Liquor Based Business Insurance
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Liquor Based Business Insurance Information
Every business needs to have specific insurance policies to protect the owners, employees and the company itself. It’s important to know what insurance is necessary for your establishment. For example, if you sell, serve or distribute alcohol, you need to have liquor liability insurance as part of your coverage. Keep reading to learn the basics about liquor liability insurance, why you need it and how to get it.
If you’re interested in learning more about liquor liability insurance, DJW Insurance Agency, Inc. in New Iberia, LA can help answer any of your questions and make sure you have the right coverage.
Call us at 337.364.7614 and request a free quote today.
Common Liquor Liability Insurance Questions:
Liquor liability refers to an organization’s legal responsibility for the actions of individuals who consume alcohol at their establishment. Under liquor liability laws, a business can be found liable for both the bodily injury and property damage caused by a person to whom they improperly served alcohol.
Liquor liability insurance is designed to protect any business that sells or serves alcoholic beverages. This type of insurance explicitly covers damages that result from fights, careless behavior or auto accidents caused by individuals who have consumed alcohol. Liquor liability is essential because it protects you, as the business owner, if your client or patrons sue your business for damages related to their intoxication. A general liability policy won’t cover this.
Most businesses carry a general liability policy, which covers claims against your business for bodily injury, property damage or personal injury. While these policies often include host liquor liability coverage, they only provide protection related to incidental service of alcohol. Host liquor liability may protect you if you are serving alcohol at a company party, but it does not offer the coverage you need to sell alcohol as part of your business. What’s more, most states require establishments that serve, sell or assist in the purchase of alcohol to carry liquor liability insurance. As such, you should know what to look for in a policy.
To secure the right level of coverage for your business, consider the following policy enhancements when shopping for liquor liability insurance.
Assault and battery coverage: When alcohol is involved, fights are a common risk. Many liquor liability policies, however, exclude coverage for assault and battery. Therefore, it’s important to ensure you account for this protection when building your policy. It should be noted that assault and battery coverage can also be extended to include specific incidents such as sexual assault, stabbings and shootings.
Defense costs: Legal fees from liquor-related claims can easily exceed tens of thousands of dollars. Be sure that your policy accounts for defense costs outside of the policy limit. Otherwise, legal expenses could quickly exhaust your policy limit, leaving little to no insurance to pay for any damages.
Inclusion of employees: Even if you forbid your employees to drink on the job, there’s a chance that they may disregard your instruction. Look for a policy that will cover damages caused by employees to better protect your business from liquor-related incidents.
Mental damages: In the event of a lawsuit, claimants may allege they were injured in nonphysical ways. In these instances, patrons could sue you for stress, mental anguish or psychological injury. Ensure that your policy accounts for these types of situations.
The following four factors determine the cost of liquor liability coverage:
Type of venue:When examining a business’s risk, underwriters look to identify the primary purpose of a venue. If you own a restaurant, the primary purpose of your venue is to serve food, so you are generally considered to have less risk than a nightclub or tavern.
Location: Liquor laws can vary drastically depending on the jurisdiction. Each state has a scoring system based on the nature of local dram shop laws. Dram shop laws impose specific liability standards on area venues that serve alcohol because the strictness of the laws may change from location to location.
Amount of liquor sales:As a general rule, the more alcohol sales you make, the higher your premiums will be. This factor tends to have more of an impact on pricing than venue type, as a restaurant that has a high percentage of alcohol sales may be priced similarly to a bar.
Individual traits:There are miscellaneous variables underwriters will take into consideration when pricing out policies, such as:
Types of entertainment onsite
Experience level of management
Formal loss control measures
Security measures and procedures for dealing with intoxicated patrons
Liquor liability policies can be complex, so it’s important to discuss the nature of your operations with a qualified insurance professional. Contact DJW Insurance Agency Inc. to learn more and to get the complete coverage you and your business need to stay protected.