Liquor Liability Insurance
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LIQUOR LIABILITY INSURANCE

Introduction: Liquor Liability

Introduction: Liquor Liability

Liquor Liability Insurance is a policy for owners and operators of establishments that sell, serve, manufacture, or facilitate the use of alcohol. Liquor Liability protects them when they are sued for the damages their intoxicated guests cause others. In some states, alcohol purveyors must carry Liquor Liability coverage to receive or maintain their liquor licenses.

The Basics of Liquor Liability Insurance

The Basics of Liquor Liability Insurance

Most states have some variation of "dram shop laws," which allow for the recovery of damages from the establishment responsible for serving the intoxicated person who harmed a third party. For instance, if an intoxicated patron starts a fight in your client's bar, the victim could sue your client for their injuries and property damage.

In the worst cases, your client may even be sued for both civil and criminal damages, making Liquor Liability coverage an essential product for any establishment - such as a bar, grocery store, distillery, or restaurant - that sells, distributes, or manufactures alcohol.

Despite the protection afforded by Liquor Liability Insurance, experts estimate that only 35 percent of businesses that should have this coverage actually purchase it. Perhaps this is because they assume their General Liability policies cover alcohol-related incidents. While Liquor Liability can be packaged with GL, standard policies usually exclude liability coverage for alcohol-related events. Your client must pay for the extra coverage or purchase it as a standalone policy to be protected.

What Does Liquor Liability Cover?

What Does Liquor Liability Cover?

As you already know, different policies include different coverages. In general, a Liquor Liability policy covers your client's court costs, witness and investigator fees, and settlements or judgments. It might also include..

  • Assault and battery coverage. Physical altercations are among most common incidents that tavern and nightclub owners face. Assault and battery coverage protects your client from the subsequent lawsuits and can be written for specific kinds of incidents (e.g., sexual assaults or shootings).
  • Defense coverage. Even frivolous claims require a lawyer. Some Liquor Liability policies will pay your client's legal defense costs when they face a lawsuit.
  • Intoxicated employee coverage. Employees sometimes drink on the job, even when it is against the rules. Some Liquor Liability policies cover the actions of intoxicated employees the same way they cover customers.
  • Off-premises coverage. If your client provides or sell liquor outside of their primary business location (e.g., catering an office party), they need off-premises coverage to ensure they are protected.
  • Mental damages coverage. Witnesses may bring a suit against your client for the psychological trauma of seeing a horrific alcohol-fueled accident. Mental damages coverage protects your clients against this kind of claim.
  • Safety training. Some carriers off free classes on how to recognize and refuse service to intoxicated patrons. Your clients could get a discount on their premium if they participate in their carrier's classes.

All Liquor Liability policies have one key exclusion. Lawsuits involving the sale of alcohol to minors are never covered. If your client sells alcohol to an underage drinker who then hurts someone, your client will not be covered in the lawsuit that follows.

Who Needs Liquor Liability?

Who Needs Liquor Liability?

Liquor Liability Insurance is a must for any business that sells, manufactures, or distributes alcohol. Even if your client isn't required to purchase Liquor Liability coverage to get a liquor license, they may find that certain contracts necessitate coverage. For example, your client's landlord might require Liquor Liability in their commercial lease.