If you own a business that serves alcohol, you’ll need to invest in liquor liability insurance. Some states require businesses to carry this insurance to receive a liquor license. The reason you’ll need liquor liability insurance is twofold. One, most general liability policies make exceptions and do not cover alcohol-related damages. Two, the United States has something called dram shop laws. We’ll cover those below.
Dram Shop Laws
In 18th century Britain, there were stores or shops that served alcohol by the ¾ teaspoon. This tiny unit of measurement was called a “dram.” Stores that sold alcohol by the dram were called dram shops.
Dram shop laws are imposed at the state level. They are statutes that allow for third-party victims of drunken misconduct to file a legal claim against the wait staff, the establishment, or the store clerk that sold alcohol to a clearly intoxicated person or a minor. Victims of drunken crimes can also file suit against the person who committed the crime and receive compensation from both parties.
Dram shop laws were put in place to discourage establishments from serving or selling alcohol to two types of people. According to the law, those who are already intoxicated and minors should not be receiving alcohol. In the case of a bar, this can be difficult to assess. It’s not always easy to tell who’s intoxicated and who isn’t. After all, liquor affects everyone differently.
Additionally, you may have a bouncer or store clerk who’s checking identification. Even so, fake IDs have gotten dramatically better over recent years. It’s for these reasons and more that you should consider liquor liability insurance for your establishment. Next, we’ll cover why there are different levels of coverage.
Liquor Liability Limits
Not all alcohol-serving businesses need the same amount of liquor liability coverage. If you’re a convenience store that only sells six-packs of beer, you probably don’t need a high-limit insurance policy. A full-service bar will need higher insurance coverage limits. This is because the bar could have hundreds of patrons a day who end up driving after drinking. Different businesses carry different risk profiles, so you should purchase your liquor liability insurance accordingly.
