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Liquor liability insurance covers claims against a business that arise out of the sale or service of alcoholic beverages; claims that are generally excluded under a commercial general liability (CGL) insurance liquor liability exclusion. This precludes coverage for property damage and bodily injury claims in which a business may be held liable by reason of “causing or contributing to the intoxication of any person.” For businesses that depend on the sale of alcoholic beverages for a large part of their income, this is a gap in coverage that needs to be addressed.
Liquor liability insurance was created specifically to address the gap in coverage caused by the CGL liquor liability exclusion and is a must-have coverage for any establishment that sells alcohol. Many business owners are unaware of the benefits that liquor liability can provide to their establishment, especially if they are not your basic bar or tavern. That’s why it’s important for agents to partner with a knowledgeable insurance wholesale broker as well as educate themselves on the ins and outs of this type of coverage. Here are 3 key facts to know about liquor liability insurance to help agents better demonstrate its value to their clients.
1. Liability Doesn’t End When Patrons Leave
In the sale and service of liquor, establishments assume some liability for the actions of their patrons while inside the building and after they leave. Dram shop laws in 38 states encourage bars take certain precautions to ensure alcohol is consumed responsibly. For example, a bar can be held liable as a third party if a drunk patron leaving the establishment caused injuries or death to others. The burden of proof falls on the establishment to show that they were not negligent in serving the patron.
2. Liquor Liability Insurance is Not Just for Bars
While bars are an obvious choice for liquor liability insurance coverage, they are not the only type of establishment that can benefit from this type of coverage. Even manufacturers and distributors of liquor can hold some liability in certain cases. Restaurants, social and fraternal clubs, liquor or convenience stores and even fundraiser events serving alcohol can all benefit from the protection of liquor liability insurance.
3. BYOB Establishments Are Not Exempt from Exemptions
Some establishments can circumvent liquor license requirements by allowing their patrons to bring their own alcohol, but not selling or serving alcohol to patrons doesn’t automatically remove liability. The 2013 CGL Amendment of Liquor Liability Exclusion (CG 21 50 04 13) explicitly states that the exclusion applies if the establishment “Serve(s) or furnish(es) alcoholic beverages without a charge, if a license is required for such activity; or Permit(s) any person to bring any alcoholic beverages on your premises, for consumption on your premises.” Simply saying that someone brought their own drinks and therefore are responsible for their own actions is not a defense in and of itself, which is why liquor liability remains a valuable coverage for BYOB establishments.
About Mavon Insurance
At Mavon Insurance, we pride ourselves on our unique approach to insurance. We focus on integrity, communication, professionalism, respect and gratitude to help our clients succeed and place business in specialized markets. For more information about our products, or to become an agent, contact us today at (877) 426-2866.