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September 30, 2019

Liquor Liability Insurance 101


Contact: Amanda Edmunds

& E Insurance Agency


[email protected]

What is Liquor Liability Insurance?

Liquor liability insurance reduces and eliminates the financial liabilities that one could face as a result of selling alcohol at your establishment. While your general liability policy may cover your business from bodily, personal injury or property damage claims, host liquor liability only covers you in the event that you’re catering a gathering outside of your establishment.
Most states in the US require establishments that sell alcohol to carry liquor liability insurance. Often, business owners forget to cover themselves or try to find workarounds to avoid added costs, but this is ill-advised. Not carrying liquor liability insurance can be more expensive in the long run, especially with Dram Shop laws, which make it even easier for your business to be held accountable for alcohol-related incidents.

What are Dram Shop Laws?

Dram Shop law applies in 43 out of US 50 states and according to, “makes a business which sells alcoholic drinks or a host who serves liquor to a drinker who is obviously intoxicated or close to it, strictly liable to anyone injured by the drunk patron or guest.”

What Does it Cover?

There are some features to consider including when you’re shopping around for liquor liability coverage:

  • Assault and Battery: This is typically the most used part of liquor liability insurance because bars and restaurants see more lawsuits from bar fights than any other claim.
  • Employees as Patrons: Make sure that your liquor liability insurance covers your employees as patrons. More often than not, your employees may drink alcohol on the job regardless of company policy.
    Mental Injuries
    Physical damages are not the only injuries that can stem from a claim. Often liquor liability insurance doesn’t cover mental injuries, so make sure yours does.
  • Sexual Harassment/Assault: In the event that an intoxicated patron sexually assaults or harasses another patron at your establishment, you might be held liable.
  • Accidental Injury:  If an intoxicated person slips, falls, and injures themselves or causes accidental harm to another patron, person, or persons, you might be held liable for their medical expenses.
  • Property Damage
    If an intoxicated patron gets into their car and backs into someone else’s car, a claim could be filed against your business.

Standard exclusions for liquor liability insurance include:

  • Expected or intended injury
  • Workers compensation
  • Employers liability
  • Patrons who are underaged and drinking
  • Offenses outside of property damage and bodily harm
  • Damage to your own property

  • Liquor license not in effect

Why Do I Need It?

You may be thinking: “why do I need liquor liability insurance?” Consider that liability claims made to restaurants or bars as a result of damages or injuries caused by an intoxicated person are expensive. Then consider the following scenarios…. An intoxicated person leaves a bar, gets into his car, drives, and commits vehicular manslaughter. Next, a restaurant serves alcohol and two guests get into a fight that results in serious injuries.
In both of these cases, a restaurant, bar, club, or another establishment that serves alcohol could be held liable for the actions, damages, and injuries caused by the intoxicated person or persons. This is why it’s crucial that if your establishment sells alcohol, you protect yourself from the potential financial burden that liquor liability covers. This includes legal fees, court costs, or any civil or criminal damages awarded.
Having a liquor liability policy is a great way to protect your business, but there are also many ways to be proactive in limiting liquor induced claims. Implement and enforce safe alcohol serving and consumption practices. Train your employees to refuse to sell alcohol to patrons who are clearly intoxicated. Require a strict measuring policy for mixed drinks. Encourage designated drivers and taxi use and offer incentive. If you can make sure your employees are responsible, you can reduce your chances of dealing with a liquor liability claim. To learn more about liquor liability insurance, contact I&E Insurance today.

This web site may contain concepts that have legal, accounting and tax implications. It is not intended to provide legal, accounting or tax advice.

You may wish to consult a competent attorney, tax advisor, accountant, or your own financial advisor. EMC Insurance Agency & Financial Services LLC dba I & E Insurance Agency & Financial Services is an Independent Insurance Agency, a Member of the Trusted Choice, Independent Agents of America & PIA contact your own advisors before making any financial decision. Services offered through independent NON-AFFILIATED ENTITIES

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