Liquor Liability Insurance – What You Don’t Know Can Hurt You
If you own an establishment that serves alcohol, but you have no idea what liquor liability insurance is, you need to read this pronto. In simplest terms, liquor liability is a type of insurance that covers you for any liability arising from selling, dispensing or otherwise serving alcohol. Let’s assume, for the sake of example that there’s been a bar brawl in your establishment.
Liquor Liability: Bigger than You Think
So you congratulate yourself or your bouncer for stopping the fight before it caused any irreparable damage to your establishment. Unfortunately, however, your liability doesn’t stay right there. In fact, the most straightforward part of the equation is the damage to your establishment, which can be easily covered by your general liability insurance as part of the cost of doing business.
Anything else, such as the continuation of the original bar altercation at another location or locations, all personal injuries sustained by the fighting parties, all the way to any driving accident or accidents that occur such as lives lost–knock on wood–are considered to be your responsibility as the bar owner. And you thought you were smart enough to get yourself the perfect bouncer to protect your business.
Why the Bouncer Isn’t Everything
In fact, he’s only a small part of the equation. He’s just like the security guard at a liquor store. He or she doesn’t assume any responsibility beyond stopping the fight and preventing damage to your property. You would think that your business insurance covers everything. However, this isn’t how it works in the real world.
Liquor License Isn’t It
So you got yourself a liquor license, and you think that automatically covers you for any untoward incident–think again. The permit only allows you to sell liquor or any alcoholic beverages. It’s never meant to include the consequences that can arise from the sale or distribution of the products in question.
However, you won’t be able to obtain the necessary liquor liability without first having a liquor license. No insurance provider will be crazy enough to cover you unless you are legally entitled to sell alcohol products. So the moral of the story is you need to get yourself a liquor license before obtaining the precise liquor liability coverage that you’ll need for your business.
That’s why it makes perfect sense to get the permit to sell alcohol first before getting involved in any insurance coverage for that matter. Especially if you’re just getting started in the business, it’s of utmost importance to get your license first. Remember, some state or city ordinance may delay the process, so the earlier you make the application, the better.
Some Legal Loopholes to Liquor Liability
When you’re merely a so-called social host who will serve alcohol in a special event or gathering, you’ll need a particular liquor liability that is reserved for hosts alone. Comparatively, this type of liquor liability is much simpler if not cheaper.
Also, not all states are created equal when it comes to liquor sales or distribution laws. For instance, Texas has more stringent regulations in place than any other state in the union. Hence, if your business is operating outside of Texas, you can breathe a sigh of relief.
Liquor Liability Never Comes Cheap
These days, a moderately sized bar can be looking at a minimum of US$1,000 in annual liquor liability premiums. Of course, the higher the insurance covers you, the better. At the said amount, you can probably get as much as half a million dollars. When your liquor business is worth so much more, you should aim for one million to two million dollars.
An Ounce of Prevention…
At this level of coverage, you can protect your business so much better. Nonetheless, you can’t be trigger happy. Just remember, your future premium payment can increase the more claims you submit to your insurance company. Hence, protect yourself further by training your staff on the proper way of serving liquor to the point where your people can quickly recognize intoxicated bar patrons or minors. Also, you better be sure that litigation costs are covered under your liquor liability policy. After all, you don’t want your pocket to shoulder these costs.