Liquor Liability Insurance Requirements

liqour liability insurance quotes

If you serve alcohol on your business premises, then you need liquor liability insurance. This type of insurance protects you should an inebriated customer injure another person or damage property.

This post will explain in detail exactly what liquor liability insurance covers, who needs it, and what types of policies exist. We will then point you toward some top carriers for liquor liability insurance.

Why Do You Need Liquor Liability Insurance?

Alcohol is notorious for impairing good judgement, coordination and clear thinking. That means that when alcohol is involved, lots can go wrong.

  • Drunk customers may become belligerent and attack each other.
  • Intoxicated patrons may be more prone to tripping and falling or other accidents.
  • Your customers might be more likely to get into automotive accidents when leaving your establishment if they are drunk.
  • Drunk patrons may damage other types of property as well.

Depending on your state laws (see below), you might be held liable for these types of situations.

Liquor liability insurance can help protect you by covering legal and medical costs if you do get sued.

What are Dram Shop Laws?

Dram shop laws exist in the vast majority of the US. There are only six states that don’t have them. The District of Columbia has them as well.

Dram shop laws essentially say that if you sold alcohol to a person who then injured someone or damaged their property, you are legally liable for their actions.

That does not mean that the person who drank the alcohol is not liable; it just means that both of you are on the line for damages in a potential lawsuit.

If you have spent significant time in bars, you have no doubt at some point heard the bartender say “I’m cutting you off” to a customer, and then refuse to serve them further alcohol.

Bar staff may do this if they notice someone is becoming obviously intoxicated. They decided that person was becoming dangerously drunk, and that giving them further alcohol would be unwise.

Alas, it can be really hard to correctly guess when a customer really is or isn’t becoming dangerously inebriated.

Some people look quite coordinated and “normal” while intoxicated, especially if they drink a lot on a regular basis, yet still pose a danger to others.

That is why you can never be too safe—and why you need liquor liability insurance to fall back on.

What Types of Businesses Need Liquor Liability Policies?

Any type of business that serves liquor or sells it need to get a liquor liability policy. Some examples include:

  • Bars
  • Taverns
  • Nightclubs
  • Liquor stores
  • Grocery stores
  • Convenience stores
  • Breweries
  • Caterers
  • Sports stadiums and arenas
  • Etc.

Those are just a few examples. There are many other types of businesses that may benefit from taking out a liquor liability policy.

What Liquor Liability Insurance Covers

What does liquor liability insurance cover?

  • Bodily injury: If a drunk customer injures someone else, and that person sues, liquor liability insurance can cover the costs. For example, say the inebriated person trips into a third party, and that person falls and gets hurt. The policy may pay out.
  • Assault and battery: Liquor liability policies can cover injuries and damages that result from a drunk patron attacking another person.
  • Drunk driving: Business owners are expected to do what they can to stop a drunk person from operating a vehicle. If that person proceeds to do so anyway though and then injures someone or damages property with their vehicle, liquor liability insurance can pay out.
  • Property damage: The policy can help pay the costs of repair or replacement when a drunk patron damages the property of a third party (i.e. spills wine on another patron’s designer suit or dress, etc.).
  • Legal costs: Liquor liability insurance can help pay for your legal fees if you get sued for a liquor-related incident.

Liquor Liability Coverage Exclusions

While liquor liability insurance covers a lot of things, it does not cover everything. Here are some exclusions to be aware of:

  • Underage drinking: You are absolutely responsible for not selling or serving alcohol to minors. If you do so, you are breaking the law, and there will be consequences. That is not something liquor liability insurance is going to be able to protect you from.
  • Damage to your personal or commercial property: You need other coverage to protect your personal or commercial belongings. Take out a commercial property insurance policy to protect items related to your business. Liquor liability insurance is only for covering damages to the property of third parties.
  • Injury to yourself or your employees: Injuries to employees are covered by workers’ compensation. Injury to your own person is covered by your personal medical policy.
  • Libel or slander: General liability insurance covers incidents involving slander or libel. They are not covered by a liquor liability insurance policy.
  • Expired license: Serving liquor or selling it with an expired license is illegal. This is another area where you are expected to take complete responsibility. Liquor liability insurance will not cover the costs of any legal consequence that might ensue.

Types of Liquor Liability Insurance

There are several different types of liquor liability insurance. Let’s break it down so you know which one you need.

General Liability Insurance

This refers to the main type of liquor liability insurance we are discussing in this post. This type of policy is what you need if serving or selling alcohol is a regular part of your business.

Host Liquor Liability Insurance

This type of liquor liability insurance is not a full policy. It is simply an endorsement within general liability insurance.

You would choose this type of coverage if your business does not usually serve or sell alcohol, but does on occasion.

You can pay for the endorsement permanently, or you can add or remove it from your general liability policy as needed.

