As a tavern, restaurant, or bar owner, it is crucial to have a Liquor Liability policy in place.
You already know that obtaining a liquor license is worth the money, considering liquor sales tend to have a profit margin of 70-80%. But there's so much more that goes into selling liquor than shelling out thousands of dollars on a license and pouring your patrons a drink.
We're going to go over everything you need to know about liquor liability insurance to help relieve some of those fears so you can focus on your drink menu and not your aspirin bottle.
What is Liquor Liability Insurance?
To put it in simple terms, liquor liability insurance helps reduce or eliminate the financial liability that you could face as a result of selling alcohol at your establishment.
You may be thinking, "But I already purchased general liability insurance, doesn't that cover me for liquor liability as well?" The answer is yes and no. Your general liability policy will cover you and your business from claims made as a result of bodily injury, personal injury, and property damage. Host liquor liability coverage is included in your general policy, but only covers you in the event you are catering a gathering that isn't at your establishment.
Liquor liability insurance is a little different. It protects you if you're in the business of manufacturing, selling, or serving alcohol.
Most states require you to cover liquor liability insurance, but sadly, some business owners try to get around carrying it due to the added costs. This is incredibly risky and not advised. In the long run, not carrying liquor liability can be far more expensive, not to mention potentially dangerous to your customers.
Why Do I Need It?
If your establishment served a customer who later got behind the wheel of a car and was involved in an accident that resulted in someone being killed, the victim's family could sue you/your business for damages. Their lawyers would argue that you are liable for serving someone alcohol who is already inebriated.
It may not seem fair, but it's called Dram Shop law and in 38 states, it's perfectly legal to hold a bar or restaurant liable for serving a person alcohol whose actions result in death or injury to someone else. If you have liquor liability coverage, legal fees, court costs, penalties, and damages will all be covered by your policy.
Think about it this way: If you own your home, you may not like paying the additional monies that come with carrying a homeowners insurance policy, but it's better to have it than to be sued personally by a guest who hurt themselves at your house, right? The liability protection and medical coverage written into your homeowners' policy will absorb the costs that result from your guest's injury. Think of liquor liability coverage the same way.
What Else Should My Liquor Liability Insurance Protect From?
Having liquor liability insurance can protect you from more than just lawsuits that stem from a patron who leaves your establishment and gets into an accident.
Here are other features that you should consider being included in your policy when shopping for liquor liability coverage:
Protection from Assault and Battery Claims - Bars and restaurants see more lawsuits from bar fights than any other claim. If for some reason, your liquor liability policy excludes assault and battery, you can buy back the coverage. There's a good chance, you're going to need this the most.
Defense Cost Coverage - Defending a liquor liability claim can be very expensive. Having your attorney fees covered outside the policy limit leaves enough room for your insurance to cover damages.
Employees as Patrons - Due to the nature of the business, some employees may drink alcohol on the job, whether you allow them to or not. Make sure your liquor liability insurance covers your employees as patrons.
Mental Injuries - Not all injuries are physical. A claim may cite mental anguish, stress, anxiety, or another form of psychological damage. Not all liquor liability policies cover this, so make sure yours does.
Take A Deep Breath - You Got This!
If you are feeling overwhelmed, don't let your fear consume you. Be proud of everything you've accomplished so far! Opening a business isn't easy and getting into the restaurant business is even harder.
You probably still have questions about liquor liability insurance and we have the answers. At Alliance Insurance Agency, "We've got you covered." We offer small business owners like you the peace of mind needed so you can focus on your success.
Give us a call at 888.279.9701 or contact our risk advisors online.