Do You Need Liquor Liability Insurance?

Posted: June 26, 2019

Americans enjoy meeting for a drink so much that bars and nightclubs have become a 27-billion-dollar industry. While the vast majority of patrons use good judgement while drinking and safely make it home, there’s always a chance that someone may leave and hurt themselves or other people. Learn more about how this situation effects restaurant and bar owners and why liquor liability insurance is important.

Request a quote for Liquor Liability Insurance from King Street Agency today.

What Is Liquor Liability Insurance?

Many businesses make their profits from providing an environment for customers to consume alcohol. As such, they bear responsibility for the well-being of their patrons. To avoid expensive lawsuits due to customers who get into car accidents, commit crimes, or injure themselves, businesses that serve liquor are required to purchase liquor liability coverage in most states. Since bar and club owners could be liable for thousands of dollars in lawyer fees, this coverage could save them thousands of dollars.

The Dram Shop Law

Dram Shop Laws are applicable in 43 states. These laws hold a business accountable for the well-being of their customers after they leave. These laws apply in many ways, including:

  • If an intoxicated patron gets in a fist fight outside your establishment, you can be held liable.
  • A customer who leaves and causes a car accident that hurts others can sue you.
  • If an intoxicated customer leaves your bar and commits a violent act, you can be held liable.

By purchasing liquor liability insurance, you protect your business from these and other violations of the dram shop law.

While South Carolina does not have an explicit dram shop statue, South Carolina courts still allow injury victims to pursue compensation from alcohol serving establishments on the basis of alcohol-related criminal statues and negligence law.

What Types of Businesses Need Liquor Liability Coverage?

If your business serves liquor, then you very likely need liquor liability coverage. Some of the most common businesses that require liquor liability insurance include:

  • Bars
  • Restaurants that serve alcohol
  • Breweries
  • Wineries
  • Nightclubs
  • Liquor stores
  • Caterers

Cost Factors For Liquor Liability Insurance

The amount you’ll pay for liquor liability insurance depends on a few factors, including:

  • Exposure to Liquor. The more your business depends on the sale of liquor, the greater the price you may pay for a liquor liability policy. For example, a caterer who mostly provides food may have a lower price than a bar who’s profits come exclusively from liquor.
  • Location. Some locations are notorious for incidents occurring and more claims are filed in these areas. A more dangerous location will typically demand a higher premium.
  • If your business has filed many claims in the past, the cost of coverage will be higher than if they’ve filed little to no claims.

If We Occasionally Serve Liquor, Do We Need Insurance?

One major caveat to liquor liability is that it applies to businesses that profit off the sale of liquor, but it isn’t necessary for those who host occasional parties. For instance, if a company holds a Christmas party and serves eggnog and other alcoholic beverages, they don’t have to purchase a liquor liability policy. Instead, their general liability insurance may include host liquor liability coverage that would cover them in the event of a third-party claim.

Limitations of Liquor Liability Coverage

To thoroughly understand whether you would benefit from liquor liability coverage, it’s also important to know its limitations. Learn more about what isn’t covered:

  • Damage to Your Property. Claims related to patrons leaving and causing injury are covered. But if a customer slips and knocks over an expensive shelf or throws a brick through the window causing property damage, that is not covered. This is an important distinction to bring up with our agents so you know you’re getting the coverage that’s right for you.
  • Other Claims, Such as Underage Drinking. If an underage drinker leaves your establishment and their family finds out and sues, this type of claim is not a part of liquor liability coverage. It’s vital for every business to know the situations that may occur and the types of insurance that will cover them.

Speak With A Knowledgeable Agent

At King Street Agency, our knowledgeable agents will be happy to walk you through your insurance needs. We can discuss the details of liquor liability insurance together, find out if you need it, or help you to find a similar policy that may benefit you more.

Contact us today to speak with an agent, or request a quote online.