Liquor Liability Insurance: Costs and Coverage
Nathan Weller is an Insurance Expert focusing on insurance for small business. He has 15 years experience in insurance operations, FNOL, and claims handling.
Liquor liability insurance covers businesses that sell and serve alcohol. The cost for liquor liability insurance can range from $270 to $2,000 annually. Liquor liability insurance handles claims arising out of the actions of an intoxicated patron. Whether the claim is for damage or injury, the business can be held legally liable for its role in providing alcohol to an intoxicated customer.
Coverage for alcohol-related incidents is limited in general liability policies, making liquor liability insurance necessary for businesses selling alcohol. To get a fast liquor liability quote for your small business, contact Tivly. Its experts will pair you with the provider that can get you covered properly.
Liquor Liability Insurance Costs, Coverage & Deductible by Business Type
Business Type | Coverage | Annual Premium Cost | Deductible |
|---|---|---|---|
Bar | $ 2 million | $171 to $2,060 | $1,000 |
Restaurant | $ 1 million | $45 to $545 | $1,000 |
Caterer | $ 1 million | $65 to $775 | $1,000 |
Coffee Shop/Cafe | $ 1 million | $21 to $255 | $1,000 |
Nonprofit | $ 1 million | $51 to $615 | $1,000 |
Club | $ 1 million | $22 to $270 | $1,000 |
When pricing this type of policy, an insurance company will consider many factors. These include the size of your business, the policy limit, and your state’s legal requirements. Your state’s legal requirements are set by what is known as dram shop laws.
Dram shop laws are laws created by state governments to set liability for businesses selling alcohol. These laws determine the scope of who is liable for a loss as the result of alcohol consumption. Since dram shop laws aren’t regulated federally, it’s up to each state to decide how liability is determined. Not every state has dram shop laws, so you’ll want to check your state to see if they have a law and, if so, what the specific details are.
Five Factors That Impact Liquor Liability Insurance Cost
How To Reduce Your Liquor Liability Insurance Costs
Risk Engineering plays an essential part for an insurance carrier in determining the insurability of a business and the cost of the policy. As a business owner, there are proactive steps you can take to help reduce the cost of liquor liability insurance by managing the risk:
- Train your employees: Many training courses are offered for businesses that serve alcohol, such as alcohol awareness training. This training can result in a premium discount.
- Hire professional bartenders: Most bartenders are trained to detect intoxication signs and prevent overconsumption of alcohol. Hopefully, they can stop trouble before it happens.
- Don’t serve minors: A young couple comes into the restaurant and orders the lunch special and a beer. The trained server makes sure the customers are of the legal age to order alcohol. You can’t be too cautious. Your employees should check identification for any patron who looks younger than 30 years old.
- Use a voucher system: If your business is hosting a social event with alcohol, consider using a drink voucher to limit the consumption of alcohol.
- Offer nonalcoholic beverages and serve food: By offering food and nonalcoholic beverages, you can help your patrons offset any consumption of alcohol.
Who Needs Liquor Liability Insurance
The following businesses should consider liquor liability insurance:
- Bars
- Restaurants
- Caterers
- Food trucks
- Breweries and wineries
- Delis
- Cafes
- Liquor stores
- Grocery stores that sell beer, wine, or liquor
- Certain event and performance spaces
- Landlords who have tenants engaged in the above activities
How Does Liquor Liability Insurance Coverage Work
If your business sells or serves alcohol, then you’ll want to consider purchasing a liquor liability insurance policy. The policy provides coverage for your business when someone damages third-party property or becomes injured due to their intoxication:
- Jessica has had too much to drink at Bob’s Bottom Shelf Bourbon. She leaves the business and doesn’t like what the parked car on the street is saying to her, so she kicks the passenger door, denting it. The damage to the vehicle is an example of third-party damage that Bob’s Bottom Shelf Bourbon could be found liable legally.
- Jack is playing darts at his favorite campus bar, Study Break. Unfortunately, he’s had too much to drink and suddenly sees three dartboards instead of one. Jack takes a guess and mistakenly throws a dart into the shoulder of another customer. This is an example of a bodily injury claim for which Study Break could be liable for legally.
Liquor Liability vs Host Liquor Liability
Liquor liability coverage is third-party coverage. If your business doesn’t manufacture, sell, or serve alcoholic beverages, you may not need liquor liability insurance. Standard general liability policies include host liquor liability coverage. Since it’s included in the policy, it’s hard to say what host liquor liability insurance costs but general liability tends to be less expensive than alcohol liability insurance.
If you have a business or nonprofit hosting an event that will sell alcohol, the host liquor liability within the general liability policy will generally provide coverage for those scenarios. However, your limits may not be sufficient for a special event, so check your policy and consider increasing your coverage.
Host liquor liability doesn’t protect against all claims. You may still be sued under tort law by a third party if an alcohol-related injury or damage is due to your negligence. For this reason, social hosts may consider buying event insurance.
Policies That Complement Liquor Liability Insurance
As you can see, liquor liability insurance is often best when paired with other policies your business may need:
- General liability: A commercial general liability policy provides coverage against claims arising out of third-party damage and bodily injury that result from the business’s everyday activities. If your company produces alcohol that makes someone ill, that risk will fall within the completed operations of the general liability policy.
- Workers compensation: Restaurant and bar employees face several job-related hazards, such as wet floors, broken glass, intoxicated customers, and a fast-paced environment. Liquor liability insurance seldom covers employee injuries, making workers’ compensation insurance necessary for some businesses.
- BOP: A BOP is usually a combination of coverages for the actual business (property and operations). It’s often more cost-effective to bundle the property owners and general liability into the BOP.
Bottom Line
Owning and running a small business can be difficult and stressful. Having a liquor liability insurance policy can provide the peace of mind that comes from knowing that, in the event of an unforeseen circumstance, there’s help available. Whether you’re serving liquor at a one-time event as a nonprofit organization or you’re in the business of selling and serving alcohol, you’ll want to consider purchasing a liquor liability insurance policy.
