Site icon AdvisorSmith

Liquor Liability Insurance

Liquor Liability Insurance

Get a quote on Liquor Liability Insurance

Serving alcohol to customers exposes your business to new sources of liability. If your customers become intoxicated and cause a car accident, injure others, or damage property, you could be sued. Although you can take steps to mitigate your risk, there’s always a chance that an incident could lead to costly lawsuits. Liquor Liability Insurance can help financially protect your company against these risks. 

What is Liquor Liability Insurance?

Liquor Liability Insurance protects your business from liability in situations where individuals who consumed alcohol that your business sold, manufactured, or served cause injury or damage to others. When you operate a business that sells or serves alcoholic beverages, you could be held legally liable for the actions of customers who become intoxicated. Customers could cause car accidents, trip and fall, unintentionally injure another person, start a fight, or damage someone else’s property, and your business could be sued. Liquor Liability Insurance can cover damages and legal expenses in the case of a lawsuit.


What does Liquor Liability Insurance cover?

Liquor Liability Insurance covers incidents of third-party bodily injury and property damage caused by individuals who consumed alcohol that your business sold, served, or manufactured. Some policies may even cover mental trauma, assault and battery, and liquor-related incidents involving employees. 

If your business is sued, your insurer would pay for legal expenses, including court costs, attorneys’ fees, and any settlements. If your business is found to be at fault, Liquor Liability Insurance can provide coverage for any damages owed, including medical expenses, costs to replace or repair damaged property, lost wages, and more.


Who needs Liquor Liability Insurance?

Liquor Liability Insurance is a key coverage for any business that makes, sells, or serves alcohol. Businesses that commonly secure this coverage include:

Why do I need Liquor Liability Insurance?

Dealing with a costly liquor liability lawsuit could be financially devastating for your company. No matter how hard you work to ensure a safe environment and monitor customers’ alcohol consumption, it’s impossible to completely eliminate the chance of accidents and lawsuits. Liquor Liability Insurance will step in to cover any claims that arise as a result of liquor liability. In addition, liquor license laws in many states legally require you to have this coverage, and commercial leases often require it as well. 

Many states have “dram shop” laws that hold businesses liable if they serve an intoxicated customer who later causes an accident or injury. Even in states without dram shop laws, negligence laws can still hold businesses liable. An event attendee who receives alcohol from you, becomes intoxicated, and causes a car collision or starts a violent altercation with another person could result in liability for your company. 


It’s important to understand that although general liability insurance covers most third-party property damage and bodily injury, it does not cover incidents caused by liquor liability. General liability policies may include coverage for host liquor liability, but this only applies to companies that do not make, sell, or serve alcohol as part of their business. Companies that occasionally allow alcohol at company events or businesses that allow patrons to bring alcohol onto their business premises for consumption would be covered by host liquor liability. 

What is host liquor coverage?

Host liquor coverage provides liability protection from liquor-related incidents that cause bodily injury or property damage but, unlike Liquor Liability Insurance, is specifically designed for businesses that are not primarily involved in the manufacturing, distribution, selling, or serving of alcoholic beverages. Often included as part of commercial general liability coverage, host liquor liability coverage can protect businesses that may occasionally serve alcohol as part of company parties or celebrations or who may allow customers to bring alcohol for consumption onto their business premises.


What is the difference between host liquor and retail liquor?

Host liquor liability refers to the liability that arises out of the incidental serving of alcoholic beverages. This primarily applies to organizations that are not in the business of selling, manufacturing, distributing, or serving alcohol. An example of this is a movie theater that does not sell or serve alcoholic beverages but does allow customers to bring their own alcoholic beverages.

Retail liquor liability refers to the liability that arises out of the manufacturing, distribution, selling, or serving of alcoholic beverages to your business’s patrons, which is covered by Liquor Liability Insurance.

What is dram shop coverage?

Dram shop coverage is another name for Liquor Liability Insurance. Dram shop coverage protects your business from liability in situations where individuals who consumed alcohol that your business sold, manufactured, or served cause injury or damage to others.

How is Liquor Liability Insurance priced? 

The pricing of your Liquor Liability Insurance varies depending on what type of business you operate. Insurers typically ask these questions when determining the price of coverage:

What are the key exclusions of Liquor Liability Insurance?

Common exclusions from Liquor Liability Insurance include: 

Tips to Reduce Liquor Liability Risk

The liability that comes from serving or selling alcoholic beverages can be daunting, but there are steps that your business can take to mitigate these risks. Aside from securing Liquor Liability Insurance, your business can also benefit from the following precautionary actions:

Final Word

Establishments that sell or serve alcohol can become embroiled in costly lawsuits if inebriated customers cause third-party bodily injury or property damage. This is why it’s crucial to make sure your business has adequate Liquor Liability Insurance. This coverage provides valuable financial protection, and it is often required by liquor licensing laws and commercial leases.

Exit mobile version