What is Liquor Liability Insurance? Understand the Basics

liquor liability insuranceAny business that serves, sells, manufactures or is involved in the purchase of alcohol must have liquor liability insurance. This includes bars, restaurants, taverns, nightclubs and other organizations that serve patrons alcohol. Liquor liability insurance is important because selling liquor exposes businesses to many possible liability situations. If an intoxicated person is involved in an accident, the establishment may be named in a lawsuit. The establishment can be liable for the injuries caused by the intoxicated person. Some insurance companies sell liquor insurance as part of a package, but other companies require consumers to purchase liquor liability insurance separately. This difference is usually based on the ratio of total liquor sales to total sales.

Many states have laws that hold social hosts liable for lawsuits if they serve alcohol to an intoxicated person that ultimately causes an accident. Arizona limits the amount of exposure that most social hosts have to lawsuits. However, if the social host is licensed to serve alcohol, such as a bar or a restaurant, there is potential for a serious lawsuit if an intoxicated person is involved in an accident. In fact, the establishment could be liable for serving a single drink to a patron even if another establishment ultimately over-served the person.

You can minimize the risk of lawsuits and incidents by taking some precautionary steps. First, you can hire and train bartenders who can monitor the intake of alcohol. You should also have regular training programs to ensure that all staff members are aware of the importance of serving alcohol responsibly. However, it is still critical to have appropriate liquor liability insurance to protect your business.

It’s important to find an insurance broker that fully understands the liability issues in your state so that you can create a policy that will protect your business in the case of an incident. In many cases, the broker will recommend a policy that includes legal defense fees, assault and battery protection and regulations about employee drinking. Because liquor liability insurance policies are more complex in Arizona than in many other states, it’s especially important to find an insurance broker who fully understands the rules and regulations. This will protect your business in the event of an incident.


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