Liquor Liability Insurance: Costs and Coverage

Liquor liability insurance covers businesses that sell and serve alcohol. The cost of liquor liability insurance can range from $ 270 to $ 2,000 annu

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Liquor liability insurance covers businesses that sell and serve alcohol. The cost of liquor liability insurance can range from $ 270 to $ 2,000 annually. Liquor liability insurance handles claims arising from the actions of an intoxicated patron. Whether the claim is for damage or injury, the business can be held legally liable for its role in supplying alcohol to an intoxicated customer.

Coverage for alcohol-related incidents is limited in general liability policies, which require liquor liability insurance for businesses that sell alcohol. To get a quick liquor liability quote for your small business, contact Commercialinsurance.net. His experts will connect you with the provider who can get you properly covered.

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Liquor liability insurance costs, cover and deductible by business type

When pricing this type of policy, an insurance company will take many factors into consideration. These include the size of your business, the policy limit and your state’s legal requirements. Your state’s legal requirements are determined by what are known as dram shop laws.

Drama shop laws are laws created by state governments to hold accountable businesses that sell alcohol. These laws determine the extent of who is liable for a loss due to alcohol use. Since dram-shop laws are not federally regulated, it is up to each state to decide how liability is determined. Not every state has drama store laws, so you will want to check your state to see if they have a law and, if so, what the specifics are.

Five Factors Affecting Liquor Liability Insurance Costs

Insurance carriers, when pricing a liquor liability policy, may use the total percentage of alcohol sales at your business. The alcohol sales provide data on how many customers you serve. However, if your business sells top-shelf liquor or high-end wine, the percentage of sales can be skewed and this can be a factor in helping reduce your costs.

Buying liquor liability insurance as a standalone policy is generally more expensive than packing it with your other policies. For example, a business owner’s policy (IDP) can reduce overall costs by combining protection against all major property and liability risks in one package.

How many claims you submit is a factor in determining the premium. The more claims you make for your beverage liability insurance, the greater risk the insurance company accepts, and therefore you can expect a higher premium.

Because dram store laws may differ from state to state, the risk factor for the insurance company may be higher depending on the location. For example, in Utah, a DUI victim can claim compensation from each party involved, including the business that the driver served. Virginia, however, does not have a Drama Shopping Act.

Liquor liability costs can be higher depending on the type of business seeking coverage. An off-campus bar is likely to receive a higher premium than an off-campus restaurant. At the restaurant, alcohol consumption is considered accidental. At the bar, alcohol consumption is the primary goal.

How To Reduce Your Liquor Liability Insurance Costs

Risk engineering plays an essential role for an insurance company in determining the insurability of a business and the cost of the policy. As a business owner, there are proactive steps you can take to help reduce the cost of liquor liability insurance by managing risk:

  • Train your employees: Many training courses are offered for businesses that serve alcohol, such as alcohol awareness training. This training can result in a premium discount.
  • Hire professional bartenders: Most bartenders are trained to detect signs of intoxication and prevent alcohol abuse. Hopefully they can stop trouble before it happens.
  • Do not serve minors: A young couple enters the restaurant and orders the special lunch and a beer. The trained server makes sure the customers are of legal age to order alcohol. You can not be too careful. Your employees should check identification for any patron who looks younger than 30 years old.
  • Use a proof of purchase system: If your business is hosting a social event with alcohol, consider using a liquor voucher to limit alcohol consumption.
  • Offer non-alcoholic drinks and serve food: By offering food and non-alcoholic beverages, you can help your customers offset any alcohol consumption.

Who needs liquor liability insurance

The following businesses should consider liquor liability insurance:

  • Bars
  • Restaurant
  • Caterers
  • Food trucks
  • Breweries and wineries
  • Delis
  • Café
  • Liquor Stores
  • Grocery stores selling beer, wine or liquor
  • Certain event and performance spaces
  • Tenants who have tenants involved in the above activities

How does liquor liability insurance coverage work

If your business sells or serves alcohol, you may want to consider buying a liquor liability insurance policy. The policy provides coverage for your business when someone third-party property is damaged or injured due to their drunkenness:

  • Jessica had too much to drink at Bob’s Bottom Shelf Bourbon. She leaves the business and does not like what the parked car on the street tells her, so she kicks the passenger door and dives into it. The damage to the vehicle is an example of third party damage that Bob’s Bottom Shelf Bourbon can be found legally liable for.
  • Jack plays darts at his favorite campus bar, Study Break. Unfortunately, he drank too much and suddenly saw three dart boards instead of one. Jack takes a guess and accidentally throws an arrow into another customer’s shoulder. This is an example of a bodily injury claim for which Study Break may be legally liable.

Liquor liability vs host beverage liability

Liquor liability cover is third party cover. If your business does not manufacture, sell or serve alcoholic beverages, you may not need liquor liability insurance. Standard general liability policies include host beverage liability coverage. Since it is included with the policy, it is difficult to say what host beverage liability insurance costs, but general liability tends to be cheaper than alcohol liability insurance.

If you have a business or non-profit organization that offers an opportunity that will sell alcohol, the host beverage liability within the general liability policy will generally provide coverage for those scenarios. However, your limits may not be sufficient for a special occasion, so check your policy and consider increasing your coverage.

Host beverage liability does not protect against all claims. You may still be sued by a third party under tort law if an alcohol-related injury or damage is due to your negligence. For this reason, social hosts may consider buying event insurance.

Policies that supplement liquor liability insurance

As you can see, liquor liability insurance is often best when combined with other policies your business may need:

  • General liability: A commercial general liability policy provides coverage against claims arising from third party damages and bodily injury arising from the business’ day-to-day activities. If your company produces alcohol that makes someone sick, that risk will fall within the completed operations of the general liability policy.
  • Workers’ compensation: Restaurant and bar employees face various work-related hazards, such as wet floors, broken glass, intoxicated customers and a fast-paced environment. Liquor liability insurance rarely covers employee injuries, which necessitates workers’ compensation insurance for some businesses.
  • BOP: A BOP is usually a combination of cover for the actual business (property and operations). It is often more cost effective to bundle the property owners and general liability into the BOP.

Bottom Line

Owning and running a small business can be difficult and stressful. Having a liquor liability insurance policy can provide the peace of mind that comes from knowing that, in the event of an unforeseen circumstance, help is available. Whether you are serving liquor at a one-time event as a non-profit organization or you are selling and serving alcohol, you will want to consider buying a liquor liability insurance policy.


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