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by on Sep 22, 2017

Liquor liability insurance can protect you from damaging claims that could potentially put you out of business. In some cases, your state might require this type of insurance by law, in other cases it’s just strongly recommended. But the bottom line is that if your business involves serving alcohol, it’s probably a good idea to get coverage.

What is liquor liability insurance?

Usually added on as a policy endorsement, liquor liability insurance protects companies that make, sell or serve alcohol against accident or injury claims that occur as a result of patrons drinking too much. This type of insurance is the product of the Dram Shop Act which states that any business that overserves liquor (i.e. serves liquor to a customer who is already obviously intoxicated) can be held strictly liable to anyone harmed by the drunken patron. These claims are more common than you might think and they can do serious damage to your business.

In 2013, a jury in Texas jury found a local bar liable for more than $18 million for overserving a patron who then got into his car and ended up killing an 18-year- old in a head-on collision just minutes later.

And this year, a man in Bend, Oregon sued a local bar for $2.6 million for overserving him. He claims that the servers allowed him to get so drunk that he was unable to resist getting into a fight with his friend which resulted in him sustaining a broken neck, fractured skull and permanent brain damage. The suit has not even been settled yet, but the bar in question has already been forced to shutter its doors as a result.

What types of businesses need liquor liability insurance?

If you own or run a bar, liquor store, or restaurant that serves alcohol, the need for liquor liability insurance should be pretty obvious. But there are other types of businesses that might not even know they need liquor liability coverage. For instance, it is commonplace for service industry businesses such as hair salons, nail salons, barber shops and spas to serve complimentary beer, wine and/or cocktails as a perk for their clients. Alcohol is also common at pop-up events, art gallery exhibits and grand openings. And while it might seem unlikely for a client in this sort of establishment to be overserved, you really have no way of knowing exactly how much alcohol a customer has consumed before coming in. And either way, where alcohol is present, intoxication is always a possibility. Just one irresponsible server or customer could end up costing you the business you’ve worked so hard to build. So again, if you own or operate a business that serves alcohol in any capacity, you are better safe than sorry.

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