If your business sells, serves, or allows any alcoholic beverages to be consumed at your establishment, Liquor Liability protects you should your clients or patrons sue your business for damages related to their intoxication.
Food service businesses with Liquor Liability Insurance have coverage for the costs of liquor-related injuries, assaults, or accidents that occur on and off their business premises, depending on their policy.
This insurance also typically covers expenses related to violating state laws related to alcohol retail.
Liquor Liability Insurance covers the legal fees, settlements, and medical costs your business may face, up to the limits of your policy.
To protect their liquor liabilities, many bars pay $966 to $3,360 in annual premiums.
There are two ways to hit the lower ranges of the policy premium spectrum. The first is by reducing coverage. While this might be attractive option, do know that the average cost to defend a liquor liability claim is approximately $150,000, and the average cost of a settlement approximately $500,000, making a reduction in coverage less than ideal. The second, more effective method is to reduce risk by following a few best practices.
- Create official protocol for handling inebriated guests. That way, your employees won’t have to do any guesswork. This should include action steps, such as denying service, asking for a designated driver, or offering to call a cab.
- Scan every ID. Underage liquor sales are a huge threat to a bar or nightclubs profitability. All it takes is one serious regulatory violation to warrant a liquor license suspension.
- Pull receipts and any additional documentation. This includes time-stamped ID scans. As soon as you catch wind that there’s been an accident, physical altercation, or other alcohol-related incident, you should pull receipts. Credit card transactions are easy to pull – the receipts are often even itemized. Also note that with most ID scanning software (including VeriScan Online) reports are generated through a one click export. Depending on your setup, cash payments may be more difficult to track. Immediately find the person who served the person involved, and ask what was served, how many drinks were served, and whether or not the server engaged the person in conversation. Document all of this. The point here is to gather evidence while all the information is still fresh in case you do wind up in court.
Liquor Liability Insurance is almost a necessity for bars and taverns – in fact, some states require it before bar owners can get a liquor license. These requirements are part of a state’s dram shop laws, which can hold bars responsible for selling alcohol to an intoxicated patron who ends up hurting someone or damaging property. Depending on where you live, you could be sued if a patron has too much to drink and crashes their car. Fortunately for bar owners, Liquor Liability Insurance covers these lawsuits.
To get an idea of what deductible and policy limits are available for your bar, talk to your insurance agent.
Remember: Investing in an ID scanning solution can mitigate these costs by around 5% and defend against regulatory complaints. It shows good faith and cooperation with the law, providing more transparency in court, reducing the likelihood of lawsuit settlements against your establishment.