If a customer of your establishment became intoxicated and injured themselves or someone else your business can be held liable for loss or damages as a result. However, if you have a good liquor liability insurance policy you will find this area protected. If your business sells, serves, manufactures, uses or purchases alcohol you will most likely need this coverage.
Liquor liability insurance is expensive and usually offered as an add on to your BOP “Business Owners Policy” or a separate liability policy. Liquor Liability is not generally covered in your standard liability policy. More than half of business owners that should have this type of insurance do not and leave themselves open to possible lawsuits or legal issues. There are some important things to know and understand about liquor liability insurance to make sure you are getting the most out of the money you are investing in this insurance coverage type.
When looking at a Liquor Liability insurance policy it is important to make sure these clauses are included in the policy. A typical reason why so few businesses that should have this coverage don’t, is that there are too many clauses in these policies and this makes the policy seem useless to the business owner. Making sure the below clauses are in your coverage will help to alleviate some worry on whether or not your getting the best value for your dollar.
ASSAULT AND BATTERY coverage, most alcohol related crimes end in violence. Having a clause in your policy that covers these claims makes the cost worthwhile. MENTAL DAMAGES should be included in damage definitions as well. Avoid policies that have limited damage definitions. A person is just as likely to claim mental anguish or psychological damages as they are to claim assault and battery damages.
Avoid policies where the DEFENSE COST is deducted from your total coverage. Insurance companies know that frivolous lawsuits and defense attorney costs make up the largest amount of money in claims. The insurers will offer you lower premiums to help make this type of policy more appealing. This is not necessarily a good policy and you may want to reconsider these type of policies.
Another way insurance companies try to save money on claim payouts is to not COVER EMPLOYEES. Employees are more likely to drink in the establishment that they work regardless of the rules you have set. You want to make sure there is a specific clause covering your employees.
Please note if you live in a state with the “dram shop liability” statute (which involves serving someone intoxicated more alcohol or serving minors and these individuals then go out and cause harm on a third person) you will need this insurance. Dram Shop Liability varies from state to state but can put a dent in your business operations if you are charged under this law. It is illegal to sell to minors and so the liquor liability policy will not cover claims that involve sales to minors.
On a good note: some insurers offer reduced rates if you and your employees take safety classes. When dealing with your insurance agent make sure you find out about this great way to reduce your coverage cost.
This is a general overview of important coverage regarding liquor liability. It is meant to help you get the best coverage that you need to insure your business. The important piece to this article is that liquor liability should be considered a necessity if you run an establishment that has anything to do with alcohol. Feeling secure that your business is covered will help you to focus on the more important tasks of running and maintaining a good business and give you added piece of mind.