Liquor liability insurance is a type of insurance for businesses that sell alcoholic beverages. Why would you want to obtain this insurance for your business?
There are risks involved in selling alcoholic beverages. The biggest risk is inadvertently selling to underage or obviously intoxicated patrons and assault and battery among patrons as well. Some businesses are at greater risk than others, based upon the type and size of the business and their alcohol-serving policies and practices. For example, a huge night club with live entertainment that caters to a young crowd has more risk than a small restaurant.
Liquor liability insurance is designed to defend a business against a lawsuit due to an injury, death or property damage from negligent and/or illegal alcohol service. Having insurance does not obviously prevent liability. Licensed businesses are only insured to a certain level of coverage. Beyond that, the licensee is responsible for paying the claim.
In applying for liquor liability insurance, you may be asked about a number of things:
- Entertainment, live music
- Dance floor
- Gross annual revenues of food vs. alcohol
- Square footage of business
- Average age of patrons
- Drink promotions, happy hours
- Beverage service training for all employees
- Age verification procedures
- Type of clientele
- History of alcohol-related problems at the business
You also need to guard against liability. Implementing responsible business practices is the best protection against liability. Some best practices include:
- Discouraging intoxication
- Promoting non-alcoholic beverages and food
- Promoting safe transportation alternatives
- No drinking on duty
- Responsible promotions and marketing
- Implementing comprehensive training
- Maintaining adequate number of employees to properly monitor patrons
- Having a standard hiring system
- Having a system for rewarding and disciplining employees
- Implementing and enforcing written alcohol management policies and signage
Your insurance company may give discounts up to 20% if you implement training and responsible business practices. Your insurance professional can provide you with those details.