In 2010, the misuse of alcohol cost around $249 billion in total and alcohol-related accidents are responsible for billions of dollars in damage every single year.
This includes the cost of medical care for anyone who is injured as a direct result of an alcohol-related incident as well as property damage and, as such, is why any business who wants to sell it needs liquor liability insurance.
What is Liquor Liability?
Liquor liability is a type of insurance that protects businesses and venues that either serve, sell or manufacture alcohol.
If you own a bar, restaurant, nightclub, brewery, convenience store or even a cafe that sells alcohol, you will need to have liquor liability insurance coverage to protect you and your business no matter how small.
Some businesses are even legally required to obtain this insurance coverage before they are given a liquor license, so if you are thinking of setting up a business which sells alcohol, it would be wise to double-check if this requirement applies to you.
A liquor liability protects you if anyone causes damage, or hurts others or themselves due to an overconsumption of alcohol and provides coverage for any medical costs, settlements and legal fees associated with any injuries or damages caused by an intoxicated person who was sold or served alcohol by the insurance policyholder.
Why is it so Important?
Put simply, if you are selling alcohol without being covered, then you could be subject to a costly lawsuit leaving your finances depleted, your reputation ruined, and it could even cost you your business.
An inebriated person could injure other individuals or cause serious damage to property, which means that you are vulnerable to being sued by the injured party.
To protect yourself, purchase liquor liability insurance and give yourself the peace of mind that you and your business are safe.
Bear in mind, however, that it won’t replace a general overall liability policy and you may need to carry both forms of insurance to be fully protected.
What Types of Businesses Need or Should Have it?
Any business or venue that sells alcohol needs to have liquor liability insurance coverage. These include:
- Restaurants and cafes
- Liquor Stores
- Grocery Stores
- Venues that sell alcohol – ie. music venues, etc.
How Liquor Liability Varies from State to State
It is important to know that coverage of insurance varies state by state as each one has its own requirements and interpretation as to who is legally liable in the event of injury to property or a third party.
That’s why it is important to find out the requirements of your state rather than assuming that you will have the same coverage as the same business elsewhere.
Some states require proof that the business sold alcohol to the inebriated individual in question and that injuries sustained were a direct result of the person’s alcohol consumption.
In others, every establishment in which an intoxicated individual drank from can be entered into a lawsuit, and must prove that the patron did not appear inebriated while there, if the person in question then went on to cause injury to a third party.
Cost of Liquor Liability
On average, the cost for liquor liability insurance ranges from around $900 and $1200 per year, however, various factors can influence the total cost and your final rate will depend on the deductible and limit that you select.
Getting a liquor liability insurance is easy and straightforward – just call your chosen insurance carrier and they should be able to add this protection onto your already existing business insurance needs.
The four main factors that influence and contribute towards liquor liability costs are:
- Your location – If your business is in a location where there are a higher number of total claims you are likely to end up having to pay more, compared to if you were in an area with fewer claims.
- Your claims history – If you have a poor claims history then most insurance companies will unfortunately see you as a higher risk, meaning that you will end up having to pay more for your coverage compared to those who are claim-free.
- Your exposure – Generally the more alcohol you sell, the higher your exposure. For example a convenience store would be expected to pay less compared to a supermarket or big grocery store due to selling a smaller quantity of alcohol.
- Your profession – The cost of insurance greatly varies depending on your industry due to facing different risks. For example, a restaurant will face different risks compared to a bar or a general caterer.
Aside from potentially your location, these four factors are generally out of your control, but there are other ways to save money on your liquor liability costs which include enforcing strict alcohol consumption policies and adjusting your coverage limits. Alternatively, you can also try asking if there are any discounts available.
Host Liability vs. Liquor Liability
Both Host and Liquor liability cover you against alcohol-related lawsuits, however, the type of coverage that you need depends on the type of business you own.
Whilst liquor liability protects businesses and venues that either serve, sell or manufacture alcohol, host liability covers business owners who do not serve or sell alcohol, but allow for it to be consumed on their premises.
This includes restaurants and venues that allow clients to bring their own alcohol to consume on their premises as well as venue owners and those who host social events where alcohol is consumed.
Host liability insurance covers property damage as well as medical expenses and legal costs if an individual causes an incident due to being inebriated and can be found in most general liability policies.
In Montclair, New Jersey, insurance companies generally agree to cover the cost that you as a business owner are legally obliged to pay due to liquor-related damages or injuries, however insurance policies can vary.