Understanding Dram Shop Laws and Liability

Dram shop laws are those that relate to cases in which someone became inebriated after drinking alcohol at an establishment, such as a bar or restaurant, then went on to cause an accident. Dram shop laws allow victims of these accidents to pursue compensation from not only the person responsible for their damage but the establishment at which the alcohol sale originated.

These laws are set up to hold bars and restaurants responsible for any accidents that occur as a result of serving alcohol.  While some bar owners may feel they are not responsible for what happens when the customer leaves, they are not only wrong, they can be held liable, and face legal consequences, potentially closing the doors to their business entirely.

Dram Shop Liabilities

Dram shop liability implies that a bar, for example, may be held liable for any civil damages if it provided alcohol to someone who later got into an accident and ended up causing harm to someone else. Dram shop liability is related to the civil liability that can be imposed against a bar or restaurant. This liability may also extend to other businesses that serve or sell alcohol, like nightclubs or sporting events.

When someone causes an accident, the results can be devastating. From minor to severe injury, to the possibility of loss of life, alcohol-related accidents can vary in severity and scope. Since alcohol is linked with inhibited judgment, a drunk driver very often is the cause of an accident with severe injury.

A Look at the State-Level

Dram shop laws are implemented on the state level and each state defines how much it wants an establishment in question to be held liable for the acts of someone who was drunk and caused damage. Some differences in state laws can include the legal standard, liability, social host, and notice requirements. Here’s a breakdown of each:

  • Legal Standard: In a case that involves an accident due to alcohol, the plaintiff’s burden of proof is usually to show that the establishment in question was negligent. For example, the bar the drunk driver came from overserved him or her. However, the statute may also include relevant information that can help establish such negligence. The plaintiff usually has to show that the person responsible for serving alcohol (i.e. the bartender) knew that the person who caused the issue was already drunk.
  • Liability: Some states take their own course of action by only making dram shops liable if the person who caused the accident was underage.
  • Notice: There are strict notice requirements in some states that state a person considering bringing a dram shop action must notify the establishment within a certain period of time. This could be anywhere from 30 days to 90 days from the date of an accident.
  • Social Host: Social host liability laws act similarly to regular dram shop laws. However, these laws extend to individuals who serve alcohol in their home or at another function, like private business parties. Social hosts with these laws can also be held liable if a guest at their party leaves drunk and ends up causing an accident.

Liquor Liability Insurance

Liquor Liability insurance can help to protect bars and restaurants against major claims related to these types of incidents. While liquor liability policies can differ between carriers, liquor liability insurance provides coverage for bodily injury or property damage caused by an intoxicated patron who was served liquor.

This coverage will cover the defense costs and judgement amount if a claim is brought against the Insured by an inebriated customer, another customer or person they impact negatively due to alcohol and the Insured is held liable. Without this coverage, when a bar is found liable for any civil or criminal damages, it is their responsibility to pay for legal fees and court costs related to the suit.

About Mavon Insurance

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