Liquor liability insurance

Liquor liability insurance provides crucial protection against financial losses at restaurants, catering businesses, food trucks, and other establishments that serve alcohol. Most states require this coverage if you serve alcoholic drinks to your patrons.

For example, an intoxicated customer at a tavern might stumbles into another customer, who falls and breaks an arm. When the injured customer sues your business to recoup their medical expenses, your liquor liability policy would help cover the cost of the ambulance ride and emergency room visit.

In most states, every business that sells beer, wine, or liquor needs liquor liability insurance. That's true for every type of business that sells alcoholic beverages, from grocery stores to convenience stores, breweries, and wineries.

If an intoxicated customer buys an alcoholic drink from your liquor store then goes on to break a car window, your liquor liability policy would help pay to replace the broken window, or cover legal costs if the car's owner decides to file a lawsuit.

Every business that manufactures, distributes, or transports alcoholic products should carry liquor liability insurance, in addition to product liability insurance. That's because you can be held responsible for harm caused by your products, even if you're not the person who directly sold it to a customer.

For example, say a customer who drinks a product made at your beverage manufacturing plant becomes intoxicated, and an argument escalates into physical violence. The injured party could seek damages from your business if they believe your company was responsible for selling a product with a deceptively high alcohol content.

Both liquor liability insurance and general liability insurance can help pay for lawsuits against business owners for alcohol-associated risks. However, they do each provide unique coverage for certain types of situations.

General liability insurance protects your business against lawsuits related to third-party injuries or property damage. This policy often includes host liquor liability coverage, which can cover claims related to a guest who consumes too much alcohol at a business-hosted event, and then as a result causes third-party property damage or bodily injury because of their intoxication.

Liquor liability insurance operates differently from this coverage in that it protects businesses that sell or serve alcohol for profit against lawsuits related to inebriated customers who cause bodily harm or damage to others. Often this coverage is required by state dram shop laws for any business that manufactures, serves, or sells alcohol.

Liquor liability insurance is designed for businesses that sell alcohol, but other businesses can take on those same risks if they decide to serve alcohol at a company function. Host liquor liability insurance, often included in general liability insurance, covers corporate functions, fundraisers, and other events where alcohol is served.

If your business is hosting an event with other specialized risks, you may want to look into special event insurance, as your general liability policy typically covers only risks faced during its normal operations.

Find out more about the difference between liquor liability insurance and host liquor liability insurance.

If your state doesn't have dram shop laws, you're still not immune from lawsuits related to selling or serving alcohol. In fact, anyone can file a lawsuit against your business if they believe you were in some way responsible for the actions of an intoxicated customer.

Even though the court is more likely to rule in your favor, your business will still have to pay for attorney's fees and court costs, which can be significant. Additionally, you might still need liquor liability insurance to get a liquor license, sign a lease, or qualify for a loan.

That's why it's important for any business that profits from liquor sales to carry this coverage, regardless of the laws in their state.

You can customize your liquor liability insurance policy by adding coverage for specific risks, such as assault and battery claims or mental damages. You might also only need a short-term policy, such as one that would cover a bartender serving at a wedding or other event.

Depending on your needs, you may be able to add this coverage to your general liability insurance policy or buy it as a standalone policy.

Talk to a licensed insurance agent to determine which coverage options are important for your business, or apply for free online quotes if you're ready to buy a policy today.