Liquor liability insurance

Liquor liability insurance, also known as dram shop insurance, is liability coverage for businesses that serve, sell, distribute, manufacture or supply alcoholic beverages. Learn if your business needs liquor liability coverage and how it can affect your insurance costs.

Liquor liability insurance coverage

A basic general liability policy excludes liquor liability coverage for businesses who generate a profit from alcohol. Liquor liability insurance is designed to fill this gap in coverage and may either be added as an endorsement to a general liability policy or purchased separately.

Who needs liquor liability coverage?

Businesses that typically need liquor liability insurance coverage include:

  • Restaurants
  • Bars and taverns
  • Caterers
  • Breweries and wineries
  • Grocery stores
  • Liquor stores

Keep in mind, liquor liability won’t replace a general liability policy. The business types listed above, and others like them, may need to carry both forms of insurance.

Host liquor liability insurance

The liquor liability exclusion doesn’t apply to all business types. Host liquor liability is coverage under a commercial general liability policy (CGL) for businesses who have an incidental exposure to alcohol.

For example, a financial firm serves alcohol at their annual company party. An intoxicated employee accidentally strikes a pedestrian on his drive home, which results in a lawsuit against the financial firm for the pedestrian’s injuries. Since the firm isn’t in the business of serving or supplying alcohol, their general liability policy may cover the incident.

Alternatively, if the business were a tavern instead of a financial firm, their general liability policy wouldn’t cover the accident. The tavern would’ve needed liquor liability insurance to cover the accident since they’re in the business of serving and selling alcohol.

Liquor liability insurance cost

Basic factors that influence the cost of your liquor liability insurance are:

Your exposure - A convenience store with 10% liquor sales can expect to pay less than a grocery store with 40% liquor sales.

Profession - Rates vary on based on your industry. A caterer generally faces different risks than a restaurant, so they can expect their rates to differ.

Location - Your liquor liability insurance cost depends on various factors related to your location. For example, businesses will usually pay more in locations with a higher number of total claims than those with fewer claims.

Claims history - Insurance companies typically view businesses with a poor claims history as higher risk. This means they’ll typically have a higher rate than businesses that are claim-free.

These factors can weigh heavily on your premium and are usually out of your control. Easier ways to save on your liquor liability costs include adjusting your coverage limits and deductibles, enforcing strict alcohol consumption policies and asking your carrier about discounts.

Getting a liquor liability insurance quote is easy! You can get a quote online, or call us directly. We have specialized agents who can include liquor liability protection as part of your business insurance needs.

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