Liquor Liability Insurance – Does Your Business Need It?

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Liquor Liability Insurance – Does Your Business Need It?

The Importance of Liquor Liability Coverage in Chicago.

What is Liquor Liability Insurance?

If your establishment sells or serves alcohol, a liquor liability insurance policy can protect you and your business from the financial consequences of a liquor-related lawsuit.  This protection may mean the difference between maintaining a successful business and closing shop should a liability lawsuit arise.  Liquor liability coverage is sold in a couple different ways.  In some cases, it can be added on as an endorsement, or addition, to a general liability policy.  In the event a policy endorsement to add liquor liability coverage is not available, a standalone policy may be issued.  

Most states in the United States have established dram shop laws and require businesses that sell or serve alcohol to carry liquor liability insurance.  Dram shop laws are based on the principle that any business which profits from the sale of alcohol should be held liable for any resulting damages.As you may already expect, a large amount of alcohol related claims filed against bars, taverns and restaurants are as a result of liquor-induced occurrences.  Common related lawsuits include:

  • Auto accidents
  • Fights
  • Sexual harassment or assault

Liquor Liability Insurance vs. Dram Shop

Liquor liability insurance and dram shop are one in the same.  A dram shop is an establishment such as a bar or tavern where alcoholic beverages are sold.  Historically, dram was a unit of weight for alcoholic drinks.  A drink would be ordered by “dram.”  This wording was later replaced by what we know as “shot.”

Does Your Business Need Liquor Liability Insurance?

Most states require liquor liability insurance if you operate a business that sells, serves or assists in the sale of alcohol.  Liquor liability assigns the legal, as well as financial, responsibilities a business has when they sell liquor.

liquor liability insurance dram shop

It is generally believed that only businesses such as restaurants, bars, and retail liquor stores need liquor liability insurance.  Your business should carry liquor liability insurance if any of the following apply:

  • Your business sells at retail or distributes liquor
  • Your business serves liquor
  • Your business allows customers to BYOB
  • Your business serves alcoholic beverages at a special event
  • Your business allows others to serve alcohol on your premises

How Much Does Liquor Liability Insurance Cost?

When it comes to costs associated with a liquor liability insurance policy, there is no one-size-fits-all solution to premiums.  Liquor liability, like General Liability, is determined by a number of factors including business size, liquor sales, experience, and even hours of operation.  Call an agent at Insured ASAP today for a clear idea of your businesses liquor liability insurance costs.

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