Liquor Liability Insurance otherwise known as dram shop liability insurance is an insurance policy that business who sell/serve alcohol are required to obtain.
When a business decides to serve or sell alcohol there are associated risks involved:
- selling alcohol to an already intoxicated customer
- contributing to the over-toxication of a customer
- serving alcohol to a minor
What is Covered Under Liquor Liability Insurance?
In the event that any of these things occur, that is not sufficient to file a liquor liability claim. However, if any accidents or injuries to the consumer, minor or an unrelated third party that caused by the aforementioned three events then the business might be held liable. This is the reason why these businesses are required to have this type of insurance to protect their business from these claims.
Claims can include bodily harm, mental harm, legal defense costs, property damage, and coverage over misdemeanors and felonies like assault and battery, and sexual assault.
What does Liquor Liability Cost?
Liquor liability insurance can be extremely expensive depending on what state the business is located.
The following factors are taken into consideration when determining the cost of your liquor liability insurance:
- Types of alcohol sold
- Hours of operation and closing time
- Food versus alcohol receipts (if applicable)
- Square footage of bar or restaurant
- Average price of drinks
- Happy hours and drink specials
- Entertainment venue, live music, and karaoke
- Bouncers and Door Keepers
- State where business is located
- Server training and certifications
There are reports that in some states, such as Iowa, where they are calling for reform to help lower the price of insurance because a lot of business have trouble finding carriers to take on such a liability without having to pay a high premium per month.
Each state has their liquor liability laws so it’s very important to know what they are. Here’s a directory on where you can find the laws mandated by your state: https://www.legalbeer.com/liquor-laws-by-state