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Liquor Liability Insurance

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Shaken, but not stirred. Liquor liability coverage helps protect you from the risks associated with serving alcohol.

Bodily injury
Injuries

An intoxicated customer knocks another patron to the ground. She breaks her wrist in the fall and sues your business for the medical expenses.

Property damage

A drunk patron trips and spills red wine on some other guests, ruining their designer clothing.

Court and legal fees
Legal fees & medical payments

A customer gets in an accident on the way home that seriously injures the other driver. Your business can be held liable if the driver was over the limit.

What is Liquor Liability insurance?

Liquor liability insurance helps protect businesses that manufacture, sell and serve alcohol. It’s designed to cover losses resulting from intoxicated guests. These losses include: 

  • Legal costs 
  • Lawsuit settlements 
  • Repairs to fix property damage 
  • Medical expenses related to injuries

 

For example, say there is a tipsy customer at your restaurant. While on their way to the bathroom, they accidentally knock another patron to the ground. The guest who fell breaks their wrist and decides to sue your business to cover the medical costs.

 

Liquor liability insurance can help by paying for the medical bills and any associated legal fees. Generally, liquor liability insurance covers:

 

Property damage. A tipsy patron excitedly sloshes their red wine while telling a story at your restaurant’s bar area. Unfortunately, the wine lands on another patron’s new $900 designer shoes. 

 

Slips and falls. An intoxicated patron injures themselves or another guest at your business.

 

Bodily injury. A group comes to celebrate a friend’s birthday with dinner and drinks. They don’t seem intoxicated as they leave, but they get in an accident on the way home that seriously injures the other driver. Your business can be held liable for the damages if the driver was over the limit.

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Who needs Liquor Liability insurance?

If your business sells or serves alcoholic beverages, you likely need liquor liability insurance. 

 

It doesn’t matter if you run a small coffee shop or a 50-seat fine-dining restaurant — food service establishments of all sizes could benefit from purchasing coverage.

 

There are laws in 30 states that allow any business that serves alcohol to be held liable for selling or serving alcohol to individuals who cause injuries or death as a result of their intoxication. These are known as “dram shop laws.” We’ll come back to these in the next section.

 

While some states may not require liquor liability insurance, your landlord may require it if you rent your restaurant space. Business property owners who want to protect their real estate from alcohol-related damages may ask that you buy insurance coverage.

 

Similarly, banks and lenders who want to protect their financial investment (that’s you) may ask you to get this coverage, too. Having liquor liability insurance makes you less of a risk from their point of view. 

 

Note that some states require proof of insurance in order get a liquor license.

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Why is Liquor Liability important?

While having liquor liability coverage makes good business sense, several critical factors turn this type of insurance from “nice to have” to “essential.”

1. Dram shop laws 

The term “dram shop” refers to a bar or tavern that sold alcohol by the dram — basically by the spoonful. Apparently, that’s how they used to drink back in the day.

 

Today, dram shop laws refer to state laws that hold a business liable for selling or serving alcohol to individuals who cause injuries or death because they’re intoxicated.

 

For example, say a group comes to your restaurant to celebrate a friend’s birthday. They order multiple rounds of drinks and have a good time. Unfortunately, they get into a car accident on the way home that injures the other driver. Your business can be sued if the driver was over the legal limit.While it may seem unfair, your business could be held responsible for this accident.

 

Currently, 30 states in the U.S. allow any business that serves alcohol to be held liable. Laws vary by state, so it’s best to check what the liabilities are in your area.

2. General liability doesn’t cover alcohol-related incidents

This is a big one. You might have thought you were covered because you already have general liability insurance.

 

While general liability insurance covers bodily injuries and damage to someone else’s belongings, it doesn’t include alcohol-related incidents. 

 

Most commercial general liability insurance excludes liquor liability. Businesses need to buy a stand-alone policy or bundle it with general liability coverage.

 

With NEXT, liquor liability is automatically included for businesses who report that they serve alcohol. It’s already part of the general liability coverage.

 

3. Settlements and legals fees add up

Whether it’s attorney fees, court costs or damages, a lawsuit creates unplanned costs that could sink even the most popular restaurant in town.

 

Defending a lawsuit can cost thousands of dollars before it ever reaches court, with the costs soaring higher for more complex cases. 

 

Even if you have strict protocols to prevent overserving or for handling intoxicated people, accidents happen. If you’re not adequately insured, a single incident can impact your bottom line.

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Host Liquor Liability vs. Liquor Liability

Host liquor liability insurance comes up a lot in context with liquor liability. While there are overlapping coverages, host liquor liability is a short-term, but ultimately a different type of policy than liquor liability.

 

This insurance is designed for a person or company hosting private events such as weddings or corporate events. Many hosts don’t realize that they could be held liable for their guest’s actions by providing alcohol at these special events.

 

Host liquor liability coverage doesn’t cover businesses that manufacture, serve or sell alcohol as part of their operations. It’s more for businesses that allow alcohol consumption on their premises temporarily.

 

Typically, it can be purchased by event or for short, temporary durations on the premises.

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How do I get Liquor Liability insurance?

NEXT Insurance is committed to making liquor liability insurance accessible to business owners whether serving tableside or offering drinks to go. 

 

We’re changing the game by making insurance easy to understand and simple to manage with all your coverage options in one place.

 

We now offer liquor liability insurance in 38* states. Small business owners can get the right amount of insurance they need to run their business with peace of mind.

 

But how much will liquor liability insurance cost? That depends on the type of business you have, but getting a quote from NEXT Insurance is simple.

 

Just answer a few questions online, and you can purchase liquor liability insurance alongside our general liability policy. Coverage starts at $150 per month. The whole process takes around 10 minutes.

 

*We now offer liquor liability insurance in 38 states. Currently not available in Alaska, Alabama, District of Columbia, Florida, Iowa, Illinois, Massachusetts, Michigan, Minnesota, Missouri, New York, Utah, Vermont.

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