Liquor Liability Insurance & Dram Shop Insurance

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Whether you work as a bartender or you work in a liquor store, serving people alcohol exposes you to a lot of liability because of what people may do while they’re drunk. Some people can hold their liquor and won’t give any trouble while others - let’s just say their personality changes from white to black. 

The last thing you want to happen when you’re dealing with that latter group is to take the blame for their drunken mistakes. This is why we’re going to spend this guide talking about the things you should know about liquor liability insurance, also known as dram shop insurance.

We’ll start off by going over the basics of liquor liability insurance and how it differs from other forms of liability insurance. After that, we’ll take a look at more specialized forms of liability insurance before we discuss how much you can expect a policy to cost you. At the end of everything, we’ll go over some of the top liquor liability insurance companies.

Liquor Liability Insurance

States in the U.S. adopt laws that control the selling of alcoholic drinks to consumers. Their purpose is to mitigate the dangers of premature and excessive consumption. Dram shop liability, also known as liquor liability statutes do this. Failure to comply with them might result in the imposition of a penalty up to the revocation of the license to sell liquor. 

Because of the drawbacks that dram shop liability might inflict on sellers, insurance companies offer liquor liability insurance or dram shop liability insurance. This insurance policy shoulder the financial burden arising from liquor liability lawsuits.  

These are some situations wherein alcohol liability can be used against a business owner:

• When the liquor store/bar continues to sell liquor to a habitual drinker in large quantities, and the person causes damages due to his drunkenness

• When the liquor store/bar accidentally sells an alcoholic drink to a minor

• When the liquor store/bar fails to see that a customer is already drunk and the said customer gets involved in a car accident

Host Liquor Liability Insurance

Host liquor liability coverage is a type of liquor liability insurance that protects a social host from liability claims should the following happen:

• The social host holds a gathering and serves minors with alcohol

• The social host continues to serve alcohol to guests who are already drunk

• A drunk guest injures himself or herself and is holding the social host responsible for what happened

So what is a social host anyway? A social host is any individual or entity that arranges a gathering. Examples of social hosts are businesses and homeowners. 

Host liquor liability insurance is available as an add-on to the general liability coverage of businesses. This means that there’s no need to get separate coverage. All the business needs to do is to request the carrier to endorse liquor liability to general liability coverage. 

On the other hand, host liquor liability insurance is available as a stand-alone policy for homeowners. It’s not clear whether or not the policy can be added to a personal liability policy in homeowner’s insurance. 

So how much host liquor liability insurance do you need to purchase? If you’re using your own property to host the gathering then you only need $1 million in coverage. However, if you’re renting another property, then the rental agreement will dictate how much coverage you need to get. Take a look at the table below that shows the policy limits you need to have based on the venue where you plan to hold the social gathering.

Liquor Liability Insurance for Event

Events such as expos, trade shows, and reunions aren’t complete without drinks that are spiked with liquor. And so, carriers offer dram shop insurance coverage not only for bartenders, pubs, or bars but also for events too. 

Liquor liability insurance for event is typically included in event liability insurance together with these other coverages:

• Medical payments coverage - Covers cost for medical treatment if an accident happens during the event and attendees get injured as a result 

• General liability coverage - Covers the cost of legal fees and compensation if ever injured attendees file a lawsuit 

• Equipment coverage - Reimburses the policyholder if his or her equipment got damaged or stolen during the event 

• Damage to rented premises coverage - Allows the policyholder to pay the owner if a rental property got damaged because of the event hosted

In connection, event liquor liability insurance can be also purchased as a short-term policy that typically lasts for only 12 hours or 24 hours. 

In case you want to sell alcohol during the event instead of serving it for free, you might want to decide to upgrade your event liquor liability insurance. Event liquor liability insurance can be upgraded into retail liquor liability insurance, which can be added with products liability coverage. 

