Wherever people drink alcohol, there is always a possibility of accidents happening. Even if it’s a formal event with courteous guests, there would always be some accidents. If you are lucky, it might be simple accidents like broken glasses, and in some cases, it can be as bad as fights that may lead to serious injuries.
The truth is, anyone that serves alcohol on their business premises puts themselves at a major risk. Anyone can sue you for injuries and damages caused by accident involving someone you served or sold alcohol to. Sadly, liquor liability lawsuits can be very expensive.
You need liquor liability insurance to protect you from these law suits if you serve or sell alcohol. Read on to learn more about the cost of liquor liability insurance and the kind of coverage you might need.
- How much does liquor liability insurance cost?
- Factors affecting liquor liability insurance cost
- How to reduce your liquor liability insurance cost
- What is liquor liability insurance?
- What does liquor liability insurance cover?
- Liquor liability insurance requirements
- Who needs liquor liability coverage?
- Liquor Liability insurance companies
How much does liquor liability insurance cost?
Liquor liability insurance for small businesses typically ranges from $400 to $2,400 per year, or $33 to $200 per month. The large range is because the insurance policy varies from one insurer to another, and it usually depends on several factors, which we are discussing below.
This is just the average. Your rates will be different. Be sure to shop around with several companies. Get a fast online quote on Thimble’s website. It shouldn’t take you more than 5 minutes.
Work with a top broker like CoverWallet, Simply Business, ez.insure, or commercialinsurance.net can be a good way to get and compare several quotes to find the cheapest one for your business.
Factors affecting liquor liability insurance cost
Numerous factors will influence the cost of your liquor liability insurance. The factors are as follows:
Type and volume of alcoholic beverages you sell
Bars that sell alcoholic beverages with more percentage of alcohol will likely pay more for their liquor liability insurance. Insurers assume that the volume of alcohol your guest consumes, the higher the risk. Therefore, a bar or restaurant with liquor sales of 25% or less of total revenue and no claims history will likely pay between $900 and $1200 per year. Con
Your total annual revenue from alcoholic beverage sales
The more money you make from alcohol, the more you will pay for your liquor liability insurance. Most insurers will raise the premium to around $1,400 per year once the restaurant’s alcohol sales volume exceeds the food sales volume.
Your hours of operation
Selling alcohol at night is risky. Establishments that stay open late and sell alcohol will typically pay more for their premiums to cover the increased risk.
Your type of establishment
The type of establishment you have (e.g., bar, concession, pub, restaurant, dinner theatre) says a lot about the kind of drinks you serve on-premises and your operation. Due to their limited hours of operation, dinner theaters and concessions pay a lower premium of $900 per year.
On-premise pool tables
Pool tables increase the risk of assault and battery incidents. If your establishment has pool tables, you might have to pay more to cover the extra risk of assault and battery that will likely occur.
Presence of security personnel
While most people believe that better security equals lower risk, this is not the case. In some cases, bouncers create an issue that might lead to fights and damage. So, if you have bouncers, you might pay more.
Server training for your attendants
Attendants with proper training are less likely to have issues with your customers. So, having server training for alcohol sales might result in a significant reduction in your policy premium. Sometimes, you can get a discount of 20%.
Claims history
A history of claims is bad for an insurance policy. It shows the insurer that you will likely have claims in the future. A business with many claims in the previous five years will likely face a surcharge of up to 50%, depending on the number and frequency of claims.
How to reduce your liquor liability insurance cost
Here are some ways to reduce the cost of your liquor liability insurance.
Buy insurance policies in bundles
When businesses purchase multiple insurance policies from the same provider, they may be eligible for discounts. For instance, you can buy a business owner’s policy (BOP) for your business.
A BOP combines general liability and commercial property insurance at a discounted rate, with the option of adding liquor liability insurance as an endorsement. If you don’t qualify for a BOP, you can add liquor liability to your general liability policy as an endorsement.
Pay the entire premium in advance.
The premium for your liquor liability insurance is usually paid in monthly or annual installments. While it may seem cheaper to choose a lower monthly payment, consider paying the full premium. Many insurance companies provide discounts on the entire annual premium.
Manage your risk
Expect to pay lower insurance rates if your small business has a clean claims history. Creating a comprehensive risk management plan is an effective way to do this. For instance, you could:
- Provide alcohol service training to your employees.
- Offer discounted food items to encourage patrons to consume food with alcohol.
- Serve alcoholic beverages with water.
- Reduce the number of hazards on your property.
Be careful with minors
You can never be too cautious when it comes to serving minors. Any patron who seems younger than 30 years old should have their identification checked. Minors should not be invited to social gatherings where alcoholic beverages are served.
Hold your party at an offsite location if your company hosts an event where you will serve alcohol. If a liquor-related incident occurs, it’s best if it happens away from the business.
Compare several quotes
The only way to make sure you are not over paying for your liquor liability insurance is to shop around with a few companies. Different insurance companies will provide you with different quotes. Don’t settle on the first quote you receive. Work with a top broker like CoverWallet, Simply Business, ez.insure, or commercialinsurance.net is a good way to get and compare several quotes. These brokers work with several insurance companies. They are able to pull quotes from these companies at once after you provide them with the details of your business.
