Why Bars and Nightclubs Need Liquor Liability Insurance

When people are under the influence of alcohol, their behavior can be unpredictable. From rowdiness to fights and injury, there are plenty of incidents that can be sparked by alcohol consumption. While selling alcohol is a lucrative part of any bar or nightclub, these businesses can protect themselves from incurring liability and lawsuits with a Liquor Liability Insurance policy. In this article, we’ll explore the need for this policy, what it covers, and how bars and nightclubs can be proactive in mitigating these exposures.

Who should carry this policy?

According to Net Quote, liquor liability coverage typically is added on as a policy endorsement. The cost of this add-on depends on the size of the liquor establishment and the number of persons served. Most states in the U.S. require establishments that sell alcohol such as bars and restaurants to carry liquor liability insurance. However, some business owners don’t realize that having a general commercial liability policy isn’t the same thing.

Businesses that require liquor liability insurance but may not be aware of it include:

  • Bars and taverns
  • Restaurants
  • Social and fraternal clubs
  • Organizations that hold fundraisers where alcohol is sold
  • Liquor stores
  • Grocery and convenience stores
  • Catering companies

Most importantly, this coverage protects bars and nightclubs from being sued for accidents and injuries that intoxicated patrons caused after being served at their establishments.

What does liquor liability cover?

  • Battery and assault
  • Property damage
  • Bodily injury
  • Legal fees associated with claims
  • Employees

It’s important to note that not all liquor liability policies come standard with assault and battery coverage. In fact, it’s in the bar owner’s best interest to invest in another separate policy to achieve the limits he or she believes is adequate.

Sandra Haley, senior vice president of underwriting and marketing at Hospitality Insurance Group, notes that the majority of liquor claims are the result of assault and battery, whether liquor-related—patrons drink too much and start a fight—or not, where patrons aren’t drunk, but happen to be in a bar when they get into a fight. As a result, many companies have made limits for assault and battery “not as readily available.”

Therefore, liquor liability might be sold in substantial amounts, such as $1 million increments. However, assault and battery coverage might only cover a fraction of that. Ensure the policy is reviewed thoroughly to match the risks with the appropriate coverage limits.

Being proactive.

Bar and nightclub owners can train their staff to identify the signs of being overserved and intoxication. Slurred speech, imbalance, and glazed eyes are obvious signs of intoxication. However, not all patrons demonstrate these behaviors. For this reason, train staff members to keep tabs on how many drinks the patron has had since arriving. There’s no way to know how many drinks the person had outside the bar, but keeping an eye on their behavior and their drink count can mitigate the risk of them getting into an accident on their way home and injuring themselves or others.

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