If you own a restaurant, bar, brewery, nightclub, event and show venue, or any space that serves or allows the consumption of alcoholic beverages, you must have liquor liability insurance coverage.
This will protect your business if a patron harms themselves or others or causes damages because of alcohol overconsumption.
There are two key liquor liability policy types: Host Liquor Liability and Liquor Liability.
But what are the differences? Which makes the most sense for your particular business? Can they be combined with any of my current policies?
Continue reading to learn more, or check out our video summary below:
Host Liquor Liability Coverage
First up, we’ll talk about host liquor liability insurance.
If your business is hosting an event that allows alcohol consumption but isn’t directly selling, serving, or manufacturing it, host liquor liability insurance is a good fit to protect against liquor-related lawsuits.
This type of coverage will protect business owners or event hosts if an employee, customer, or guest causes physical harm to another or causes property damage following too much alcohol consumption.
What is Host Liquor Liability?
Host liquor liability coverage is a short-term insurance option for those who host weddings, birthday parties, corporate events, private functions, and luncheons. Many of these hosts are unaware they can be held directly liable if anything goes awry!
Host liquor liability would make sense for a venue such as the Montclair Wedding Sanctuary or The Clubhouse, which has a bar setup but allows party hosts to provide alcohol.
Policies might also be available for a few days or year-long coverage, so that’s something to confirm with your insurance agent, depending on your business type. Often, host liquor insurance can be included under your general liability insurance. This can help pay for third-party injuries or property damage.
Do You Have an Upcoming Event?
If you need to host liquor coverage for an upcoming event, we encourage you to purchase it well in advance beforehand or at least begin the process early. The last thing you want to happen is to have an event fully planned and ready to start, only to find out it’s too late to get coverage or you were denied, leaving you open to unnecessary expenses and safety concerns.
There are also a number of exclusions, and we suggest speaking with your provider about them. For example, certain policies won’t cover events past 2 a.m., shows with fireworks or pyrotechnics, and raves.
Liquor Liability Coverage
Depending on your state, you may be subject to dram shop laws, which hold businesses legally responsible for customers that harm a third party after consuming alcohol in excess. In New Jersey specifically, the New Jersey Legislature has stated that anyone injured by an intoxicated person may seek damages from the vendor who served the alcohol if:
- The intoxicated individual was “visibly intoxicated” when served
- The vendor knew or reasonably should have known the person being served was a minor under age 21.
Bars, restaurants, and breweries are typically excluded from host liquor liability coverage, as they are more likely to be sued for alcohol overconsumption.
Liquor liability insurance can be purchased as an annual or short-term policy. It’s available for professionals who serve alcohol as a business, such as caterers, bartenders, food vendors, and chefs.
If you do have a liquor liability policy and your business gets sued, the following legal expenses can be covered:
- Attorney bills
- Damages if found liable
- Out-of-court settlements
Depending on your policy, it may also cover you for:
- Bartenders and staff drinking on the job
- Fights between customers and staff
- Severe incidents such as stabbings, shootings, and sexual assault
Additionally, you may purchase coverage as a standalone policy or bundle it with your general liability insurance policy.
Bring Your Own Bottle (BYOB)
Many restaurants allow customers to bring their bottles, commonly called “BYOB.” This can be for several reasons—maybe you can’t afford a liquor license, or there aren’t any available in your area.
For places that allow BYOB, such as Villalobos Mexican Restaurant in Montclair, NJ, the short answer is they will need liquor liability insurance, not host liquor liability.
But there are several forms of coverage for these types of businesses:
- Traditional: Customers bring their own beer in a cooler or wine or liquor in a brown bag. The establishment may provide food and nonalcoholic beverages.
- Hybrid #1: Similar to Traditional, but the establishment provides glasses, cups or mixers for the hard liquor.
- Hybrid #2: Similar to #1, except the establishment serves alcoholic beverages to the party or table.
- Hybrid #3: A customer brings in the liquor, usually wine, and brings it to a wine steward or waiter. From there, the establishment serves the wine to the party just as if it came from the establishment’s own supply.
- Hybrid #4: Includes any of the above policies, but if the business charges a BYOB fee.
Tips To Minimize Liquor Liability Lawsuits
While covering your business is essential, it’s also recommended that you take proactive steps to reduce your likelihood of liquor liability lawsuits and claims.
Some suggested tips include:
- Hire security and ensure they’re trained to effectively check IDs and de-escalate situations
- Ensure that bartenders and servers are trained in safe alcohol service
- Promote the safe consumption of alcohol
- Don’t serve intoxicated persons and recognize when they’ve had too much
- Don’t allow consumers to drink and drive. Encourage staff to call for cabs or Uber rides.
Key Takeaways
By now, you should see the importance of liquor liability coverage for your establishment. This protects you and your business, customers, staff, and innocent bystanders. We also discussed the differences between host and regular liquor liability insurance and the unique factors that impact BYOB businesses.
Follow our tips to reduce your risk of unnecessary claims, and work with an insurance agent to determine the policy that best suits your needs.