Do You Need Liquor Liability Insurance?
Owning a business that manufactures, sells, services or assists with the use or purchase of alcohol, needs liquor liability insurance coverage. Serving liquor is a naturally risky activity. No matter how careful you are or how well-trained your staff is, you always run the risk of accidentally serving alcohol to an underage minor or being sued when someone causes problems after having a drink. Liquor liability insurance protects your company against loss or damages claimed as the result of a patron of your business becoming intoxicated and injuring themselves or others.
Liquor Liability 101
There has always been a great deal of confusion about the need for liquor liability, even among the insurance professionals. Liquor liability laws vary by state and insurance coverage options are often confusing. Here are the basics for the state of Illinois:
- “Dram Shop” Laws: The Illinois’ dram shop law is entitled the “Liquor Control Act.” Under this act, any commercial establishment is held liable for any damages or injuries caused by an intoxicated persons, provided it can be proven that: the vendor sold alcohol to the patron; injuries or damages were in fact caused by the patron; the business was cause of the intoxication; and the intoxication was at least one major cause in the third-party’s injury. In Illinois dram sop law is unique because there is no requirement that the business must have knowledge or reason to know that the person was already intoxicated. The Illinois dram shop act permits plaintiffs to recover from multiple establishments. For example, if an intoxicated person had drinks at several different bars and then hit a person with their car, the injured person may recover from each bar if they can satisfy the above requirements.
- Liquor Legal Liability: This exposure is not covered by your general liability insurance policy. Liquor liability insurance provides coverage for bodily injury or property damage for which you may become legally liable as the result of contributing to a person’s intoxication. This coverage is provided by a separate policy or endorsement to the general liability policy and will only cover establishments “in the business of” of manufacturing, selling, distributing or serving alcoholic beverages for a charge.
- Host Liquor Liability: Host liquor liability covers dedicated events for businesses that elect to serve alcohol to their employees, prospects and customers. This insurance is also needed by people and businesses serving or providing alcoholic beverages to customers, guests or employees. For host liquor liability insurance coverage to apply you must not be in the business of serving, selling or facilitating alcohol. Host liquor liability is usually included in most general liability policies.
How Much Does Liquor Liability Insurance Cost?
The cost of a liquor liability insurance policy depends on several factors listed below:
- How much alcohol will be sold/served – the more that is served the more risk there is.
- Where is your business located – some places are higher risk than other.
- The limit of liability – the higher limits that the insurance company is providing the higher the premium will be.
- The ratio of food to alcohol – theory is that food sales reduce intoxication and therefore the risk.
- Hours of operation – the later you are open the longer your patrons can drink and the more likely that you will inherit clients that have been somewhere else drinking before coming into your business.
- Server training – by July 1, 2018, all on-premise alcohol servers (and those required to check identification for alcohol service) will be mandated to complete the BASSET certification in the state of Illinois.
- Experience of management – it is risker to insure someone that has never sold alcohol before.
- Square footage of your establishment – if your establishment is big the more patrons you can hold and therefore there is more risk.
Frimark/Keller & Associates Can Help
You may think you want the cheapest insurance you can find but realize you may not be getting everything you bargained for.
While most insurance products are similar in price and function, insurance providers are very different when it comes to structuring a policy that fits all your needs.
There is no such thing as a one-size-fits-all insurance policy when it comes to your business. Frimark/Keller & Associates are your neighbors. We have protected Illinois businessowners since 1910. We will carefully choose the insurance company that fits your business.
Fill out the quote form at the top of this page or call us at 847-907-4520 and let the licensed professionals at Frimark/Keller & Associates help you get the protection you need to make your business successful.