The Liquor Liability Joint Underwriting Association of Massachusetts now offers coverage up to $1 million per person and $1 million per occurrence.
The previous coverage limit was $500,000 per person and $1 million per occurrence ($500,000/$1 million).
“This improvement will not only provide our clients with a better level of protection, it will also improve their ability to purchase excess coverage,” said LLJUA President John W. Tympanick. “In most cases, clients were unable to purchase excess coverage without a base coverage of $1 million per person. In addition, by establishing limits based on a Œper occurrence‚ basis, we can protect those establishments that most need liquor liability coverage.”
Because of changing market conditions, and as an adjustment for the increase in limits, LLJUA will also increase its rates 45 percent effective immediately, Tympanick said. The smallest businesses will not be affected by the increase, since the minimum premium level will remain at the level it was at during 2004. The impact on agent commissions will vary, but, in all cases, commissions will be higher than they previously were.
Rates will now range from 13 cents per $100 of liquor sales for manufacturers, wholesalers and distributors seeking the minimum coverage of $50,000 per person and $100,000 per incident to $6.34 per $100 for bars, taverns, hotels and restaurants seeking the $1 million/$1 million coverage, where alcoholic beverages account for 80 percent of sales or higher.
In spite of the rate increase, Tympanick said rates remain lower than they were during the period from 1986, when LLJUA was formed, to 1996. A series of rate reductions from Jan. 1, 1997 through Jan. 1, 2000 brought rates to about a third of their previous level.
“The tragic fire at The Station nightclub in Rhode Island and the increasing frequency of seven-figure awards make it necessary for us to take action,” Tympanick said. “However, we are still able to keep our rates relatively reasonable, because, as a non-profit organization, all premiums collected are used to benefit our insureds. We will continue to do our best to keep quality coverage affordable.”
LLJUA is also changing its experience-rating provision so that anyone with up to two claims paid during the past 10 years will pay an additional 20 percent and anyone with more than two claims over 10 years will pay an additional 30 percent. Previously, experience rating added 20 percent for more than two claims paid during the past five years.
LLJUA is a last-resort liquor liability insurance provider for Massachusetts businesses that have been turned down for coverage in the voluntary market at least three times.
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