As a restaurant owner, you’ve probably put a lot of thought into what beers to have on tap, what wines to include on your wine list, and what specialty cocktails your bar will serve.
But have you remembered to get liquor liability insurance?
While you can control how much alcohol you serve to a patron (and you should!), you can’t control their behavior once they’ve gone beyond their limit.
Bodily injuries, DUIs, and auto accidents can quickly bring down the business you’ve worked so hard to build. None of these unfortunate situations might have been your fault, but your business might still be held liable for injuries and damage, even if they didn’t occur on your premises.
That’s why liquor liability insurance is a crucial part of any restaurant insurance arsenal, but that doesn’t mean only food service businesses need to be concerned about it.
What Is Liquor Liability Insurance?
Liquor liability insurance coverage protects businesses from some of the risks that may arise as a result of intoxicated customers.
Any business that serves or sells alcoholic beverages—even if that’s just beer and wine—should have liquor liability coverage, but because it doesn’t apply to every business, it’s not included in a Business Owner’s Policy (BOP) or commercial liability policy.
Sometimes referred to as “dram shop” insurance, liquor liability coverage is available in 43 states and premiums vary according to the local laws. States with strict liquor liability laws will have higher premiums; states with more lenient laws will have lower premiums.
Other factors that determine your liquor liability premiums are the percentage of sales that come from alcohol, the type of business you have, and even the average age of your patrons.
Who Needs Liquor Liability Insurance?
If your business sells, serves, or allows alcohol on the premises, you need liquor liability insurance. It doesn’t matter if you only serve beer and wine—Florida’s dram shop laws apply to any alcoholic beverage, and liquor liability claims can arise even from a single glass of wine.
Common businesses that require liquor liability insurance include:
- Restaurants and bars
- Breweries, wineries, and distilleries
- Taverns, nightclubs, and liquor stores
- Grocery stores and convenience stores that sell alcohol
Even businesses that don’t sell alcohol may still need protection. For example, if you host a company holiday party or fundraiser and serve alcohol to guests, you could face liability if someone drinks too much and causes harm. In these cases, host liquor liability coverage may apply.
The bottom line: if alcohol is part of your business—or even a one-time event—you should talk with an independent insurance agent about the right liquor liability coverage for your situation.
Types of Liquor Liability
There are two main types of liquor liability insurance and each of them has a distinct use.
Liquor Liability Insurance
Typical liquor liability insurance is for businesses that sell or serve alcoholic beverages. Restaurants, bars, taverns, nightclubs, grocery stores, liquor stores, breweries, distilleries, and wineries all fall under this category.
These types of businesses are often required by law to carry liquor liability insurance. With alcoholic beverages on the menu (and oftentimes, marketing that encourages them to purchase it), the risk is greater that a guest could become intoxicated and possibly cause damage or injury.
This policy can either be purchased separately or bundled under your general liability insurance policy.
Host Liquor Liability Insurance
Host liquor liability is for businesses that do not sell or serve alcohol, but allow it to be consumed on premises. Examples of this would include a small office allowing beer and wine at an employee picnic or a restaurant that doesn’t serve alcohol but allows customers to bring their own.
In cases like this, coverage might already be included under your general commercial policy, since your liquor liability risk is very low. (You’ll have to check with your independent insurance agent to be sure.)
Another use of host liquor liability would be hosts that are serving alcohol at a one-time event, such as a fundraiser or wedding. If you are serving alcohol to guests at your 21st birthday party or a small wedding reception at a public park, you won’t need to purchase an annual policy. For these cases, some insurance providers offer one- to three-day coverage to cover just the event.
Coverage
Just as with any other insurance policy, different insurance companies offer different levels of coverage, so it’s vital that you carefully examine each policy offering before you purchase it. Don’t assume that all liquor liability policies are the same.
What Should Be Covered
Typical liquor liability insurance covers:
- Assault and Battery – this covers physical injuries caused by intoxicated customers,
- Drunk Driving – this covers damage and injury caused by an intoxicated driver,
- Sexual Assault & Harassment – this covers physical injuries caused by an intoxicated patron committing sexual assault and/or harassment,
- Slips, Falls, & Personal Injury – this protects you in the event an intoxicated patron injures themselves at your establishment,
- Legal Fees – this covers the legal costs of defending yourself in the event you are sued.
It should be noted that liquor liability insurance does not prevent someone from suing you or coming after you for damages, it just protects your assets if they do.
What Isn’t Covered
Knowing what’s not covered on your liquor liability policy is just as important as knowing what is covered. Liquor liability policies typically do not cover:
- Claims relating to underage drinkers,
- Verbal offenses (libel and slander),
- Damage to your property (because this is covered under your general policy), or
- Any claims from a location operating without a liquor license.
What Does Liquor Liability Insurance Cost?
If you’ve started shopping around, you’ve probably noticed there’s no simple answer when it comes to the cost of liquor liability. Premiums can look very different from one business to the next, and that’s because insurers weigh several factors before giving you a quote.
Here are some of the biggest things that can impact what you’ll pay:
- State laws – In states with strict dram shop rules, the cost of liquor liability coverage is usually higher.
- Type of business – A nightclub will almost always pay more than a family restaurant that serves wine with dinner.
- Alcohol sales percentage – If most of your revenue comes from alcohol, expect higher rates.
- Customer demographics – Your patrons’ average age and drinking habits can influence pricing.
- Claims history – Past incidents or lawsuits can raise your premium.
At the end of the day, every business is unique. The best way to find out the true cost of liquor liability insurance for your situation is to compare quotes and talk with an independent agent who understands both your industry and your state’s regulations.
Insurance That Works as Hard as You Do
You’ve worked too hard on getting your restaurant, bar, or brewery off the ground and intoxicated patrons are unpredictable. Don’t leave the future of your business up to chance.
Purchase a comprehensive liquor liability insurance policy that fits your business’ needs.
Each business is unique. What does that mean? It means that Harry Levine Insurance is going to tailor a policy that is right for you. Getting the right kind of liquor liability coverage is a simple step that makes a world of difference. Call today to discuss your options.
Comment (1)
Holbrook Ireene
February 15, 2021Hi, This blog was really helpful in understanding about liquor liability. It helped me get some useful insight as well as perspective about this policy.