What is liquor liability insurance?
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.
When do businesses need liquor liability insurance?
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 business owner might purchase it to gain protection against the actions of intoxicated customers. Read more about liquor liability coverage.
Businesses that may need liquor liability insurance include:
- Bars
- Breweries
- Catering businesses
- Convenience stores
- Food trucks
- Food vendors
- Grocery stores
- Liquor stores
- Restaurants
- Wineries
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.
Businesses in states with dram shop laws also need this policy
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.
Liquor liability insurance costs
For a bar, the median annual premium for liquor liability insurance is slightly more than $2,000. However, a restaurant typically pays less than $600 a year. The cost depends on:
- Industry and risk
- Coverage limits
- Location
- Percentage of sales from alcohol