The Commercial Liquor Liability is coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder
Liquor liability is a type of insurance which covers businesses in the event that claims related to liquor are made against the business. Most classically, such claims involve damages as a result of the actions of an intoxicated person, such as a lawsuit filed by someone involved in a crash caused by someone who was drunk. Although damages in such suits can be substantial, businesses often lack adequate liquor liability coverage, and this can expose them to very high liability.
Most nations have laws which state that businesses which manufacture, sell, or serve alcohol can be held liable for the actions of drunken patrons. For example, if someone gets drunk at a bar and is involved in a car wreck, the bar is liable for the drunk’s activity, and the bar could potentially be forced to pay a very high liability claim. People are liable for injuries their drunken patrons do to themselves, as when someone who is intoxicated falls down a flight of stairs, and for accidents which are determined to be the fault of someone who was drunk.
Liquor liability insurance provides coverage for establishments involved in the alcohol business. The terms of the insurance can vary, and it may be attached to a general liability policy as a rider, or purchased as a standalone policy. Business owners should be aware that liquor liability is usually specifically excluded from general liability policies, and that the language of a liquor liability policy can vary.
This coverage is expensive – depending on your location – and it is estimated by experts that only 35% of businesses that should have this coverage actually purchase this coverage. Part of this is because of misconceptions that exist in the hospitality industry regarding the industry’s liability risks for intoxicated patrons. If you live in a state with a “dram shop liability” statute, then purchasing this insurance if your business will manufacture, sell, serve, or facilitate the use of alcohol is very important.