10 Things to Know About Liquor Liability

October 7, 2013
  1. 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, according to the Insurance Information Institute (I.I.I.).
  2. The breadth of liquor liability coverage varies by state because each state has its own interpretations and evidence requirements of who is legally liable in the event of an injury to a third party.
  3. The I.I.I. reports that “dram shop liability,” or social host liability, holds a social or commercial host liable for injuries inflicted on a third party by an intoxicated guest of the host’s event or establishment.
  4. 44 states and the District of Columbia have enacted dram shop liability laws or statutes that extend to social or commercial (retailers) hosts, according to a report from the Center on Alcohol Marketing and Youth (CAMY) at John Hopkins Bloomberg School of Public Health and published by the American Journal of Preventative Medicine.
  5. In some states, every bar in which an intoxicated person drank can be pulled into a lawsuit if the person causes bodily injury to a third party. The establishment must prove that the patron was not or did not appear intoxicated while there.
  6. Other states require proof that the establishment sold alcohol to the intoxicated individual, injuries were sustained and the injury was the direct result of the individual’s intoxication.
  7. CAMY’s report states that 54.3 percent of binge drinkers who reported driving after their most recent binge drinking episode drank in an on-premises, retail alcohol establishment such as a bar, club or restaurant.
  8. If liquor liability is covered by a homeowners insurance policy, it may be limited to $100,000 to $300,000 in coverage, says the I.I.I.
  9. In February of this year, ISO revised the liquor liability exclusion contained in its general liability forms to address “bring your own” alcohol establishments. The new exclusions now have an exception for insureds that are not considered to be “in the business of serving, selling or furnishing alcohol under the scope of the liquor liability exclusion simply by allowing someone to bring and consume their own alcohols on its own premises.”
  10. Many carriers offer discounts on liquor liability coverage to establishments that provide alcohol awareness education and training to employees.

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