Have you ever seen a bartender refuse to serve an already-intoxicated patron? No one who works in the hospitality industry wants to be responsible, however indirectly, for an auto accident or other incident caused by someone who is incapacitated. Nevertheless, it is fairly easy for a determined drinker to get a refill on their scotch and soda or margarita; all they have to do is ask a friend to buy a round or try their luck with a different bartender. That’s why liquor liability laws are an absolute necessity for any establishment that serves alcoholic beverages, according to Ralph Charles Chapa.
Attorney Ralph Charles Chapa, who specializes in insurance law, including professional, premises, products, liquor, and general liability, explains what liquor liability is and how to know if your business needs it.
What Is Liquor Liability Insurance?
Most states require any establishment that serves liquor – including but not limited to bars, pubs, clubs, restaurants, wineries or breweries – to carry this type of insurance. It protects the owners of those establishments from being held liable in the event that a patron causes injury or harm to other people or property after having been served alcohol there.
My Restaurant Has General Liability, Isn’t That Enough?
No. Ralph Chapa explains that liquor liability is not included in general liability coverage and must be purchased separately if you are in the business of manufacturing, selling or serving alcoholic beverages.
If your company isn’t part of the industry but serves alcohol – say, at an office Christmas party or even just a Friday happy hour event – it will be covered by a general insurance policy. This is called host liquor liability insurance and protects you from alcohol-related claims.
Why Is It Necessary? Ralph Chapa Explains:
Let’s say you own a tavern that serves beer, wine, liquor as well as burgers, chicken wings, and pizza. A patron spends his evening at the bar, drinking steadily and becoming intoxicated. As he is driving home, he T-bones another vehicle, killing the driver. It’s a terrible occurrence, but surely your tavern isn’t responsible, right? After all, you didn’t tell the patron to get behind the wheel.
Legally speaking, however, your establishment can be held liable, says Ralph Charles Chapa. The family of the victim has every right to file a lawsuit against you for playing even a bit part in this tragedy.
What Does Liquor Liability Insurance Include?
Not every insurance policy is created equally. It’s important to understand what a policy includes and excludes before you sign off on it. Otherwise, there might be a gap in your coverage that can lead to financial ruin and even the demise of your business. Here are some aspects of liquor liability coverage that attorney Ralph Chapa advises you to get:
- Assault and Battery Coverage. Many claims are the result of physical altercations that arise when one or more patrons are inebriated.
- Defense Costs. Going to court to defend your business can get expensive. Be sure that your insurance policy includes defense costs outside the policy limit so that clearing your good name doesn’t bankrupt you down the line.
- Non-Physical Damages. It’s not unusual for a victim to claim stress, mental injury, or emotional anguish stemming from an alcohol-related incident.
- Employee Inclusion. Do your employees drink on the job? Even if they are forbidden to do so, chances are they flout that rule. For the purposes of potential lawsuits, make sure that employees will also be considered patrons if they do indulge.
There’s no getting away from it: a business that serves alcohol is going to shoulder some enormous risks. However, Ralph Charles Chapa emphasizes, when it comes to liquor liability, you can make provisions that will minimize that risk – so you can focus on the rewards of running a successful bar or eatery.