor Liability Insurance protects your business in the event of an incident; your standard insurance policy likely will not cover an alcohol-related incident.
“Dram Shop” laws (a law that makes a business liable if they serve a patron who is clearly intoxicated) exist in forty-three states, and make it even easier for you to be sued after one of your overserved patrons causes harm to someone else. There are several ways that your business could be harmed if you serve alcohol but do not have a Liquor Liability Insurance policy in place. If a customer leaves your bar or restaurant and then causes an accident while driving his own or someone else’s car, you could be sued for damages, even though you were not directly involved in the accident. You could also have trouble if patrons get into a physical altercation on your property or at your event after drinking on site; you could be sued by one or both parties if injuries have occurred.
This insurance type protects your business from these types of claims and covers you even if you are sued by your inebriated customers or their victims. If you are sued and do not have liquor liability coverage, you could end up responsible for criminal and civil damages – hefty court costs and legal fees, too. A single claim could damage your reputation and ruin the business you’ve worked so hard to build. Having coverage means protecting yourself, your valuable assets, and your employees and can save you both time and money.
Do I Need Liquor Liability Insurance?
This insurance comes in handy if your business:
- Is mandated by your state to carry this form of coverage
- Is required by your bank or financial institution to carry this form of coverage
- Serves alcohol at your hotel, B&B, café, restaurant or bar
- Serves alcohol at your business event or party
- Offers catering services that include alcoholic beverages
- Owns a facility that can be rented out for parties, events or weddings
- Runs fundraisers or special events that include alcoholic beverages on site or a bar (paid or open)
Still not sure what you need?
CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.
What Does Liquor Liability Cover?
At a High Level...
This insurance covers you in the event of an accident, altercation or other event involving someone who was served alcohol at your establishment. While insurance will not prevent someone from filing a lawsuit against you, it will protect your assets if damages are awarded.
Getting Into the Details…
Every policy varies, but learning more about how this coverage works and what is covered (and what isn’t) can help you protect your business. It is important to understand both what you need from insurance and what any policy you are considering actually offers. A careful review of the policy details can help you know what to expect and what events you'll be covered for.
|Type of Claim||Description|
|Drunk Driving||If a patron got drunk at your establishment and then got behind the wheel of a car, you’re at risk in the 43 states that have Dram Shop laws|
|Fighting||If a patron starts an alcohol-fueled fight and someone gets injured and sues|
|Sexual Assault and Sexual Harrassment||If a drunk patron sexually harasses or attacks another patron at your establishment or event|
|Slips, Falls and Personal Injuries||If an inebriated patron injures themselves inside your establishment|
You’ll Know It’s the Right Policy If It Covers:
- Assault and Battery (which sometimes occurs when a patron is being escorted from the premises)
- Property damage caused by the drunk individual
- Personal injuries caused by the drunk individual
- Your employees, who may drink on the job (even if they’re not supposed to)
- Any litigation fees and court fees related to defending your establishment from a lawsuit
What Does Liquor Liability Insurance Not Cover?
This type of insurance is a must for many reasons – it may even be required by your state or locale - but it doesn’t cover everything that could happen on your premises. Liquor Liability Insurance generally does not cover:
- Patrons who are underaged and drinking
- Offenses outside of property damage and bodily harm (slander, libel, etc. are not covered)
- Damages to your own property
What Are the “Limits” on a Liquor Liability Policy?
The limits of your policy will vary based on your preferences and any legal requirements in your state. Every business is unique, so the amount of coverage you choose will depend on your personal comfort levels with risk, your annual sales and a variety of other factors.
While this type of insurance can protect you from many disasters with your alcohol-consuming patrons and their potential victims, it is not the only insurance you’ll need to ensure that you are covered. In addition to helping you find the best policy, we can help you find what your company may be missing.
How Much Does Liquor Liability Insurance Cost?
The cost of a this policy will depend on your business size, the amount of protection you want and any state required limits you’ll need to meet. The best way to to get a true idea of cost is to get a quote specifically for your business and to review it carefully to make sure all of your concerns are truly covered.