| Liquor Liability Policy |
| Written by Aaron Adam | |
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It's an occupational hazard of any business that sells or serves beer, liquor or other forms of alcohol that occasionally things might get a little out of control, and some damages or injuries may result. While common sense would seem to dictate that the fault for these incidents lie with the customers and not the establishment -- after all, no one forced them to drink -- the law says otherwise. Establishments that serve alcohol can be held liable for a number of damages and injuries that result from their patrons' inebriated conduct.
Claims that can result from the conduct of inebriated persons who bought alcohol at your establishment can be steep, as they can include any altercations they get into or accidents that happen after they leave your establishment that result from your patrons' drinking. Court decisions and state laws throughout the U.S. are also increasingly holding sellers of alcoholic beverages responsible for any damages their patrons cause. Liquor liability coverageTo help protect businesses from potential insolvency from litigation involving alcohol-related damages, the insurance industry offers liquor liability coverage as a supplement to commercial general liability coverage. Many states are requiring businesses that sell alcohol to carry liquor liability coverage to provide coverage to the general public for claims that arise from alcohol-related incidents and to help protect businesses.Liquor liability coverage, in general, provides coverage for property damage or bodily injury claims that the insured could be held liable for as a result of:
Assault and battery claims: The vast majority of claims filed against restaurants, bars and hotels result from fights or altercations. Your liquor liability policy needs to include coverage for assault and battery claims. Employee coverage: No matter how tough of a boss you are or how loyal your employees may be, sooner or later some of them are going to drink. Make sure that your policy covers your employees as well as your patrons. Mental damages: Plaintiffs in injury claims often sue for damages including stress, mental anguish or psychological damage. If the court decides to award these damages they can be costly, so make sure your policy covers them. Defense costs: Attorney's fees can eat up a lot of your profit, especially if you're facing multiple claims. Make sure your policy includes defense costs and also be sure that the coverage limits for these costs are generous. In general, premiums for a liquor liability policy start at about $500 per month and may run as high as $10,000, depending on the size of the business and the assessed level of risk. Policy limits are usually about $1 million or top out at limits equal to your CGL policy. How it worksHere's an example of how liquor liability coverage works:Some patrons of Moe's Bar become intoxicated and later a fight breaks out among them. In the course of the fight, another patron of the bar is hit by a beer bottle, causing injury. The patron sues the bar, claiming that the establishment was negligent in not refusing service to the patrons, who she alleges were obviously intoxicated. The patron seeks damages of $100,000. Because Moe's Bar has a liquor liability policy, and the policy includes coverage for assault and battery claims and defense costs, the insurer will help Moe's defend the suit and pay any damages the court may award the patron. Take actionIn addition to purchasing a liquor liability policy, businesses can limit their exposure to claims by taking a few proactive steps such as:
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