Property Casualty

Setting the Bar for Liquor Liability Insurance

Pat Griffith
Pat Griffith
AVP, Placement Consultant

Will you ever need it? Maybe not (hopefully not!). But if your business sells, manufactures, or distributes alcohol, I’d be careful about what kind of gamble you take when it comes to Liquor Liability insurance.

Think about these scenarios:

  • Someone buys liquor from your business. That same person drinks too much, drives away, and then gets into an accident hurting not just himself or herself, but another driver. The family of the other driver sues your business.
  • A group of friends of legal age buy alcohol from your business. They drink the beverages and then two of them get into a fight…one being seriously injured. The family of the injured sues your business.

Now think about this. Are you willing to risk the loss of your liquor license, business, and perhaps even your home and other personal assets? Given the scenarios just mentioned, that may just be what you’re risking if you don’t have Liquor Liability coverage.

What does Liquor Liability insurance cover and what is the “right” limit?

Quite a bit, actually. If your business were to be sued, Liquor Liability insurance covers your court costs, witness and investigator fees, and settlements or judgments. Depending on the policy, it may also include:

  • Assault and battery coverage
  • Defense coverage
  • Intoxicated employee coverage
  • Off-premises coverage
  • Mental damaged coverage
  • Safety training

Additionally, it’s important to know if your umbrella policy sits on top of your Liquor Liability policy. The majority do not. With Holmes Murphy, we try to obtain excess limits on every policy we write.

How much does it cost?

This really depends. Premiums for liquor liability are based on the historical risk for the business. Liquor Liability insurance can seem expensive, especially if you never have a claim. It may seem like money “down the drain” so to speak. However, if you get sued and that same policy pays tens of thousands of dollars in attorney bills on top of a $1 million judgement, well then, it was worth it, right?

How can you lower the costs of liquor liability losses?

I’d suggest keeping in mind the following:

  • Education — This is key! Liquor liability training should be required for all employees. One such training that comes to mind is called TIPS. It’s a “Training for Intervention ProcedureS” workshop. This can provide a “reasonable efforts defense” if you ever find your business in a lawsuit.
  • Risk Management — This includes:
    • Checking all IDs. Liquor Liability coverage does not provide coverage for claims involving accidents caused by intoxicated minors.
    • Creating a zero-tolerance policy for employees. There should be severe consequences to employees who do not follow company policies.
    • Pulling receipts and surveillance video upon hearing of the possibility you could be pulled into a suit. This could prove very valuable in your defense.

I certainly don’t want to sound dire by any means. But it’s important to carefully think out your coverages and what may be in the best interest of your business. Is it Liquor Liability coverage? Maybe. If you sell, manufacture, or distribute alcohol, we should at least discuss your options. Plus, Holmes Murphy can help in the areas of education and risk management. Just reach out to us!

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