Any time a guest or patron consumes alcohol your business provides or serves, you could be held at least partly responsible for harm stemming from their actions. This applies whether the harm happens on your premises or after they leave. Liquor liability insurance is the best way to cover related expenses and judgments.
Breweries, vineyards and other establishments that offer tastings are all at risk for such claims, which include assault and battery, driving under the influence and property damage. Caterers, clubs, grocery stores and retailers that provide alcohol samples can also find themselves named in a lawsuit.
Even if you have strict rules about not serving people who are inebriated, you could find yourself accused of participating in an incident simply because you provided the drinks.
If you make, serve or sell alcoholic beverages for a fee, you should obtain liquor liability insurance because your commercial general liability insurance won’t cover this risk. You may also hear liquor liability insurance referred to as “dram shop insurance,” and some states even have specific dram shop laws.
If you are in the business of selling or serving wine, beer or distilled spirits, you should know these laws well and follow the insurance liability rules they establish.
What expenses are covered?
Liquor liability policies are meant for companies that sell, make or serve alcohol as part of their business operations. They will help pay for several types of expenses you could face in a claim or lawsuit. These include:
- Your legal defense, such as attorneys fees, expert testimony and investigations
- Settlements or judgments you are required to pay
- Costs to repair damage to the property of others done by the patron who consumed your alcohol
- Medical bills for anyone who is injured in the event in question
- Death benefits if someone dies as the result of your service or sales
Note that liquor liability will not cover any damage done to your own property or injuries to your own staff. Those risks are covered under your commercial property and workers’ compensation insurance, respectively.
How do you get liquor liability insurance?
Liquor liability insurance can be purchased as a stand-alone coverage or it can be added to your commercial general liability policy as an “endorsement.”
Some program insurance and business owners policies designed specifically for companies that provide tastings already include liquor liability, but check your payout limits. If they are too low, you may be able to increase them. If you can’t, your JAISIN advisor might suggest buying excess liability insurance, an affordable way to add substantially more coverage to a primary liability policy.
If you own a store or other business and are allowing a vendor to offer a tasting at your establishment, you should make sure they have liquor liability coverage. In fact, your state may require proof of insurance before permitting any tastings.
Liquor liability insurance is also available if you host pop-up events or serve at off-site festivals, fairs, community events or private parties. But talk to your JAISIN broker about getting the policy written to cover those off-premises activities. And even if the grocer, wedding party, tasting club or business hosting the event carries host party liquor liability insurance, you should still carry your own commercial liquor liability policy.
Your tasting room and mobile events are enjoyed by many. Getting the right insurance will allow you to keep serving your community — even if a patron misuses your product. Call or email your JAISIN advisor today.
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