adults at bar drinking wine

Host Liquor Liability vs. Liquor Liability Insurance

If you own a restaurant, bar, brewery, nightclub, event and show venue, or any space that serves or allows the consumption of alcoholic beverages, it’s important that you have a liquor liability insurance coverage.

This will protect your businesses if a patron harms themselves or others, or causes damages because of alcohol overconsumption.

There are two distinct policy types – Host Liquor Liability and Liquor Liability.

But what are the differences? Which makes the most sense for your particular business? Can they be combined with any current policies I have?

Continue reading to learn more, or check out our video summary below:

Host Liquor Liability Coverage

First up, we’ll talk about host liquor liability insurance.

If your business is hosting or running an event that allows the consumption of alcohol, but isn’t directly selling, serving or manufacturing it, host liquor liability insurance is a good fit to protect against liquor-related lawsuits.

This type of coverage will protect business owners or event hosts if an employee, customer or guest causes physical harm to another or causes property damage following too much alcohol consumption.

A short-term insurance option, host liquor liability coverage makes sense for those who host weddings, birthday parties, corporate events, private functions and luncheons. Many of these hosts are unaware they can be held directly liable if anything goes awry!

Host liquor liability would make sense for a venue such as the Montclair Wedding Sanctuary or The Clubhouse, who has a bar setup, but allows party hosts to provide their own alcohol.

There also might be policies available for a few days, or year-long coverages, so that’s something to confirm with your insurance agent depending on your business type.

Often, host liquor insurance can be included under your general liability insurance. This can help pay for third-party injuries or property damage.

If you need host liquor coverage for an upcoming event, we encourage you to purchase it well in advance beforehand, or at least begin the process early. The last thing you want to happen is have an event fully planned and ready to begin, only to find out it’s too late to get coverage or you were denied, leaving you open to unnecessary expenses and safety concerns.

There are also a number of exclusions, and we suggest speaking with your provider about what they are. For example, certain policies won’t cover events that run past 2 a.m., shows with fireworks or pyrotechnics, and raves.

Liquor Liability Coverage

Depending on your state, you may be subject to dram shop laws, which hold businesses legally responsible for customers that harm a third party after consuming alcohol in excess. In New Jersey specifically, the New Jersey Legislature has stated that anyone injured by an intoxicated person may seek damages from the vendor who served the alcohol if:

  • The intoxicated individual was “visibly intoxicated” when served
  • The vendor knew or reasonably should have known the person being served was a minor under age 21.

Bars, restaurants and breweries are typically excluded from host liquor liability coverage, as they are more likely to face a lawsuit related to alcohol overconsumption.

The Pig & Prince Restaurant and Gastro-Lounge, who serves beer, wine, cocktails and after-dinner drinks, would require liquor liability coverage

Liquor liability insurance can be purchased as an annual or short-term policy. It’s available for professionals serving alcohol as a business such as caterers, bartenders, food vendors and chefs.

If you do have a liquor liability policy and your business gets sued, the following legal expenses can be covered:

  • Attorney bills
  • Damages if found liable
  • Out of court settlements

Depending on your policy, it may also cover you for:

  • Bartenders and staff drinking on the job
  • Fights between customers and staff
  • Severe incidents such as stabbings, shootings and sexual assault

Additionally, you may purchase coverage as a standalone policy, or bundle it with your general liability insurance policy.

Bring Your Own Bottle (BYOB)

Many restaurants will allow customers to bring their own bottle, which is commonly referenced as “BYOB”. This can be for several reasons – maybe you can’t afford a liquor license, or there aren’t any available in your area.

For places that allow BYOB, such as Villalobos Mexican Restaurant in Montclair, NJ, the short answer is they will need liquor liability insurance, not host liquor liability.

But there are several forms of coverage for these types of businesses:

  • Traditional: Customers bring their own beer in a cooler, or wine or liquor in a brown bag. The establishment may provide food and nonalcoholic beverages.
  • Hybrid #1: Similar to Traditional, but the establishment provides glasses, cups or mixers for the hard liquor.
  • Hybrid #2: Similar to #1, except the establishment serves the alcoholic beverages to the party or table.
  • Hybrid #3: A customer brings in the liquor, in this case it’s usually wine, and brings it to a wine steward or waiter. From there, the establishment then serves the wine to the party just as if the wine came from the establishment’s own supply.
  • Hybrid #4: Includes any of the above policies, but if the business charges a BYOB fee.

Tips To Minimize Liquor Liability Lawsuits

While covering your business is essential, it’s also recommended that you take proactive steps to reduce your likelihood of liquor liability lawsuits and claims.

Some suggested tips include:

  • Hire security and ensure they’re trained to effectively check ID’s and de-escalate situations
  • Ensure that bartenders and servers are trained in safe alcohol service
  • Promote the safe consumption of alcohol
  • Don’t serve intoxicated persons and recognize when they’ve had too much
  • Don’t allow consumers to drink and drive. Encourage staff to call for cabs or Uber rides.

Conclusion

By now, you should see the importance of liquor liability coverage for your establishment. This not only protects you and your business, but also customers, staff and innocent bystanders.

We talked about the differences between host and regular liquor liability insurance and the unique factors that impact BYOB businesses specifically.

Be sure to follow our tips to reduce your risk of unnecessary claims, and work with an insurance agent to determine the policy that best suits your needs.