Businesses that serve alcohol expect their employees or patrons to have a good time and act in a responsible manner. What they don't expect, however, is to find out that they are liable for the actions of an intoxicated person. While the vast majority of businesses serve alcohol without incident, the harsh reality is that lawsuits related to liquor liability are filed each day. Making matters worse, all it takes is a single liquor liability claim to put your entire business at risk.
What is liquor liability?
The term “liquor liability” refers to an organization's legal and financial responsibility for the actions of a person who consumes alcohol at its establishment and the consequences of those actions. Under liquor liability laws, businesses can be held liable for bodily injuries and property damage caused by a person who was served alcohol at their establishment.
According to the Insurance Information Institute www.iii.org liquor liability is not limited to those whose primary business is the sale of alcoholic beverages. Your business may have a liquor liability exposure if you do any of the following:
- Sell or distribute alcohol at your place of business
- Allow patrons or guests to bring their own alcohol and consume it at your place of business
- Serve alcohol at an event you are hosting
- Allow others to serve alcohol at your venue
Who is at risk?
When it comes to liquor liability, a wide range of organizations and individuals can face a lawsuit. Below are some of the most common defendants in alcohol-related lawsuits:
- Owners of restaurants, bars and nightclubs
- Owners of retail stores and convenience stores that sell alcohol
- Businesses and nonprofits that host company parties or social events
- Homeowners who host parties
- College and university organizations that serve alcohol
What can go wrong?When it comes to alcohol-related incidents, there is no shortage of things that can go wrong. Below is an overview of the wide range of injuries and damages for which a business can be held responsible for under liquor liability laws. These incidents can lead to costly judgments against your business, forfeiture of your liquor license or even criminal proceedings:
- Drunk driving incidents—Businesses can be held liable for the damages created by drunk drivers who were inappropriately served
- Fighting—Fights and assaults are among the most common causes of liquor liability claims
- Sexual assault and harassment—businesses can be at fault if someone becomes intoxicated at their establishment or event and sexually assaults or harasses another individual
- Trips, slips, falls, and other accidents—if these incidents occur as the result of alcohol consumption, a business may face a premise liability claim
- Alcohol poisoning—the over consumption of alcohol is all too common. In some cases, over consumption can lead to alcohol poisoning, a common source of liquor liability claims.
Mitigating liquor liability through risk managementWith all of the risks associated with liquor liability, some business owners may question whether it is even worth it to serve alcohol. While some incidents are unavoidable, a proper risk management program can greatly reduce the chances that a business will face a liquor liability claim.
Unfortunately, even the best risk management programs can never eliminate your liquor liability exposures completely. To make matters worse, people often file lawsuits against businesses that do everything in their power to serve alcohol in a responsible manner. When these lawsuits occur, they can be expensive with costs often exceeding $10,000 for legal fees alone. Thankfully, businesses can turn to liquor liability insurance.
What is liquor liability Insurance?
Liquor liability insurance protects businesses that manufacture, sell or serve alcohol, against claims that occur when a patron drinks too much and injures themselves or someone else. It is meant to protect any establishment that serves alcohol in any form from damages caused by an inebriated patron. Liquor liability insurance covers damages caused by alcohol-related incidents when a commercial general liability policy does not.
By: Mike Huss
Risk Solution Services Consultant
Insurance Information Institute, Marshall & Sterling, Inc.
*Markel Specialty is a business division of Markel Service, Incorporated, the underwriting manager for the Markel affiliated insurance companies.