For businesses that serve or sell alcohol, unexpected incidents can quickly turn a fun evening into a significant legal and financial headache. Liquor liability insurance is an important shield that protects your business from the unpredictable outcomes of alcohol service.
Whether you run a bar, restaurant, or any venue where alcohol is a staple, understanding what liquor liability covers and its costs can help you have peace of mind.
Liquor liability insurance, sometimes referred to as “dram shop insurance,” may provide protection against a variety of alcohol-related incidents that many other commercial insurance policies exclude from their coverages. It is specifically designed to protect businesses that manufacture, sell, or serve alcoholic beverages. This insurance is crucial because it addresses risks unique to the alcohol service industry and in many cases is a legal requirement for establishments that serve alcohol.
Some of these risks include impaired judgment and reduced coordination, which can lead to accidents and injuries. Businesses can face substantial financial losses from lawsuits alleging that they served alcohol to a visibly intoxicated patron who later caused harm to themselves or others.
General liability insurance normally protects businesses from claims related to certain common accidents, such as the classic slip-and-fall accident, that customers sustain on company property. If a customer slips on a wet floor and hits their head, general liability may cover required medical care.
Most general liability policies, however, exclude accidents in which intoxicated customers are injured. If a drunk customer tripped over a step and hit their head, the incident probably wouldn’t be covered by general liability because the customer was inebriated at the time of the incident.
Liquor liability insurance usually extends coverage to common accidents involving intoxicated customers. Should an intoxicated customer be hurt in a covered accident on company property, liquor liability may help pay any resulting legal fees, settlements, and/or judgements.
As you can see, general and liquor liability insurance go hand in hand to provide the comprehensive coverage these types of businesses need.
While the exact protections afforded by any particular policy depend on that policy’s terms and conditions, the following are some of the types of incidents that liquor liability policies often cover.
Any establishment that serves drinks should understand that it increases the risk of accidents. That is because alcohol impairs judgment and coordination. Common incidents may include slips, falls, or collisions, which can occur due to wet floors, uneven surfaces, or simply the reduced physical control of intoxicated patrons.
Liquor liability insurance plays a critical role here by covering legal fees and settlements that arise from injuries and subsequent claims.
Should one or more intoxicated customers get into a physical confrontation, people who are injured in the fight might sue the business that served the customers for damages. These sorts of claims can quickly become expensive if several people are involved.
Most liquor liability policies include coverage for physical fights where alcohol plays a role. In some cases, policies even cover emotional and/or psychological injuries, which bystanders might claim they sustained even though they weren’t directly involved in a confrontation.
In a similar fashion, many liquor liability policies also cover a business’ liability in sexual harassment and assault incidents. This doesn’t absolve the guilty party of their responsibility or any criminal consequences. Instead, it generally helps the business pay costs associated with covered lawsuits filed against them over these types of incidents.
Even if an incident involves only two people, sexual assault claims can be expensive. Lawsuits can drag on for a long time, and settlements are sometimes high because incidents can have lasting effects on the victim.
In light of how expensive these claims can be, you may want to make sure your business has robust coverage for sexual harassment and assault incidents. An insurance agent who specializes in liquor liability policies can help you find one with solid coverage, and they can also check to see whether emotional and psychological injuries to bystanders are covered.
Intoxicated behavior can also lead to accidental or intentional damage to your property. From broken glassware and furniture to significant damage to the building itself, the costs can quickly add up.
This insurance helps manage the financial burden of such damages, covering repair costs and property replacement. This ensures your business can return to normal operations with minimal disruptions or financial losses.
Your business’ liability for intoxicated customers doesn’t necessarily cease when customers leave the business premises. Should a customer drive home while still inebriated and cause a DUI accident, your business might be held partially responsible. Needless to say, DUI accidents can be extremely severe and result in large settlements.
Liquor liability policies frequently cover a business’ responsibility in customer-caused DUI accidents. Because these claims can be so expensive, it’s generally wise to select a high limit that gives your business lots of protection for these claims.
Over-serving alcohol can lead to severe health issues, namely alcohol poisoning. This is a critical condition that can have legal repercussions for your business. Liquor liability insurance provides protection against claims of negligence associated with over-serving. This includes covering the medical costs incurred by the affected individuals and any legal fees that result from a lawsuit.
For help finding a liquor liability policy that will give your business the protection it needs, contact World Insurance Associates. Our independent agents are well-versed in liquor liability insurance, and they’ll be able to help you find a policy that has robust protections against the alcohol-related risks your business is exposed to.
Similarly, our experts can help ensure your liquor liability insurance is compliant with state laws. Our agents understand the hospitality industry inside and out to provide invaluable guidance.
As with any insurance, the cost of liquor liability insurance can vary based on various factors such as your business size and location, the type of establishment, and your claims history. The long-term protection this insurance provides is invaluable.
Talk with an expert at World Insurance for a free consultation to better understand your insurance needs and costs.