Tuesday Morning Insurance Tidbit - Liquor Liability

[InsuranceMan]

Good Morning Fine Citizens of ADI-land!!!!!!!!!!

     It is a lovely, but a bit cold, day in Sheridanopolis.  I hope wherever you are, you are toasty warm whilst reading this informative installment of “The Tidbit”.  Today we are going to look at a coverage that is as important as any that you can purchase, LIQUOR LIABILITY.

     First of all, let me explain the definition of Liquor Liability.  According to the “Insurance Information Institute (I.I.I.)”, Liquor Liability insurance is defined as coverage for bodily injury or property damage caused by an intoxicated person who was served liquor by the policyholder.  Wait … WHAT?!?!?!  Just by serving someone liquor, you can be sued?!?!?!  ABSOLUTELY!!!!!   

     Liquor Liability coverage is essential coverage to have if you are in the business of alcohol, any type of alcohol!  If you produce it, sell it, give samples of it, you better have it!  This is especially true in states that have adopted any kind of Dram Shop Act/Law.  OK, what is a Dram Shop Act/Law????  I am so glad you asked!  A Dram Shop Law/Act is a statute which makes a business that sells alcoholic drinks, or a host who serves liquor to a patron who is or appears to be intoxicated, or close to it, strictly liable to anyone injured by the patron, including the patron.  Did you know that currently the only states in the US that have not adopted any kind of dram shop law are: Delaware, Kansas, Louisiana, Maryland, Nebraska, Nevada, South Dakota, and Virginia?  Every other state has a Dram Shop Act/Law on the books.

     So, does that mean if you are in any of those states you don’t have to worry about Liquor Liability?  NO!  Often times, these states still allow for prosecution regardless of if this law was in place.  As well, personal injury attorneys rarely care in the case of a lawsuit, and they will come after you.  Even if the intoxicated person injures someone else, or themselves, crashes their car into someone or something, or even if they go home and beat up the neighbor or significant other, you could potentially be sued.

     “But InsuranceMan2.0, we only give away a total of four, quarter ounce samples!!!!  That cannot get someone drunk!!!!!”  Ah, excellent point dear reader, however … You may not have known the patron was at three other establishments before wandering in for a lovely sample of your wears.  Or, perhaps they just slammed a fifth in the parking lot and then came in to have a taste, or get a cocktail (did a little pre-game warm up as it were), and it had not hit them prior to them coming in.  Whatever the situation, if you have served them you could have potential problems.  Case in point, I work with an establishment that is in the business of selling alcoholic drinks.  They are in the business of selling A LOT of alcoholic drinks.  In fact, they are the largest bar in a state that I shall not name.  A patron came in at 11 a.m. for a Jager Bomb (I’m not judging), paid for the drink with their debit card, and went on their way.  Fast forward to 3 p.m. when this gal went to her child’s daycare, retrieved her child, and proceeded to drive through the wall of the daycare.  Yeap, true story.  Sad but true story.

     As it turns out, the establishment that I represent was not the first stop of this gal’s morning, nor was it the last.  At each place she stopped, she had at least one Jager Bomb, paid for it with her debit card, and moved on.  In the lawsuit that ensued, her paper-trail of where she had been and the drinks she consumed was easy to establish since they all were transacted through her bank statement because of the debit card.  Her lawyer then named each of the 8 establishments in the lawsuit citing that they each in someway contributed to her intoxication.  Guess what, all 8 of them were successfully sued, and had to split the penalty 8 ways.

     I am not saying that this is ever going to be a situation that you may be involved in, but I will tell you that if you don’t have liquor liability coverage then you don’t have liquor liability coverage.  Liquor liability coverage is almost always excluded under your general liability coverage if you are in the business of selling or profiting from alcohol, period.  So, without purchasing a separate liquor liability coverage, you have no coverage.  That means that any suit and resulting claim would come out of your own personal pocket, or that of your business.  Either way, that is not good.  Furthermore, an often-overlooked aspect both General Liability and Liquor Liability is the fact that they both provide for defense coverage.  Yessir!  If you are sued, no matter if it is a real case of negligence, or a frivolous lawsuit, your policy provides for the cost of defense.  Yeah, Buddy! 

     I have seen people sue over the craziest of things.  Things that have no validity what-so-ever.  I don’t know if you have hired an attorney lately, but the prices are not going down!  Even in the case of a frivolous lawsuit, it could cost you tens of thousands of dollars to prove your innocence.  Better that money and the crack staff of attorneys comes out of the insurance carriers’ pocket as opposed to yours. 

     The long and the short of it is this …  Liquor Liability is something you should have, you need to have, and something that you should want to have.  Pair this with making sure that you and all the servers are TIPS trained, and you should have very little to worry about.  Heck, most carriers only charge between $750 and $1,000 a year for a standard liquor liability policy.  That would barely get you 2-3 hours of a lawyer’s time!  Of course, that pricing can be impacted by various factors such as a full-blown cocktail room that is selling $1.2 million a year, but for a normal tasting room that is either giving out free samples, or making a decent profit from tasting charges, it should not cost you more than that.  And for that $750 - $1,000 you have the piece of mind of knowing if you are sued due to a liquor situation, you have $1,000,000 worth of coverage to take care of any claim, defense costs, and crack staff of lawyers.  Now, that is something that should make you sleep better at night.

 

Until next time my friends,

 

STAY VIGILANT,

Aaron Linden

a.k.a. InsuranceMan2.0

InsuranceMan2.0@yahoo.com

307-752-5961