Liquor liability insurance provides coverage for establishments that serve alcohol, such as pubs, bars, clubs, restaurants, and wineries. It covers the costs and fees associated with defending a lawsuit, as well as damages awarded in a judgement, brought against the establishment for serving drunk people.
Liquor liability insurance would cover the cost of medical and repair bills if an intoxicated person:
- injures themselves
- injures others or
- damages property
Damage to the establishment’s own property are not covered by liquor liability insurance, nor are fines related to serving minors. Depending on the policy, there may also be no coverage for damages related to any offenses other than bodily injury or property damage that are committed by an intoxicated patron.
Why do I need it?
If your organization serves alcohol, or if your organization hosts events where alcohol is served, you are responsible for ensuring customers and attendees are not overserved. Should intoxicated patrons or guests cause bodily injury or property damage, the server and/or supplier of the alcohol can be held responsible. This includes damage done by patrons who get into accidents while driving drunk.
Those in the hospitality industry should well understand the need for liquor liability insurance, but any organization that hosts events where alcohol is served as part of their business operations may also require a liquor liability insurance policy.
Some general commercial liability insurance policies include coverage for liquor liability, while others exclude it. If your business ever serves alcohol, check with your commercial insurance broker to see if you need to purchase additional coverage.
What else should I know?
Although a staff party would not typically require separate liquor liability insurance, employers can be found responsible if employees overindulge and cause injury or damage. Check with your commercial insurance broker to ensure you have coverage for damage to/caused by intoxicated employees at a staff party.
An individual or group hosting an event that is not part of a business’s operations (e.g. hosting a wedding reception in your backyard as a favour to a friend, for which you receive no compensation), should purchase Host Liquor Liability insurance. This is a short-term policy (for the dates of the events), and protects hosts from damage caused by intoxicated guests. (This policy would not cover damage to the host’s property by drunken guests; however, the homeowner’s insurance policy would likely provide coverage for that damage.)
How much does it cost?
Pricing for liquor liability insurance policies depend on a number factors, including: the operations of the business (is it a food-primary restaurant, or a liquor-primary bar?); the size and location of the venue; the limit of coverage required (e.g. $2,000,000); how many claims the organization has made in the past; and whether alcohol is manufactured on the premises.
In the past few years, both the cost and the availability of liquor liability insurance have changed significantly, as part of insurance’s “hard market.” Major losses and growing claims costs have forced insurance companies to be stricter about who they insure, and the coverages they offer. According to Canadian Underwriter, this means finding sufficient coverage limits for liquor liability is proving difficult for pubs, bars, and other alcohol-oriented establishments.
Finding a commercial insurance broker who is committed to making sure your organization gets the coverage it needs is crucial in protecting your business.
How do I prevent alcohol-related incidents?
Just as important as having proper insurance is having proper protocols in place. Establishments serving alcohol must take every precaution to prevent alcohol-related damage, destruction, and injury.
To mitigate your liquor liability risk:
- Train all servers (completion of Serving It Right is mandatory for everyone in BC who sells or serves alcohol), and make sure they understand the risks of overserving patrons
- If you have an alcohol-centric establishment, create an environment that is centered around responsible alcohol consumption
- Demonstrate a zero-tolerance policy for overserving by staff, and overconsumption by customers
- Provide alternatives to alcohol (who would say no to a Shirley Temple?)
- Promote safe transportation home (for instance, some bars partner with designated driving organizations to offer priority service to their patrons)
- Ensure staff and security keep the peace between drunken patrons wherever possible, without using any excessive force
With the responsibility for drunken damage and injury falling on those who serve alcohol, liquor liability insurance is a must-have for all establishments, venues, and events where alcohol is sold or provided. Contact your business insurance broker to ensure you have the right liability coverage for you.
To request an obligation-free insurance quote, click here.
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Morgan Thomas, BA (Dtn.)
Team Leader, Personal Insurance Service Associates