Those who own establishments serving beverages of an alcoholic nature may wonder if they need to purchase liquor liability insurance. In fact, many businesses don’t purchase it because they either think that the insurance they have is enough, or they simply don’t feel the risks justify the additional expense.
The Purpose of Liquor Liability Insurance
The reason that liquor liability insurance exists is to protect businesses serving alcohol from claims being made against them from patrons. Contrary to popular belief, general liability is not enough.
Why Is Liquor Liability Insurance Important?
Liquor liability insurance is important for many reasons. When something happens in your establishment, it may seem logical that the one or more individuals who perpetrated the incident are to blame. However, this is typically not the case. More often than not, it is the establishment that served the alcohol to the perpetrator which is largely held liable.
Without liquor liability, an establishment in which an incident occurred can be sued for significant amounts of money in damages, and the more severe the damages or injury, the higher the amount that can be sued for.
Liquor liability insurance protects businesses that sell alcohol from large financial losses. For example, if you own a bar and a patron becomes intoxicated and decides to start an altercation with another patron in your establishment, liquor liability protects you from being blamed for any injuries caused as a result of that altercation or the unsafe work environment it may have created.
Another scenario might be an intoxicated, unruly patron who is escorted out of your establishment to maintain the peace in your establishment, but who then attempts to charge you with assault.
Is It Mandatory to Have Coverage?
Not all states require alcohol-selling establishments to carry liquor liability insurance. Unfortunately, this can often be the reason why so many establishments are left vulnerable to lawsuits.
Even if an establishment is located in a state that doesn’t require liquor liability insurance, it may still be required. For example, if you are renting the space in which your establishment operates, your landlord may require you to have this coverage in order to protect their real estate investment from the physical damage that can lead to costly repairs.
If you don’t rent the space you operate from, you may still need to be covered with liquor liability insurance. Any large business loans taken out for the purpose of starting and running your business may include a requirement from the financial institution to have coverage.
Just as with a landlord, the financial institution from which the money was borrowed needs to protect its investment which is, essentially, you. By having liquor liability insurance, you become less of a financial risk from the bank’s perspective.
Features to Look for When Choosing Coverage
When searching for coverage, you need to ensure that your policy covers certain situations. You will be left unprotected in the event that an incident occurs if your liquor liability insurance quote doesn’t include the following features.
A good liquor liability insurance policy will ensure that you are covered for any legal costs you incur in the process of defending yourself for charges placed against you. It should also cover any payment of settlements or other judgments which have found you liable. Both of these financial features are important, as, without them, your costs can quickly escalate into amounts that can be overwhelming.
Coverage for Assault and Battery
Although you may have never suspected that assault and battery would enter into any scenario in your establishment and require liquor liability, not having this coverage can leave you vulnerable. There are some claims which can be excluded by a liquor liability policy under something called the “expected or intended injury” exclusion.
When you purchase assault and battery claim insurance, you essentially buy back coverage, which protects you from all assault and battery claims against you.
Other Specific Situations
Depending on the area in which your business operates, you may want to ensure you have coverage for specific crimes. These could include vandalism, shootings, sexual assault, stabbings, or similar incidents.
Alcohol Training Certification
Alcohol Training Programs educate alcohol servers for the responsible service, sale, and consumption of alcohol.
Who Needs Certification and What Are the Benefits?
Any staff members working in licensed entities and establishments are required to have alcohol training. What is good about alcohol certification? One of the many benefits of training is that, should a liquor liability claim be filed against you, certification will show that you exercised due diligence in the legal sense, which could possibly lessen your liability.
A very important aspect of this training teaches any employees who are serving alcohol to recognize when a patron is at risk of becoming intoxicated. This can include tracking the number of drinks a patron has had. Servers can also be trained to notice the other signs of intoxication, such as impaired movement and slurred speech.
Another very important aspect of alcohol training involves being able to spot patrons who are underage. This can be done by asking for their ID, as well as by being able to recognize and report the possibility that a patron’s ID was been forged or altered in some way. The reason that this is so important is that many providers of liquor liability insurance exclude coverage where underage patrons become intoxicated.
Again, when servers are trained to recognize these signs, and you have the right coverage, it can provide you with the ability to demonstrate that you made every attempt possible to limit or refuse the sale of alcohol to those patrons deemed at risk of intoxication or who were underage.
In addition to protecting yourself, having liquor liability insurance and alcohol certification also means that you are taking steps to protect the public by limiting alcohol sales. If you ensure your patrons’ drinks are limited by training your staff to recognize intoxication risk, the likelihood of being charged for lack of liquor liability insurance due to any unruly behavior—such as on-premises altercations or driving while intoxicated—may be greatly lessened.
There are many other ways to be proactive about limiting claims made against your business. For instance, you can also train employees to refuse serving alcohol to patrons who are obviously intoxicated. You can also implement a policy of strict measurement for mixed drinks.
You can also encourage that patrons use a designated driver, as well as ensure that the phone numbers for local taxi companies are placed in plain view of all patrons. Not only will this be a proactive action on your part, but, should a patron make a claim against you, they cannot say they didn’t see the signs for taxi and designated drivers, as they were placed in plain view of all patrons.
Finding the Right Insurance Company for Liquor Liability
The long-term success of your business depends on the right mix of liquor liability insurance features. If you are unsure about the kind of coverage that’s right for you, it becomes absolutely essential to obtain expert advice.
Finding the right company is also important because they will know how to tailor your policy to the size of your business. They will also be able to adjust your policy based on the type and value of your company.
Of course, not all insurance companies will be created equally, which is why you need to compare them. When you begin your search, it’s important to ensure that all liquor insurance companies you are comparing are qualified to provide you advice about your liquor liability insurance. Not doing so could result in incorrect or inconsistent coverage and the loss of thousands of dollars due to legal fees and claim settlements.
Your policy will be tailored to your unique needs when you consult with an insurance provider that has intimate knowledge of liquor liability laws. You’ll also benefit from a company that knows how to best address all of the risks which you carry as an establishment that serves alcohol.