Liquor Liability Insurance

Most major events and entertainment venues serve alcoholic beverages. But if drinking gets out of hand, your business may be held liable for the actions of intoxicated customers. While you can take measures to limit your risk of liability, you still need to protect your business with a liquor liability insurance policy. 

An independent insurance agent can help you assess your business's liquor liability coverage needs and explain your insurance options. They'll get you matched to the ideal amount of alcohol liability insurance coverage for your unique business and its exposures. They can also help you get set up with the right bar insurance or restaurant insurance if you're in need. But until then, here's a closer look at liquor liability coverage and when it's necessary.

What Is Liquor Liability Insurance?

The definition of liquor liability insurance is a special type of business insurance coverage that can pay for expenses related to bodily injury or property damage claims due to the alcohol served at your establishment. Any business that sells or serves alcoholic beverages, including restaurants, nightclubs, and bars, can be held liable for damages or injuries caused by intoxicated patrons. This can include damages that result from fights, careless behavior, or car accidents. 

While it may seem logical to place the blame on the individual who perpetrated these acts, the establishments that allowed them to become intoxicated are also held largely liable and can be sued for exorbitant sums of money, particularly if resultant injuries are severe or fatal.

Fortunately, you can protect your business from large financial losses with a liquor liability insurance policy. These policies are sometimes included with general liability coverage in some business insurance policies, but most often, they need to be purchased separately as stand-alone coverage or as a business policy endorsement. 

Liquor liability insurance can cover the cost of damage or medical bills resulting from intoxicated customers or guests, as well as the cost of your business's legal defense in a lawsuit. In contrast, general liability insurance covers the cost of third-party bodily injuries and personal property damage, such as customer slip-and-fall accidents on your bar's slick floor.

Is Liquor Liability Insurance Required?

Most states require all establishments that serve, sell, or assist in the purchase of alcohol to carry liquor liability insurance. But even if your business is in a state that doesn't mandate this coverage, you may be required to carry it by your financial institution if you have taken out a business loan or by your landlord if you rent your business's building.

Liquor liability insurance is particularly important to bars, taverns, and nightclubs. It may mean the difference between maintaining a lucrative business and closing your doors should you ever face a lawsuit for claims of third-party damage and other incidents related to intoxication.

Who Needs Liquor Liability Insurance?

Any business that serves alcohol to the public needs liquor liability insurance. You might need to get this coverage if you own or run any of the following:

Basically, all businesses that serve alcohol at events or on-premises need alcohol liability coverage. An independent insurance agent can help you find the right amount of liquor liability coverage for your specific business.

What Does Liquor Liability Insurance Cover?

Liquor liability insurance will cover your business against losses resulting from a related lawsuit. This alcohol-related claims coverage can protect your business against the costs of:

• Property damage: If a customer you served at your restaurant, bar, etc., gets intoxicated and damages someone else's personal property, your business can be held liable for the loss.
• Bodily injury, assault, and battery: If a customer who was overserved at your establishment physically injures someone else, your business can be held liable for medical treatments and potential resulting lawsuits.
• Drunk driving: If a customer who was overserved at your business leaves and ends up causing an accident, property damage, or injury to another driver or third party while driving intoxicated, your business can be held liable for resulting damages.
• Legal defense costs: If your business is sued for the actions of an intoxicated patron, alcohol-serving business insurance can cover the cost of your legal defense, such as attorney, court, and settlement expenses.

Even if your business is found to have acted properly and the liability suit is dropped, your business could accrue high charges for legal defense fees and court costs. 

Fortunately, liquor legal liability insurance covers expenses related to hiring an attorney, paying settlements or judgments, and more. An independent insurance agent can help your establishment get set up with all the right dram shop insurance coverage.

Host Liquor Liability Coverage for Weddings and Social Events

Consumers may also purchase a one-time liquor liability policy to cover them for charges that may stem from alcohol consumption at a special event they plan to host. This can include weddings, fundraisers, and reunions. This insurance, also known as host liquor liability, is necessary if you are catering the event yourself or if the catering company or venue doesn't have liquor liability coverage.

The cost of host liquor liability is based on the estimated number of attendees, the types of alcoholic beverages served, and the event's duration. Events that feature cash bars over open bars may have lower coverage costs as attendees aren't likely to drink as much.

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Is Liquor Liability Covered by a Commercial General Liability Insurance Policy?

Host liquor liability coverage can be a part of a commercial general liability insurance policy. General liability insurance covers third-party claims of bodily injury or personal property damage caused by your business. 

However, general liability insurance may cover incidents of alcohol-related damage if your business allows visitors, customers, etc., to drink on its premises but doesn't explicitly serve liquor. In such cases, claims related to third-party bodily injury or personal property damage involving liquor may be covered by general liability.

How Much Does Liquor Liability Insurance Cost?

Small businesses typically pay an average of $45 per month, or approximately $542 per year, for liquor liability insurance. However, the cost of liquor liability insurance can vary depending on several factors. These can include:

• Your business's industry
• Your business's size and location
• Your business's annual liquor sales
• Your policy's coverage limits and deductible
• Your business's past claims history
• Your state's regulations for coverage

An independent insurance agent can help you find the most affordable alcohol liability insurance rates near you.

Review Your State's Requirements and Regulations for Liquor Liability Insurance

Understand that the amount of liquor liability insurance required for businesses varies by state. It's critical to review your state's specific mandates for coverage for alcohol-serving establishments. 

Having insurance may also be required for you to obtain a liquor license in the first place. An independent insurance agent can help you find your state's liquor liability insurance requirements and alcohol liability laws to obtain the correct amount of coverage. 

Common Liquor Liability Insurance Claims

Dram shop liability insurance can be used to cover several types of claims. Here are just a few of the most common liquor liability claims to consider getting coverage against:

• Patron injuries after overconsumption
• Property damage caused by intoxicated customers
• Legal action against the establishment that served the liquor

Having alcohol-related incidents insurance can help your business avoid the costs that can arise from any of these claims and many others. An independent insurance agent can provide you with even more common bar liability insurance examples, and get equipped with the right liquor liability insurance for bars.

Tips for Reducing Your Business's Risk of Liquor Liability Insurance Claims

Fortunately, there are several proactive measures your business can take to reduce its liquor liability risk. Implementing mandatory staff training sessions on responsible alcohol service and how to avoid overserving customers can aid your bar's risk management. 

Proper ID verification techniques are also critical for avoiding these claims. It's also important to alert staff to all related documentation regarding alcohol safety policies and ensure your employees know how to follow safety protocols when serving and monitoring guests.

How to Choose the Best Liquor Liability Insurance Policy for Your Business

When you're ready to find the right restaurant liquor liability insurance policy, it's helpful to first determine your unique business's coverage needs. You'll want to compare the coverage limits, exclusions, and premium rates of several different policies. 

Working together with a local independent insurance agent can help you complete this alcohol liability policy comparison efficiently. Your agent knows where to find the best liquor liability insurance for bars and restaurants and can get you covered with all the protection your establishment needs.

An Independent Insurance Agent Can Help You Find the Right Liquor Liability Insurance

For help finding an affordable liquor liability insurance policy for your business or event, enlist the help of an independent insurance agent in your town. These agents are free to shop and compare policies and rates from a number of different carriers for you and present you with only the results that offer the best blend of coverage and cost. 

They'll find the ideal policy to best protect your bar. And down the road, your agent can help file business insurance claims for you and update your coverage as necessary.

FAQs About Liquor Liability Insurance