Mass. Liquor Liability JUA to Write Higher Limits

August 25, 2004

The Liquor Liability Joint Underwriting Authority (LLJUA) of Massachusetts has taken advantage of a new law and filed to write higher occurrence policy limits of $1 million/$1 million.

By law, the LLJUA had been limited to writing $500,000/$1 million limits but a bill recently signed into law removes the 15-year old statutory limit and gives the LLJUA leeway to offer higher occurrence limits after approval of the limits and rates by the commissioner of insurance.

Charles Bucke, LLJUA president, said his organization felt the higher limits were necessary because some customers were having difficulty obtaining excess umbrellas based on the lower limits.

“We felt we needed at least $1 million/$1 million so they could get the umbrellas,” Bucke explained. “We think this will satisfy more umbrella carriers.”

He said the LLJUA hopes for approval of its filing in time to begin offering the higher limits by Oct. 1 but there is no indication when and if approval will be received by then.

The LLJUA was created by the Massachusetts legislature in 1985 to guarantee the availability of liquor liability insurance to any licensee or any person lawfully engaged in serving alcoholic beverages.

LLJUA is a liquor liability insurer of last-resort. To be eligible for coverage from LLJUA, the business owner has to be turned down for coverage three times in the voluntary market.

LLJUA’s liquor liability insurance is available for owners of Massachusetts taverns, hotels, restaurants, social clubs, package stores, caterers and other businesses that sell alcoholic beverages.

All insurance companies authorized to write personal injury liability insurance in Massachusetts are members of LLJUA. A board of directors, whose members are either elected by the insurance companies or appointed by the insurance commissioner, governs the association.

While the LLJUA just implemented a rate increase in July, the cost of liquor liability insurance has decreased 84 percent in just two years, according to the company. Today, many businesses can obtain liquor liability protection for less than $1 a day.

LLJUA offers comprehensive coverage, with no deductibles and no aggregate limits. LLJUA also offers: assault and battery coverage (5 percent of base premium); excess property damage coverage (1 percent of base premium); a 10 percent discount for clients if 100 percent of management and 75 percent of servers participate in an approved alcohol-training program; and no off-and-away exclusion.

Bucke said the LLJUA wrote about 1,275 policies in 2003 and is on track to write about 1,500 for 2004.

He said that the fire at The Station nightclub in Warwick, Rhode Island last year has affected the liquor liability market, causing more insurers to take a second look at their exposures. The LLJUA writes mostly “mom-and-pop” establishments with high liquor to food ratios, but in the aftermath of The Station fire it has written several larger nightclubs it might not usually see.

“There has been a little softening in the market recently but not a lot,” he added.

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