Liquor liability insurance provides coverage for legal fees, settlements, and medical costs if alcohol is sold to an intoxicated person who then harms others or damages property.
Most states require every business that sells or serves alcohol to carry liquor liability insurance. Your general liability policy likely excludes alcohol-related liability – that’s why you may need liquor liability in addition to other policies. Securing this policy may be a requirement for obtaining a liquor license or a commercial lease. Even when it’s not required, a small business owner might purchase it to gain protection against the actions of intoxicated customers. Read more about liquor liability coverage.
Note: If your small business serves alcohol at a company function, you are exposed to the same risks as a business that sells alcohol. Host liquor liability insurance covers corporate functions, fundraisers, and other events where alcohol is served.
Liquor liability is crucial in states with dram shop laws, which place the blame for actions by intoxicated individuals on the establishment that served them. That means you could end up footing the bill for property damage, medical expenses, and costs related to a lawsuit.