One-Time Liability Policies

Maybe you are not concerned with occasionally selling alcohol—you just want to serve or sell it at a single, standalone event. In that case, there are one-time liquor liability policies you can purchase.

So, for example, maybe you operate a non-profit organization. Typically, you have no need to sell or serve alcohol, thus you would not want to purchase regular liquor liability insurance, nor do you necessarily need host liquor liability insurance. But you have a single fundraiser coming up at which you want to serve alcohol. So, you can buy a one-time liability policy to cover that fundraiser.

As another example, perhaps you operate some kind of venue that does not usually host events or sell alcohol. But someone has scheduled a wedding at your venue. You could get a one-time liability policy to protect your business.

What Does Liquor Liability Insurance Cost?

The cost range we have seen for liquor liability insurance is anywhere from $450 to $1,200 per year.

That is a pretty wide range, so you probably are wondering why the cost can be higher or lower. Here are the factors that impact the price:

  • The size and scope of your business: If you operate one small convenience store, you probably are not going to need to pay as much for your liquor liability insurance as you would if you owned a chain of bars.
  • How much alcohol you are selling: The sheer amount of alcohol you are selling will impact your insurance costs as well. If liquor accounts for a large percentage of your total revenue, you will pay more for insurance than if it only accounted for a tiny fraction of your profits.
  • Where you are located: There are some areas that are considered to be especially risky with respect to liquor-related incidents. For example, perhaps your area has a statistically high number of drunk driving accidents compared to surrounding areas. Just operating there could drive up your costs for liquor liability insurance.
  • Your track record: If you have made a lot of claims in the past related to liquor liability, then it stands to reason that you are going to have to pay more to maintain your liquor liability coverage. If, by reducing your risk, you can reduce future claims, eventually you might qualify for lower rates.
  • Bundling: Purchasing multiple types of insurance policies from a single provider is often a great way to reduce your overall insurance costs.
  • Upfront payments: If you pay upfront for a year of liquor liability insurance rather than paying monthly, you might qualify for a discount.
  • Other discounts: Insurance carriers might sometimes offer opportunities for additional types of discounts for liquor liability insurance.
  • Coverage amounts and deductibles. Higher coverage amounts and lower deductibles mean more expensive policies, whereas lower coverage amounts and higher deductibles can lead to lower monthly costs for insurance.
  • Which company you choose: Comparing quotes from different insurance companies will show you that some companies simply offer more competitive pricing than others, depending on their underwriting procedures. That is why you should shop around.

What Can You Do to Reduce Your Risk?

If you want to avoid liquor liability claims, the following tips can help:

  • Cut customers off when you are worried that they are becoming dangerously drunk.
  • If you think a customer is not safe to drive, you should call them a cab and try to get them to leave their keys with you.
  • Educate your staff to recognize when patrons are becoming dangerously intoxicated.
  • Check your premises for safety hazards (i.e. tripping hazards). This is important for general safety, but becomes extra important when alcohol is involved.
  • You can offer breathalyzer tests to customers.
  • If all else fails, you can call the police when a patron is behaving aggressively and/or refusing to take a cab home.

Top Liquor Liability Insurance Carriers

1. The Hartford

The Hartford is among the oldest insurance providers in the US, operating out of Hartford, Connecticut, since 1810. The company is known for its affordable policies, generous discounts, and excellent customer satisfaction.

The Hartford offers a number of insurance products to companies operating in the food and beverage industry, among them liquor liability insurance.

This company does not offer a lot of policy details on its website, but does mention that there are opportunities to save if you bundle policies and pay upfront. We recommend contacting The Hartford to learn more extensively about their liquor liability policies.

Best for: We recommend liquor liability insurance from The Hartford if you are looking to save by bundling with restaurant insurance or other policies.

2. Progressive

The third largest insurance company in the US is Progressive. While this company is best known for its home and auto policies, it also offers business insurance policies such as liquor liability insurance.

As with The Hartford, Progressive is renowned for its generosity with discounts and its affordable rates. Customers also like the mobile app.

Best for: Progressive is worth considering as an alternative to The Hartford. Both companies have similar benefits, so you may want to request quotes from each before you decide on one or the other.

3. Founders Insurance Company

This company’s history dates back to 1901. Founders Insurance Company serves 22 states, and offers liquor liability and special events policies.

Founders explains, “Five decades of experience allows for flexibility in risk acceptance, too. Late closings, prior claims, new ventures, live entertainment or special events aren’t a problem for Founders.”

In short, Founders offers excellent adaptability, and can accommodate businesses with a wide range of needs.

Best for: If you want a policy that is totally customized to the requirements of your individual business, you will want to work with Founders Insurance Company.

Protect Your Business with Liquor Liability Insurance Now

Are you ready to get the protection you need for your bar, tavern, restaurant, or other business?

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