If you operate a bar or restaurant where adult beverages are served, you’re likely well aware of the risks you face – specifically, the risks that are tied to the alcohol that you sell. To review, alcohol affects the brain by interfering with its communication pathways, thereby potentially causing changes in mood, behavior and a lack of coordination among those who consume it. Now, that’s not to say that there’s nothing wrong with having a drink or two, but when one’s drinking gets out of hand, so does the likelihood that something can go awry. We’re talking about bar fights, injury and property damage.
And if something goes awry inside your establishment and you’re roped into an alcohol-related lawsuit over the incident, you could be forced to pay thousands of dollars out of pocket in court and attorney fees. That is, of course, unless you’re properly covered with Liquor Liability Insurance.
What Liquor Liability Insurance Covers
Though some alcohol-serving establishments opt to pass on Liquor Liability Insurance for money-saving purposes and just hope that their General Liability Coverage will suffice (which it usually won’t), it’s recommended that any nightclub, bar or restaurant serving alcohol purchase such a policy in the event that you’re roped into a lawsuit over an alcohol-related incident. Here’s what Liquor Liability Insurance covers:
- Litigation costs (i.e. attorney fees and court costs).
- Assault and battery: It’s recommended that you purchase a Liquor Liability Insurance policy that covers this too.
- Miscellaneous: Insurance professionals recommend making sure that things like sexual assault, shootings and mental damages are also covered as part of this policy.
Who Needs Liquor Liability Insurance?
We already told you that it’s strongly recommended that any bar, club or restaurant that serves alcohol – whether it’s located in New Orleans or in the Great Plains – purchase a Liquor Liability policy. In some places, however, you don’t have a choice, as most U.S. states require relevant businesses to carry such a policy. For entities in areas that aren’t mandated to carry it, it’s important to know the risks and consequences associated with not having it.
Liquor Liability Insurance doesn’t just cover what happens in or around your business, but off of its premises as well. For instance, if a customer drives home drunk after an evening at your bar and is involved in an accident, your establishment may be held liable for knowingly serving an already heavily intoxicated patron.
Liquor Liability Insurance Costs
So just how much does Liquor Liability Insurance cost? It depends. In fact, there are various considerations that go into the premium prices, which include:
- The location of your establishment: For example, a bar on the Las Vegas strip will likely pay much more than one located in suburban Detroit. Liquor Liability Insurance also varies based on state regulations. For instance, in Louisiana, establishments pay about $2 for every $1,000 in alcohol sold. In Alabama, however, this amount per $1,000 of alcohol sold is much higher due to stricter state law.
- The volume of your alcohol sales: The more you sell, the more premium you’ll pay.
- The volume of alcohol-related incidents: If you’ve been in a lot of car accidents, you’ll pay more for car insurance. The same is true of Liquor Liability Insurance – past alcohol-related incidents indicate higher risk, which translates to higher premium costs.
- Coverage amounts: Finally, premiums are also reflective of how much coverage you need. However, it’s worth noting that this coverage should be based on the other items on this list.
Conclusion on Liability Insurance
Like we said, if you’re weighing the decision of whether or not to purchase a Liquor Liability policy, it’s important to know the risks and consequences. It’s also important to remember that lawsuits can last several years and cost tens of thousands of dollars. Is your business equipped financially for that?