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Important Liquor Liability Considerations for Business Owners

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If an intoxicated person causes property damage or bodily injuries on a business' premises after being served alcohol there, liquor legal liability and host liquor liability will protect the business. The details of how the person was served alcohol will determine what type of coverage is required. Business owners should understand the basics of both types of coverage.

Liquor Legal Liability
This form of insurance covers property damage or bodily injuries for which a business may be responsible for after allowing a person to become intoxicated on the premises. Liquor legal liability is a separate form of insurance, and it only covers parties in the business of selling, distributing, manufacturing or serving alcoholic drinks for free or for profit where a license is required. The general liability policy will not cover this.

Host Liquor Liability
This type of insurance protects businesses facing claims of property damage or bodily injury from parties injured by an intoxicated guest. The intoxication must have taken place on the premises. Host liquor is included on the commercial general liability policy for businesses that are not in the business of selling, serving, manufacturing or distributing alcohol.

Although these policies may sound very clear for parties not in the alcohol business, events that happen in real life may not always be so easy to define. It is important for all business owners to consider their exposure. If an event is hosted off the company premises where a liquor license is required, the company hosting the event may be considered to be in the business of alcohol provision. Some companies also charge a cover fee for their events. In such a scenario, the company could be considered to be in the business of selling alcohol because of the fee requirement.

It can be difficult to determine which type of liability coverage is needed for a particular case. To avoid finding out which type is needed after getting to court, business owners should discuss their options with an agent. As most agents will say, it is also wise to consult an attorney for legal questions. Although agents provide all of the necessary information about policies and possible occurrences, only attorneys can provide actual legal advice.


The following tips are helpful for reducing the likelihood of liquor liability lawsuits:

  • Serve drinks instead of offering an open bar.
  • Hire a vendor who is licensed and insured to serve beverages. Be sure to obtain a copy of the individual's certificate of insurance naming the business as an additional insured for that specific event.
  • Stop serving drinks early in the evening.
  • To slow the effects of the alcohol, provide food for attendees to eat.
  • Implement a policy for intoxicated guests, but be sure to handle difficult people in a tactful manner.
  • Provide non-alcoholic drinks at no charge.
  • Price the alcohol at a moderate rate or slightly above. Guests will be less likely to drink more if the alcohol is not cheap.
  • If possible, schedule the event during day hours. This discourages heavy drinking.

Click here to return to Amity Insurance E-Newsletter August 1, 2012.