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There has always been a lot of confusion about the need for liquor
liability even among insurance professionals. Liquor Liability laws
vary greatly by state and insurance policy coverage options are often
confusing. Here is some basic information dealing with the subject. The
most challenging definition in the commercial general liability policy
is coverage granted for Host Liquor Legal which is defined to cover
organizations who are not “in the business” of selling alcohol. It is
recommended you contact your agent or an Allen Financial Insurance Group
underwriter to discuss your specific exposures and coverage
requirements.
Host
Liquor Liability is a form of liquor liability directed at hosts of
business or social functions where liquor or alcohol is served, with or
without a charge. The basis for legal liability is a dram shop, liquor
control or alcoholic beverage law. The laws vary by state, but most
provide that the owner, operator or host serving or selling alcoholic
beverages is liable for injury or damage caused by or to an intoxicated
person if it can be established that the owner, operator or host caused
or contributed to the intoxication of the person through the sale or
serving of alcoholic beverages.
Both host liquor
liability and "dram shop" liquor legal liability protect your business
in the event an intoxicated person causes bodily injury or property
damage as a result of being served liquor by your business. However, the
circumstances under which the liquor was served will determine which
coverage in needed.
· Host
Liquor: Provides protection for businesses against bodily injury or
property damage suits brought by parties injured as a result of an
intoxicated guest who was served alcohol at an event you hosted. Host
liquor liability is a coverage that is included under the commercial
general liability policy for those businesses not
'in the business of'
serving, manufacturing, distributing, selling, serving or providing
alcohol.
· Dram
Shop Liquor Legal Liability: Provides coverage for bodily injury or
property damage for which you may become legally liable as a result of
contributing to a person's intoxication. This coverage is provided by a
separate policy and will only cover an insured
'"in the business of"
manufacturing, selling, distributing, serving alcoholic beverages for
charge or no charge if a license is required for the activity. This
exposure is not covered under the general liability policy or the host
liquor definition.
It sounds simple and
straightforward. If you're not in the business of selling,
manufacturing, distributing or providing liquor all you need is host
liquor liability, right? Well, that is a loaded question. It's important
to understand that although the definition of the two coverages seems
separate and distinct, real life isn't so neatly compartmentalized.
You must check your
exposure. If you host an event and are required by the establishment in
which you are hosting the event to have a liquor permit, it can be
construed as being 'in the business of' selling, serving or providing
alcohol. Similarly, if you provide liquor at a company-sponsored event
for which a fee is charged it may be construed that you are "in the
business of".
The line between liquor legal and host liquor can
be fuzzy. However, to avoid clearing the fuzzy interpretation of your
legal liability in the courtroom, it is best to discuss the insurance
requirements with an insurance professional before you host the event.
It is also wise to discuss your legal responsibility with your attorney.
Here are a few tips
for reducing your liquor liability exposure:
Hire a licensed and
insured vendor to serve the alcohol. Make sure you obtain a certificate
of insurance naming your business as an additional insured for the
event.
Serve drinks rather
than offer a self-service bar
Serve food.
Adequate amounts of food slow down the affects of alcohol.
Keep the drinks
moderately or above moderately priced. Low priced alcohol means more
alcohol consumption.
Stop serving drinks
early
Offer non alcoholic
drinks for free
Hold the event
earlier in the day to discourage excessive drinking
Have a policy for
intoxicated guests. This can be touchy and must be handled tactfully. An
intoxicated VIP may prove to be a challenge. |