So how much insurance money can you get from liquor liability insurance for events? The amount payable to you depends on the type of event covered. Refer to the table below:

Dram Shop Insurance for Wedding

When there’s a wedding, there’s alcohol. One can't exist without the other.   And of course, the following can happen:

• Person A gets drunk and starts a fight with person B leaving both injured and needing medical attention

• Person A owns a car and refuses to take Uber. He drove the car drunk and got involved in a car accident

• Person A is tipsy and didn’t notice that a portion of the venue’s area is wet. He slipped and fell on the floor sustaining minor injuries that need medical attention

• Person A suffers from a health condition, which is often triggered by drunkenness. Upon drinking a considerable amount of alcohol, person A lost consciousness, has shallow breathing, and needs to be rushed to the hospital 

Drinks make weddings merry and bright (after all no one would enjoy a wedding where alcohol isn’t served). Nonetheless, the example situation above tells you that alcohol can ruin a great moment too. 

Consider getting liquor liability or dram shop insurance for your wedding. You might be wondering what this is. Wedding liquor liability insurance is a type of liquor liability coverage tailored for wedding ceremonies.  

This coverage is typically offered as a one-day insurance policy - pretty on point since there’s no need to get a long-term coverage as wedding ceremonies only last for a day. 

So how does the dram shop insurance for weddings work? The policy offers coverage for the following:

• Third-party injuries - Someone slips and falls on the wedding venue and is holding you responsible for what happened

• Third-party property damage - A drunk person drops his phone on the floor and blames you for it

How much insurance money can you get from the policy anyway? Most carriers offer $500,000 - $1 million. However, you can find carriers that offer custom limits starting at $100,000. 

You can have your wedding without liquor liability insurance. However, you should know that most event venues require renters to get covered and add them as additional insured. And so, without liquor liability, you might find difficulties in finding a place to rent. 

Liquor Liability Insurance for Bartenders

Liquor liability coverage for bartenders has a $1 million up to $2 million limit. This policy is useful for bartenders who are working independently or for those who do bartending outside other than the bar or pub they’re working for to get extra income. 

Liquor liability insurance for bartenders is offered as a long-term policy and as a short-term policy.  Short-term bartender liquor liability lasts for one day or three days. 

Bartenders can do two things to have liquor liability coverage. They can purchase the insurance as a stand-alone policy. Or if they already have general liability coverage, it’s better to add liquor liability to their existing policy for convenience. 

Liquor Liability Insurance Cost

There are a few factors that go into determining how much you can expect to pay for your liquor liability policy. This means that it’s pretty difficult to get an estimate of how much it’s going to cost you if you’re not willing to go through the whole quote process for your company of choice.

As we mentioned above, the duration of your insurance policy is one thing to account for. Shorter policies will cost you less overall but they will typically cost you a lot more per day. You’ll also have to consider whether you’re getting a policy as a bartender or as a business.

If you’re getting business liquor liability insurance coverage, you’ll need to account for the size of the business, since that will amplify the risk that the insurance company is taking when they cover you. This is due to the larger number of customers that you’ll have, making it more likely that someone will do something worthy of a claim.

Also, as we briefly mentioned before, insurance companies care about whether you’ve had to make a claim in the past. These companies see people who frequently make claims as a high risk because they assume that they must be doing something wrong, even if the claims were due to simple bad luck.

To get these costs, we took a small-to-medium-sized bar that has no history of making prior claims. We did this to make sure that these values are as close to the average as possible. The average cost of alcohol liability coverage is about $61 per month and $732 per year.

Host Liquor Liability Insurance Cost

The cost of host liquor liability insurance is lower than that of a bar because of the fewer risks that an insurance company is taking by covering you. If you’re the host of a smaller event, you can expect to pay as little as $59.58 per month or $715 per year for your liquor liability insurance policy.

However, if you regularly host larger events, you may find yourself paying more for your liability coverage. For example, some event hosts have to pay as much as $1,000 per year for coverage.