General Liability vs. Liquor Liability

General Liability vs. Liquor LiabilityLiquor Liability Insurance is a required policy for any type of business that serves liquor, wine, or beer. As we’ve mentioned in previous posts, carrying this policy mitigates the legal exposures your clients face. Businesses that forego this policy are on the hook for major damages resulting from drunk driving, assault, and battery. In addition to supplying your clients with comprehensive liquor liability insurance, it’s also important to understand what would qualify a liquor liability claim versus a general liability claim. These two policies overlap, which is why it’s important to familiarize yourself with these potential challenges.

Assault and battery claims are a huge source of loss for liquor-related charges and policies. For this reason, assault and battery coverage is increasingly sold as a stand-alone policy or to be added to general liability coverage as well as liquor liability coverage. As these claims continue to account for almost 40% of claims, the structure of how they are sold is being changed, as well.

In the admitted market, policies are generally silent on assault and battery, and “the approach becomes more varied as the liquor exposure moderates,” Renate Jordan, senior vice president and account executive, Gen Re, explains to Insight + Analysis Magazine.

“It’s typically a non-issue for standard market business—clients with liquor receipts that are 40% or less of total receipts,” Bill Turner, vice president, professional and product development at BerkleyReSolutions, agrees. “They’ll typically get full assault and battery for both general liability and liquor liability.”

But as the proportion of liquor receipts inches closer to 50% and above, as in bar business, taverns, and nightclubs, Turner elaborates, “You might start to see exclusions. More often than not, you will see a submit on the GL and the liquor liability, with a lower limit for assault and battery,” he says to the source.

The fine line varies depending on the business. If they are in the business of serving, buying or selling liquor, the GL policy will not apply to any claims for bodily injury. Depending on how the injury arose and the overlapping of coverages, the policy may not apply. If your state does not hold the business liable, such as in Maryland, advise them to increase the GL policy limits instead.

Agents need to review their state dram shop laws to determine how the situation will be remedied, including determining how your client will be found at fault if they overserved a patron. If your agency prevents both policies from including an assault and battery component, explain that to your clients before a claim is made, as some providers allow more than one insurance policy with assault and battery coverage.

As an agent, it’s up to you to determine the most effective policy combinations to adequately protect your client. Stay on top of regulations in 2018, your dram shop laws, business accountability, and changing insurance markets this year to prevent your own legal battles from occurring.

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