It is now November and many commercial businesses should take some time to review their commercial general liability insurance policy. For example, if your business is a resort, campground, restaurant, brewery, distillery or even an event venue, then you will want to make a New Year’s resolution to review your Liquor Liability coverage.
According to the Insurance Information Institute (III) Liquor Liability insurance is:
“Business coverage that protects your business against loss or damages claimed as a result of a patron of your business becoming intoxicated and injuring himself or others. If your business manufactures, sells, serves or facilitates the use or purchase of alcohol, then your business will likely need this coverage. Liquor liability coverage may be sold as an add-on to a commercial liability policy or as a stand-alone policy. But, if you do not purchase this extra coverage, your standard commercial general liability policy does not protect your business against liquor-related claims.”
Liquor Liability Coverage in the news…
While drunk-driving fatalities have decreased in the past 30 years, it is important to understand that 10,000+ people lose their lives each year as a result of drunk-driving car crashes. The National Highway Safety Transportation Administration (NHSTA) provides a website with safety facts, risk factors, responsible behavior and campaigns; however, it is important to remember that many news items that create attention concern liquor liability cases.
Famously, almost 20 years ago Outback Steakhouse Inc. was sued by an Indiana couple. The case was brought by David and Lisa Markley who suffered injuries resulting from being hit by a drunken gentleman who had been served alcohol by Outback. Outback was sued and the jury awarded the Markleys $39 million. The award was upheld by an appeals court.
This past month, in an ongoing case in Connecticut, a Montville woman was awarded $1.45 million settlement against the estate of the man who crashed into her after he had been drinking at the Mohegan Sun Casino. The case against Mohegan Tribal Gaming continues.
How state laws affect the cost of liquor liability coverage
Many business owners assume that their general liability policy provides some type of liquor liability insurance. However, while a general liability policy may include host liquor liability insurance, this is called social host liability coverage and serves to cover only incidental service of alcohol, for example at a company social function. This type of coverage does not protect the company which is in the business of serving alcohol, selling or manufacturing alcohol.
Most states (43 to date) have what are called dram shop laws. These statutes:
- Vary in severity
- Can impose liability on liquor servers for injuries resulting from interaction with an intoxicated patron
- Make a business liable if they serve alcohol to an obviously intoxicated customer
For example, in the State of Tennessee, one wishing to make a dram shop claim must meet these limited circumstances:
- The direct cause of injury was the sale of the beverage
- The beverage was purchased by minor under age 21 OR a person “visibly intoxicated,” and
- The vendor SOLD the alcoholic beverage to the intoxicated patron
And according to NOLO:
“In order for dram shop liability to apply in Tennessee, a 12-person jury must find that all the elements of a dram shop claim exist “beyond a reasonable doubt.” This is a much higher bar than in most states, where dram shop liability — which is civil liability, not criminal — need only be proven by “a preponderance of the evidence” or by “clear and convincing evidence.”
Looking to the new year…
As you prepare for 2018, you might want to meet with our insurance team and be prepared to discuss a few topics:
- If your business is financed, does your financial institution require liquor liability coverage?
- Do you serve alcohol at your B & B, hotel, restaurant, cafe or bar?
- Do you serve alcohol at business events?
- Does your business provide catering services, which include alcoholic beverages?
- Are you involved in fundraisers that include alcoholic beverages or a bar, open or paid?
- Do you own a facility that is rented for parties, events or weddings?
And speaking of weddings…John Bailey Company offers a wedding insurance program which covers standard liability (including liquor liability) as well as cancellation/postponement, lost deposits, and event gifts.
In closing, remember diversity is John Bailey Company’s niche. We understand different business and personal exposures which allows us to create specialty insurance solutions.