What is liquor liability insurance?
Liquor liability insurance or dram shop liability insurance is a type of commercial liability insurance that covers small businesses that manufacture, sell, or serve alcoholic beverages. This type of insurance covers claims of bodily injury or property damage brought against your business due to intoxicated individuals to whom you served or sold alcohol.
While most businesses’ general liability insurance covers these claims, most general liability insurance may not cover alcohol-related claims. As a result, it is especially important for restaurants, bars, breweries, wineries, and other businesses that deal with alcohol regularly.
Furthermore, liquor liability insurance is even more critical for businesses operating in states with dram shop laws. These laws hold businesses liable for the actions of intoxicated people to whom they served alcohol, particularly if the person served was visibly intoxicated. These laws vary in detail, but in general, liquor liability insurance reduces the risk for the company when sued for alcohol-related incidents. Dram shop laws are currently in place in 43 states of the US.
What does liquor liability insurance cover?
Liquor liability insurance can protect your alcohol-serving or selling business regardless of whether your state has a dram shop law. Liquor liability insurance usually covers any bodily injury or property damage caused by an intoxicated person served alcohol by your business, even after they left. For example, this could include the following:
Assault and battery
The insurance can protect you if one of your customers gets involved in a fight on-premises while intoxicated and someone sues you.
Sexual assault or harassment
This type of insurance may cover damages if an intoxicated person assaults or harasses someone else on your property.
Property damage
If an intoxicated person damages someone else’s property on your premises, this policy may cover the damages.
Bodily injury
Liquor liability insurance may protect you if an intoxicated person injures themselves and sues you.
Drunk driving
If an intoxicated customer leaves your establishment and drives a car, liquor liability insurance will protect you from any resulting damages or injuries in the event of a lawsuit.
Liquor liability insurance requirements
Dram Shop Liability applies to all restaurants that serve alcohol and are licensed by the state in which they operate. The term “dram shops” dates back to the 18th century when bars served alcohol by the dram (0.125 ounces). The dram shop law or the dram shop rule holds bars, restaurants, and other alcohol retailers liable for the actions of customers to whom they served alcohol until they were intoxicated or while they were intoxicated. The dram law is especially applicable when a patron is involved in an alcohol-related car accident.
Dram shop laws have variations in different states. Currently, only eight states in the US that do not have some version of the laws. Some states in the US also have social host liability laws that apply to hosts of private functions that serve alcohol.
The amount of liquor liability insurance you need depends on where you do business. Many states, particularly those with strict dram shop laws, will refuse to issue you an alcohol license unless you submit proof of liquor liability insurance to the licensing office. Although some states, such as Texas and Louisiana, have “soft” or even no dram shop laws, restaurant and bar owners would be putting their businesses at risk if they did not have liquor liability insurance.
For instance, before approving a loan, a lender may request liquor liability insurance proof from business owners who wish to put up their building or equipment as collateral.
Who needs liquor liability coverage?
Liquor liability insurance should be considered by any company that manufactures, sells, or serves alcohol regularly. The following are examples of these types of businesses:
- Bars – Learn more at the best bar insurance companies
- Breweries or wineries
- Caterers
- Facilities for events
- Hotels
- Liquor shops
- Liquor stores in grocery stores
- Restaurants – Learn more at restaurant insurance cost and the best restaurant insurance companies
What isn’t covered by liquor liability insurance?
If your business is sued, liquor liability insurance will cover legal costs, court costs, lawyer’s fees, and settlements. However, coverage varies depending on the insurer, the policy, and the state where your company is located (because each state has its regulations and laws regarding dram shop liability).
Although liquor liability exclusions vary depending on the insurer, most standard policies contain exclusions that state when the insurer will not provide coverage:
- Injuries or bodily injuries that occur due to selling or serving alcohol while you do not have a liquor license.
- Injuries caused by acts other than the sale, serving, or furnishing of alcoholic beverages, such as sickness or illness caused by manufacturing. If your company manufactures alcohol and customers become ill due to a production error, product liability insurance will most likely cover it rather than liquor liability insurance.
- Any alcoholic beverage sold to a minor or underage person causes injury.
- Many policies exclude coverage for volunteers who work in your business.
- Any liability covered by another insurance policy, such as general liability.
- Any offense that does not result in bodily harm or property damage, such as libel and slander.
- Physical or personal property damage
Liquor Liability insurance companies
If your restaurant serves any alcoholic beverage, you are constantly at risk of legal action being taken against you. The most efficient and cost-effective way to obtain the financial protection you’ll need when alcohol-related incidents occur is to transfer this risk to a highly-rated insurance company. Here are our recommendations of the best liquor liability insurance companies for your consideration.
- Insureon – Best for Liquor Liability Policy Recommendation
- Food Liability Insurance Program (FLIP) – Best for Immediate Coverage of Liquor Liability
- Coverwallet – Best for Comparison Shopping of Liquor Liability Insurance
- Markel Insurance – Best for Event or One-Day Liquor Liability Insurance
