Liquor Liability Insurance

Most major events and entertainment hotspots serve alcoholic beverages. But if drinking gets out of hand, your business may be held liable for the actions of intoxicated customers. While you can take measures to limit your risk of liability, you still need to protect your business with a liquor liability insurance policy. 

An independent insurance agent can help you assess your business's liquor liability coverage needs and explain your insurance options. They'll get you matched to the ideal amount of coverage for your unique business and its exposures. But until then, here's a closer look at liquor liability coverage and when it's necessary.

What Is Liquor Liability Insurance?

Any business that sells or serves alcoholic beverages, including restaurants, nightclubs, and bars, can be held liable for damages or injuries caused by intoxicated patrons. This can include damages that result from fights, careless behavior, or car accidents. 

While it may seem logical to place the blame fully on the individual who perpetrated these acts, the establishments that allowed them to become intoxicated are also held largely liable and can be sued for exorbitant sums of money, particularly if resultant injuries are severe or fatal.

Fortunately, you can protect your business from large financial losses with a liquor liability insurance policy. These policies are sometimes included with general liability coverage in some business insurance policies, but most often, they need to be purchased separately as stand-alone coverage or as a business policy endorsement. Liquor liability insurance can cover the cost of damage or medical bills resulting from intoxicated customers or guests, as well as the cost of your business's legal defense in a lawsuit.

Is Liquor Liability Insurance Required?

Most states require all establishments that serve, sell, or assist in the purchase of alcohol to carry liquor liability insurance. But even if your business is in a state that doesn't mandate this coverage, you may be required to carry it by your financial institution if you have taken out a business loan or by your landlord if you rent your business's building.

Liquor liability insurance is particularly important to bars, taverns, and nightclubs. It may mean the difference between maintaining a lucrative business and closing your doors should you ever face a lawsuit for claims of third-party damage and other incidents related to intoxication.

Who Needs Liquor Liability Insurance?

Any business that serves alcohol to the public needs liquor liability insurance. You might need to get this coverage if you own or run any of the following:

An independent insurance agent can help you find the right amount of liquor liability coverage for your specific business.

What Does Liquor Liability Insurance Cover?

Liquor liability insurance will cover your business against losses resulting from a related lawsuit. This coverage can protect your business against claims of:

• Property damage: If a customer you served at your restaurant, bar, etc., gets intoxicated and damages someone else's personal property, your business can be held liable for the loss.
• Assault and battery: If a customer who was overserved at your establishment physically injures someone else, your business can be held liable for medical treatments and potential resulting lawsuits.
• Drunk driving: If a customer who was overserved at your business leaves and ends up causing an accident, property damage, or injury to another driver or third party while driving intoxicated, your business can be held liable for resulting damages.

Even if your business is found to have acted properly and the liability suit is dropped, your business could accrue high charges for legal defense fees and court costs. Fortunately, liquor liability insurance covers expenses related to hiring an attorney, paying settlements or judgments, and more.

Host Liquor Liability Coverage for Weddings and Social Events

Consumers may also purchase a one-time liquor liability policy to cover them for charges that may stem from alcohol consumption at a special event they plan to host. This can include weddings, fundraisers, and reunions. This insurance, also known as host liquor liability, is necessary if you are catering the event yourself or the catering company or venue doesn't have liquor liability coverage.

The cost of host liquor liability is based on the estimated number of attendees, the types of alcoholic beverages served, and the event's duration. Events that feature cash bars over open bars may have lower coverage costs as attendees aren't likely to drink as much.

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Is Liquor Liability Covered by a Commercial General Liability Insurance Policy?

Host liquor liability coverage can be a part of a commercial general liability insurance policy. General liability insurance covers third-party claims of bodily injury or personal property damage caused by your business. 

However, general liability insurance may cover incidents of alcohol-related damage if your business allows visitors, customers, etc., to drink on its premises but doesn't explicitly serve liquor. In such cases, claims related to third-party bodily injury or personal property damage involving liquor may be covered by general liability.

How Much Does Liquor Liability Insurance Cost?

The cost of liquor liability insurance can vary based on a number of different factors. These can include:

• Your business's industry
• Your business's size and location
• Your business's annual liquor sales
• Your policy's coverage limits and deductible

An independent insurance agent can help you find the most affordable liquor liability insurance near you.

An Independent Insurance Agent Can Help You Find the Right Liquor Liability Insurance

For help finding an affordable liquor liability insurance policy for your business or event, enlist the help of an independent insurance agent in your town. These agents are free to shop and compare policies and rates from a number of different carriers for you and present you with only the results that offer the best blend of coverage and cost. And down the road, your agent can help file business insurance claims for you and update your coverage as necessary.