If you operate a business where you sell or serve alcohol, you need liquor liability insurance. That includes bartenders, caterers, party hosts, event coordinators, and anybody else who provides alcohol to customers or guests.
If you know you need insurance for your alcohol-related business but don’t really know why or what it is, you’re not alone.
Trying to understand the ins and outs of liquor liability can feel overwhelming, but we’re here to help with this deep dive that answers your biggest questions and concerns.
What Is Liquor Liability Insurance?
Liquor liability insurance is specialized coverage for alcohol-related claims.
If an intoxicated customer causes bodily injury or property damage, this policy helps cover any costs you may be responsible for as the person who served the drinks.
While you probably already have a general liability policy for your business, this does not cover any damages connected to serving or selling alcohol. A liquor liability policy fills this gap, protecting you from claims resulting from damages caused by intoxicated customers.
What Is the Difference Between General Liability Insurance and Liquor Liability?
Basic general liability coverage excludes any claims associated with selling or serving alcohol, which is why you need liquor liability insurance if you want to feature cocktails on your menu.
| General Liability Insurance | Liquor Liability Insurance | Coverage |
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Bodily injury (unrelated to alcohol)
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Property damage (unrelated to alcohol)
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Personal and advertising injury
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Damage to Premises Rented to You
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Inland Marine (Tools and Equipment)*
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Alcohol-related bodily injuries
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Alcohol-related property damage
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Assault and battery*
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*Inland marine and assault and battery coverage is optional for an additional cost.
What Are Dram Shop Laws?
Dram shop laws hold businesses liable for damages caused by an intoxicated person they served.
In other words, if you sell drinks to a customer who gets drunk and causes an accident, you could be held financially responsible for the damages.
Laws vary from state to state, but most areas have some kind of dram shop law in effect.
Most places hold you responsible if you sell or serve alcohol to somebody who is underage or if you serve somebody who is already intoxicated.
Due to these laws, dram shop insurance is essential. If you get hit with a claim, you could be expected to pay enormous sums out-of-pocket. A liquor liability policy can help cover these costs so you don’t have to drain your bank account.
Do I Need Liquor Liability Insurance?
Yes! Anybody who sells or serves alcohol needs the financial safety net that liquor liability insurance provides.
A single claim can cost hundreds of thousands of dollars, which can be detrimental to any business. Liquor liability insurance can absorb some or all of those expenses.
Depending on where you live, you may also be legally required to carry liquor liability insurance if you serve or sell alcohol. Some states won’t even allow you to operate your business without proof of insurance. You should always research local laws.
Even if it’s not required by law, many employers, venues, and event coordinators require bartenders and caterers to have liquor liability insurance. When you can provide a Certificate of Insurance (COI), it shows potential partners that you are responsible and prepared.
What Does Liquor Liability Insurance Cover?
Liquor liability insurance covers third-party injury and property damage claims caused by intoxicated patrons.
If you overserve a customer or accidentally serve an underage guest, your coverage can help pay for any damages that person may cause.
There are a variety of expenses that could result from these claims, including:
- Medical bills
- Legal fees
- Court costs
- Settlements
- Judgments
- Property damage repairs
Expenses like these can pile up quickly, resulting in a massive financial burden for your business, but liquor liability insurance can offset these costs.
Claims can come in many forms, and it can be tough to plan for the unexpected. Liquor liability insurance offers a safety net for this exact reason.
Here are a few real-world examples of how this coverage can save the day.
Property Damage and Bodily Injury Liquor Liability Claim Example
A bartender was serving drinks at a rowdy party. After consuming several cocktails a piece, two guests got into a fistfight, breaking some furniture and a few bones in the process. Both the guests and the venue sued the bartender for damages.
Drunk Driver Liquor Liability Claim Example
An attendee at a networking event enjoyed several glasses of wine before leaving. While backing out of his parking spot, he hit a pedestrian, breaking her arm. The bartender and venue were held financially responsible for her medical bills.
