Those who own establishments serving beverages of an alcoholic nature may wonder if they really need to purchase liquor liability insurance. In many cases, it may be a state law, but in others it is left up to the bar or nightclub.
In fact, many businesses don’t purchase this type of bar insurance because they either think that the coverage they currently 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 that serve alcohol from claims that patrons may make against them. Contrary to popular belief, general liability is not enough, especially when the situation stems from an incident involving intoxication.
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 coverage, 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 more money the people will seek.
This kind of insurance for bars protects the business 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 while 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 for everyone else, but who then attempts to charge you with assault.
There are, of course, many more examples of why your bar needs this kind coverage.
Is It Mandatory to Have Coverage?
Not all states require alcohol-selling establishments to carry liquor liability insurance. Unfortunately, this is often the reason why so many establishments are vulnerable to lawsuits.
Even if an establishment is located in a state that doesn’t require liquor liability insurance, it may still be required by others. For example, if you are renting the space for your bar, your landlord may require you to have this coverage as part of your rental agreement. This is to protect their real estate investment from the physical damage that can lead to costly repairs.
If you don’t rent your space, you may still need liquor liability insurance before you can get a business loan.
Just like the landlord, the lender needs to protect its investment which is, essentially, you. Liquor liability insurance makes you less of a financial risk from the bank’s perspective.
Features to Look for When Choosing Coverage
When searching for bar business insurance, you need to a policy that covers specific situations. You will be left unprotected in the event that an incident occurs if your coverage doesn’t include the following features:
Insurance for bars and nightclubs should cover any legal costs you incur in the process of defending yourself against 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, not having this coverage can leave you very 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.
This training teaches any employees who serve 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 forged or altered in some way. This is important because 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 bar insurance, you can 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, the insurance required for bars and alcohol certification also means that you are taking steps to protect the public by limiting alcohol sales. If 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 to serve alcohol to patrons who are obviously intoxicated. You can also implement a policy of strict measurement for mixed drinks.
You can also encourage patrons to use a designated driver and place the phone numbers for local taxi companies 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 taxis and designated drivers.
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, we can provide expert advice.
Finding the right company is also important because they will know how to tailor your bar insurance 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 are created equally, which is why you need to compare them. When you begin your search, it’s important to ensure that they are qualified to provide advice about your liquor liability insurance. Not doing so could result in incorrect or inconsistent coverage, paying too much, and the loss of thousands of dollars due to legal fees and claim settlements.
At Tabak Insurance Agency, your policy will be tailored to your unique needs because we have an 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.