Liquor Liability: Liability, Programs, Costs & More
March 1, 2021
Research shows our ancestors began consuming alcohol 10 million years ago. Scientists believe human's ability to ingest fermented and rotting fruit may have helped the species survive. Sadly, liquor consumption leading to drunken driving causes more than 10,000 fatalities in the U.S. each year. The NHTSA estimates an annual cost of $44 billion related to the deaths and damages triggered by impaired drivers.
What is Liquor Liability Insurance & Who Needs It?
Liquor liability insurance is a business insurance policy. It is a specific coverage to protect companies against lawsuits and claims of bodily injury and property damage caused by a patron who became intoxicated on the insured's alcohol.
The spectrum of businesses that need liquor liability coverage is broad because it is necessary and often legally required for any company that manufactures, serves, sells, or distributes alcoholic beverages. Taverns, bars, nightclubs, breweries, and wineries require liquor liability. Also in need of liquor liability insurance programs are liquor, grocery, and convenience stores, caterers, hotels, event halls, and event organizers. Suppose a company does not sell or serve alcohol but allows its consumption on its property or at company-sponsored events. In that case, it needs the protection of a host liquor liability policy.
What Does Liquor Liability Cover?
A liquor liability policy helps to pay for bodily injury claims that result in medical payments, settlement, and legal defense fees. Simultaneously, the property damage portion covers the harm to a claimant's property caused by an intoxicated person. Liquor liability includes third-party liability and property damage. For example, should an intoxicated person injure another person or damage their property, the injured third party may file lawsuits and claims against the company or establishment that served the alcohol.
Types of Liquor Liability Insurance
This guide to liquor liability insurance programs explains the types of coverage included in a typical liquor liability insurance product.
Liquor Liability vs. Host Liquor Liability
The intent of the coverage and protection for liquor liability and host liquor liability is the same as described above. A liquor liability policy is standalone and necessary for a business that distills or manufactures alcoholic beverages and for those that serve, sell, or distribute liquor.
When attendees at weddings, luncheons, corporate events, birthday parties, private gatherings consume alcohol provided by a host, that host has exposure and can be found liable for any property damage or bodily injury their attendees and guests cause. Hosts in such cases need a Liquor Liability insurance program.
Host Liquor Liability insurance typically covers businesses that do not sell liquor but allow its consumption on their property or at their event. Examples include a casual Friday Happy Hour or third-party events it sponsors. A charity picnic at the local state park or a sales meeting at the business owner's getaway lodge are typical examples.
Host Liquor Liability coverage is sometimes included in a business's Commercial General Liability (CGL) policy. It is also written as in a short-term insurance policy when not inclusive to the CGL. An example is purchasing a policy to add Host Liquor Liability insurance for weddings.
Drunk Driving Ramifications (the bar or restaurant's liability)
Should an intoxicated customer be the cause of an accident in a vehicle they are operating, the establishment owner, whether a winery, brewery, nightclub, bar, restaurant, tavern, or other business that serves liquor, is potentially liable for the results of the accident. In other words, the injured party may sue the company for damages caused by the drunk driver.
Dram Shop Laws
As with nearly all motor vehicle laws, Dram Shop laws are written and enforced at the state level. According to Wikipedia, "A dram shop is a bar, tavern, or similar commercial establishment where alcoholic beverages are sold. Traditionally, it is a shop where spirits were sold by the dram, a small unit (3/4 of a teaspoon) of liquid."
Dram Shop laws intend to hold establishments responsible when the business served liquor to an inebriated patron who caused an accident. In some cases, dram shop liability extends to the host of a social event where alcohol was served as part of an event.
There are 43 states and the District of Columbia that have Dram Shop laws. The laws are not uniform and have unique variations per state. What is consistent about these statutes is each has adopted regulations that permit some degree of liability to shops that let apparently inebriated customers leave to drive while drunk. The range of punishments varies state by state. California laws prohibit civil liability actions against people and businesses that serve alcoholic beverages to persons who cause vehicle accidents resulting in property damage, injuries, and fatalities.
A hospitality insurance program from a leading provider, such as RMS Hospitality Group, can tailor coverages to protect restaurants, bars, and clubs from financial losses due to liquor liability and related claims. Assault & Battery is an appropriate and most often an advisable additional coverage for liquor-serving establishments. Assault & Battery coverage protects against a wide range of claims, including clientele injured by security, bouncers, or other employees. It likewise offers protection against losses relating to claims arising from employees who were drinking while at work. Also, depending on the nature of the insured's business, they should consider purchasing additional coverage to protect against mental health claims, violence, and more.
Limits of Insurance
The following policy limits are in RMS Hospitality Group's standard coverage on its Bars and Taverns policies, of which Liquor Liability is an integral part.
In our litigious society, the $1,000,000 limit for Liquor Liability is reasoning enough for drinking establishments to add Excess Limits coverage to boost their liability limits to $5,000,000.
Liquor Liability Insurance Costs (and what factors affect the price)
Business insurance of any type is never a one price fits all solution. There are too many variables for set prices. Liquor liability policy premiums vary due to such factors as the size, location, type of business, claims history, minimum state law limits, other state requirements, the policy's liability limits desired by the owner, and more. While each situation is unique, the range in the cost of liquor liability coverage starts at $250 and runs up to $2,500 annually.
Best Liquor Liability Insurance Programs
When you seek the best Liquor Liability insurance online, the only stop you'll need is the Program Business directory. You'll discover the right market fit for all your insurance needs. That's because ProgramBusiness.com connects wholesalers, MGAs/MGUs, program administrators, and carriers with independent agents looking to place business. The robust platform enables agents to quickly contact and begin the underwriting, quote, and submission process.
RMS Hospitality Group is a perfect example of liquor liability insurance programs you'll find. It offers comprehensive coverage for large bars and sports bars to the small tavern on the corner. Its aggressive claims staff is ready to fight frivolous claims on your behalf. RMS HG accepts risks with DJs, live bands, and dancing. Its expertise includes "in-house" legal counsel with knowledge of liquor law liability issues and venues nationwide. Agents appreciate knowing they will not encounter insurance branch office or wholesale channel conflicts because the program is exclusive to the RMS Hospitality Group.