Underage Drink Liquor Liability Claim Example
At a wedding reception, the bartender accidentally served several drinks to an underage bridesmaid. She attempted to drive herself home and crashed her car. She suffered severe burns and injuries, plus damage to the guardrail. The bartender was held liable for her medical bills and the repairs.
These claims resulted in payouts as high as half a million dollars. Thanks to liquor liability insurance, the policyholders didn’t have to pay out of pocket.
What Are the Benefits of Having Liquor Liability Insurance?
There are many benefits to protecting your business with liquor liability insurance, including:
- Financial protection. Liquor liability insurance safeguards your assets from unexpected expenses from claims.
- Compliance with laws and regulations. By taking a proactive approach and insuring your business, you can cut through some red tape when getting your business registered and licensed.
- Business credibility. Demonstrate that you are a professional and trustworthy business owner who cares about your customers by carrying liquor liability insurance.
- Peace of mind. Liquor liability insurance allows you to stress less and focus on providing the best service possible.
Protecting your business with liquor liability insurance is good for you, your partners, and your patrons.
How Much Is Liability Insurance for Your Business?
Insurance Canopy’s liquor liability insurance starts at $35.42 per month or $475 per year for an annual policy. You can also opt for an event policy for $275 if you only need coverage for a few days.
The cost of your liquor liability policy can vary depending on a few factors, including:
- The coverage limits you choose
- Any additional coverage you add
- The state where you operate
- The size of your business
Is Liquor Liability Insurance Worth It?
Absolutely.
A single claim can cost hundreds of thousands of dollars after you factor in expenses like legal fees, medical bills, settlements, and property damage. That’s enough to bankrupt most small businesses.
At less than $36 a month, you can avoid this headache and financial strain.
To put it into perspective, you could buy two streaming service subscriptions or seven lattes for the cost of your monthly liquor liability premium.
With a small monthly investment, you could save big money and stress down the line.
Do I Need Liquor Liability Insurance to Throw a Party?
If you’re throwing an event or party where you’ll be serving alcohol, you’ll need host liquor liability insurance.
Most people don’t know that many states have dram shop laws that hold hosts liable if their guests become intoxicated and cause accidents, even if the drinks are free.
There are a few key differences between liquor liability and host liquor liability:
Host liquor liability coverage is for people throwing a private function rather than serving the public. They also don’t typically sell or serve alcohol as part of their business, otherwise they would need a standard liquor liability policy.
Get Coverage
Insurance Canopy makes it simple to apply for liquor liability insurance and get coverage quickly.
If you’re a bartender, caterer, food truck vendor, or any other small business owner who serves alcohol, we’re here to get you covered and back to doing what you do best.
FAQs About Who Needs Liquor Liability Insurance
What Events Are Covered Under Liquor Liability Insurance?
Liquor liability insurance covers most events where alcohol is being served, including:
- Weddings
- Retirement parties
- Corporate events
- Birthday parties
- BBQs
- Holiday events
- Food festivals
- And more!
If you are a vendor or bartender who serves alcohol at events, you need to protect your business with a liquor liability policy.
What Happens if I Serve Alcohol Without Liquor Liability Insurance?
Serving alcohol carries many risks that could cause financial strain if you don’t have coverage.
If an intoxicated customer or guest causes property damage or bodily injury, you could be responsible for hefty fines, fees, and bills.
Depending on where you live, liquor liability insurance may be legally required for you to operate.
If you get hit with a claim in one of these areas and don’t have the proper coverage, you could face legal consequences ranging from fines to jail time.
Do I Need Liquor Liability Insurance for Weddings?
Yes! If you’re serving alcohol at your wedding in any way, you need host liquor liability insurance.
If you hire a caterer or bartender, make sure that they carry their own liquor liability coverage, too. In the event of an alcohol-related accident, you could both be held liable.
