Too much of a good thing may become a problem, especially when that thing is alcohol. Businesses that serve alcohol could be liable for property damage and injuries that result from consumption, potentially causing catastrophic financial and legal consequences. But, businesses can help to mitigate this risk through safe practices and liquor liability insurance.
How Alcohol May Lead to Liquor Liability
Patrons at bars, restaurants and other establishments may drink alcohol while on the premises, but what happens if someone drinks too much and then drives under the influence? If that individual causes a crash and injures or kills someone, the bar may be named in a lawsuit and accused of overserving the customer.
Lawsuits could occur in other scenarios that result in damage or injuries, such as if a patron gets into a fight while intoxicated. Plus, it’s not just bars that need to worry about this: establishments that serve alcohol, including restaurants, wineries and event venues, could also be liable for property damage and injuries tied to the consumption of alcohol. Even companies that aren’t in the business of serving alcohol may be liable if they provide alcohol or allow alcohol consumption.
The laws that hold businesses responsible for the actions of intoxicated customers are called dram shop laws, and these laws exist in most U.S. states. While they often hold businesses responsible for serving minors, dram shop laws may also hold businesses liable for overserving customers.
Dram Shop Lawsuits Are Common
Lawsuits involving incidents that happened under the influence of alcohol are common and may use dram shop laws to hold the establishment that provided the alcohol liable. A few examples of dram shop lawsuits that have made headlines include:
- A bar in Odessa, Texas, has been sued by the parents of a 19-year-old who was killed in an alcohol-related car accident. The lawsuit, which claims the bar overserved a customer who was obviously intoxicated, is seeking $1 million in damages, according to the Odessa American.
- Delta Air Lines has been accused of overserving a man during a cross-country flight. After exiting the plane, the man ran over and killed his wife in the airport parking lot. A representative of the deceased woman’s estate is suing on behalf of her and their child, who saw the accident, according to Law & Crime.
- A dram shop lawsuit has been settled for $1.2 million. The bars involved claimed the driver, who went on to cause a crash that killed a 17-year-old, showed no sign of intoxication. However, a test shortly after the crash revealed that one of the defendants had a blood alcohol concentration of 0.193, according to the New Jersey Law Journal.
Liquor Liability Insurance
Liquor liability insurance can provide important protection against dram shop lawsuits for businesses that sell alcohol. Bars, taverns, nightclubs, restaurants, liquor stores, convenience stores, grocery stores, caterers, tasting rooms, wineries, distilleries and breweries could all benefit from coverage.
It’s important to note that commercial general liability insurance typically excludes liquor liability coverage for companies that are in the business of making, selling or distributing alcohol. This means that, without liquor liability insurance, your business won’t be protected if you’re named in a lawsuit.
Furthermore, dram shop lawsuits often involve serious injuries or deaths. Since settlements and judgments frequently exceed $1 million, businesses may not survive a lawsuit if they have inadequate insurance coverage.
If your business is named in lawsuit involving alcohol-related property damage, bodily injury or death, liquor liability insurance can help pay for related legal costs, settlements and judgments.
Host Liquor Liability Insurance
Even if a host is not in the business of selling alcohol, they could face liquor liability issues if attendees are consuming alcohol. For example, a company may allow alcohol at a picnic for employees and their families. If any of the attendees drink excessively or an underage individual drinks alcohol, the company may be held liable for resulting property damage or injuries.
Host liquor liability insurance provides coverage for policyholders who are not in the business of selling, manufacturing or distributing alcohol. Unlike liquor liability insurance, host liquor liability insurance may be part of general liability insurance coverage. However, every policy is different, so it’s important to check your policy and verify that your business has the proper coverage.
Liquor Liability Insurance for Events
Special events often involve alcohol, whether the event is an art gallery opening, a wedding, a festival or a concert. Event hosts can face liquor liability under dram shop laws just like bars, restaurants and breweries.
Event liquor liability insurance provides short-term coverage for events and may be included as part of a special event liability policy. This is important coverage for any event where attendees will be consuming alcohol, so make sure to verify your policy terms and conditions with your insurance advisor.
Managing Liquor Liability Exposures
According to the National Highway Traffic Safety Administration (NHTSA), 37 people die in crashes caused by drunk driving each day in the United States. By following risk management policies regarding alcohol, businesses and hosts can help prevent tragedies while protecting themselves from liquor liability lawsuits. While your business should have a comprehensive risk management strategy, simple preventative measures include:
- Do not serve anyone who is visibly intoxicated.
- Check IDs and do not serve minors.
- Train all workers on their legal responsibilities and how to deal with intoxicated individuals.
- Encourage people to find a safe ride home. For example, offer to call taxis for intoxicated patrons or partner with a sober or safe ride program.
- Allow cars to be left in your lot overnight and clearly communicate this to patrons.
Do you need liquor liability coverage?
Whether your business is selling alcohol, providing an open bar or allowing alcohol on a bring-your-own basis, you may need a liquor liability policy. Consider the following scenarios:
- A convenience store sells alcohol to a minor. The minor drinks all of the alcohol immediately and gets into a crash, in which he and another person are seriously injured. The convenience store is sued for selling alcohol to a minor.
- A company holds a holiday party with alcohol for employees and clients. Some of the attendees overindulge. After the party, one of the employees is involved in a fatal crash and the company is named in the resulting lawsuit.
- An art gallery hosts an opening for a new exhibit. At the opening, there’s a self-serve table with champagne and appetizers. A 20-year-old drinks multiple glasses of champagne and then causes a crash that results in severe injuries. The art gallery is sued for overserving and for serving a minor.
Although the host liquor liability coverage provided under general liability insurance may provide coverage for some situations, companies in the business of selling alcohol need to purchase standalone coverage. Special events may also require additional liability protection. To make sure you have the coverage you need, it’s important to always review your policy ahead of any event.
Is your business protected?
Alcohol-related incidents could lead to significant legal and financial consequences for businesses, making liquor liability insurance an essential safeguard. From dram shop lawsuits to host liability issues, establishments and event hosts need to take steps to mitigate risks and secure proper coverage. If you need help assessing your insurance needs and finding a liquor liability policy that meets them, Higginbotham can help. Get in touch with a business insurance specialist today.
