Liquor Liability Insurance
Serve or sell alcohol and the law can hold you answerable for what a customer does afterward.
Any business that sells or serves alcohol, not only the ones that look like bars.
The exposure attaches to the sale, so it reaches retailers as well as venues. A grocery store selling a six-pack and a nightclub running a full bar are on the same side of the dram shop line.
- Bars and nightclubs.
- Restaurants, and caterers serving alcohol at someone else's venue.
- Breweries and wineries.
- Liquor stores and grocery stores that sell alcohol.
- Any other business that sells or serves alcohol, whether or not that is its main trade.
Many business policies exclude alcohol-related claims outright. That exclusion is the gap this contract fills.
If a business sells alcohol to a customer who then causes property damage, or injury to themselves or to someone else, while intoxicated, the business can be held responsible. It might seem unfair. It is nonetheless how the exposure works.
Liquor liability is written as its own policy because it has to be. Many business policies specifically exclude any claim resulting from an alcohol-related incident, so without this coverage both the defense and the damages are the owner's own problem.
Where liquor liability claims come from.
The incident usually happens somewhere the business will never see.
- Strict liability removes your best defense. Under dram shop law the question is not whether staff behaved reasonably. Serving somebody already intoxicated can be enough on its own, and the business can be answerable for what that person does next.
- Injury to the intoxicated customer counts. The claim is not limited to third parties. A customer who harms themselves after being served can be the one bringing it.
- Staff physically managing a patron. Escorting an intoxicated customer off the premises is an ordinary part of running a venue, and it is also the situation where a claim against your staff most easily arises.
The options that decide what this policy is worth.
Liquor liability wordings differ on exactly the points most likely to be tested.
- Look for assault and battery coverage. Claims against your staff, including those arising from removing a drunk patron from the premises, are a distinct exposure. Confirm the policy reaches them rather than assuming the liquor grant does it.
- Ask about coverage for litigation costs. The gray-area outcome, where a court awards no damages and each side pays its own legal fees, is common enough to be worth insuring against specifically.
- Confirm it matches how you actually sell. Service on the premises, sale for consumption elsewhere, and catering at a third-party venue are different activities. The policy should be written against the ones the business actually does.
- Do not treat it as a duplicate of general liability. General liability answers ordinary premises and operations claims. The alcohol-related claim is carved out of it, which is why the two policies sit side by side rather than one inside the other.
Liquor liability questions we hear most
Doesn't our general business policy cover this already?
Often the opposite. Many business policies specifically exclude any claim resulting from an alcohol-related incident, which is the reason liquor liability is written as a separate contract. It is worth reading the exclusion before relying on the policy.
What is a dram shop law?
Dram shop laws apply to places where alcohol is sold, and most jurisdictions have them. They create strict liability for a business that serves alcohol to somebody who is already intoxicated, meaning the business can be held responsible for that person's subsequent actions without proof that it acted recklessly.
Can we be liable for something that happens after the customer leaves?
Yes. If a customer who was served while intoxicated goes on to cause property damage or injury, to themselves or to others, the business that sold the alcohol can be held responsible for it.
Does the policy pay to defend a claim we expect to win?
That is much of the point. Legal costs are incurred defending a claim whatever the outcome, and a case can end with no damages awarded while each side still pays its own fees. Coverage for litigation costs is worth asking about alongside the damages limit.
Do retailers need this, or only bars and restaurants?
Any business that sells or serves alcohol may need it. That includes bars, nightclubs, restaurants, caterers, breweries, wineries, liquor stores and grocery stores.
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Let's put the right policy in place.
Oxford Risk LLC is an independent agency. We represent you rather than a single carrier, which means we can place your coverage with the company whose appetite actually fits your risk. Tell us what you need to protect and an advisor will take it from there.
- Call (330) 315-3081
- Hours Monday - Friday: 8:00 AM - 4:00 PM
- Offices Fairlawn, OH, Cranberry Township, PA, Columbus, OH, Livonia, MI