Liquor Liability Coverage

The insurance industry is no stranger to bar and tavern exposures, but insuring bar and tavern accounts can be uniquely challenging due to one major factor – alcohol consumption. Any establishment that serves alcohol should consider liquor liability coverage, which provides the proper insurance for anyone who serves alcohol. And alcohol does not just mean beer; it can include mixed drinks, wine, or high-end liquor. A typical commercial general liability policy does not provide enough coverage due to the liquor liability exclusion, as no coverage is provided when selling, serving or distributing alcohol (except for very few situations otherwise known as “host liquor”). Liquor liability coverage is an important coverage for restaurants or fine dining establishment too.

Bar owners can be brought into claims and lawsuits that include allegations of over-serving patrons. Arguably, the most devastating claims are those concerning patrons who leave the bar intoxicated and are involved in a motor vehicle accident. And even though the patron was the operator of the vehicle, the bar is seen as liable for potential over-serving and failure to properly monitor the intoxication of the patron. Often times the driver, if they survive the accident, goes to jail, but civil action may be brought against the bar.

Alcohol-related claims do not always result in fatalities, however they do present an exposure that can be not only damaging to the reputation of the bar, but could jeopardize the survivability of the business altogether.

Consider a few of the horrifying statistics provided by the Centers for Disease Control and Prevention (CDC):

• On average, 30 people die every day on United States roadways as a result of crashes involving an alcohol-impaired driver.
• In 2013: 10,076 people were killed in alcohol-related accidents; 1,149 were less than 14 years of age.
• In 2010: over 1.4 million people were arrested for driving under the influence of alcohol or narcotics.

So what can bar owners do to protect themselves? A primary focus for managing this risk is implementing training for serving guests and monitoring for intoxication. Knowing the signs of when a patron has “had enough” and discontinuing service is a significant step toward guest safety. There are multiple safety programs that can provide needed instruction, such as Training for Intervention ProcedureS (TIPS) or Techniques of Alcohol Management (TAM), as well as various state approved programs too numerous to mention.  In addition, some states actually require businesses to provide server training as a condition of obtaining a liquor license. By controlling liquor consumption at the server level, these proactive steps help to reduce the potential exposure for the bar.

Talk to your independent insurance agent; they can help you recognize your specific insurance needs. By having the right coverage in place and a proactive attitude toward minimizing intoxication, you are not only protecting your business, but the public as a whole. We cannot control the overall national statistics, but anything we can do – one bar at a time and one patron at a time – might make our little corners of the world just a little safer. Let that sink in as well.