Business owners that serve alcohol to guests face unique liability risks. In many states, business owners can be held liable for injuries or property damage caused by guests or patrons who are intoxicated. This can apply even to businesses that do not sell or serve alcohol; those that allow alcohol to be consumed on the premises may also be liable under state laws. To protect business assets from legal enforcement or lawsuits, business owners should strongly consider liquor liability insurance. U.S. Risk Underwriters, one of the nation’s leading providers of specialty insurance products, knows that there exists much confusion about the types of liability insurance available, particularly in the differences between liquor liability and host liquor liability policies. In this guide, we’ll break the differences down, allowing you to help clients select the right type of policy for their specific needs.
Liquor Liability Types: What’s the Difference?
Alcohol-related incidents are responsible for billions of dollars in property damage each year, not to mention the high cost of medical care for those injured in such incidents. According to the National Institute on Alcohol Abuse and Alcoholism (NIAAH), in the year 2010, alcohol misuse cost about $249 billion. This number includes all alcohol-related injuries and property damage incidents, not only those caused by the serving, manufacturing, or distribution of alcohol by businesses.
To protect against the costs associated with an alcohol-related injury or damage, business owners have two primary insurance choices:
- Liquor Liability Insurance – companies that sell and/or serve alcohol may face lawsuits if an intoxicated patron causes an injury or damages property. Liquor liability insurance provides coverage for legal expenses, including the costs of settlements or damages. This type of insurance is ideal for businesses that manufacture, sell, or distribute alcohol products, such as restaurants, bars, taverns, breweries, and retail shops.
- Host Liquor Liability Insurance – this type of insurance is available where business owners may face liabilities if they do not serve or sell alcohol, but allow alcohol to be consumed on business premises. This can include businesses that host social events where alcohol is consumed, venue owners where alcohol is consumed, and even bottle clubs or restaurants that do not serve alcohol but allow patrons to bring their own and consume it on premises.
Host liquor liability coverage is typically included in most general liability insurance policies and covers medical expenses, property damage, and legal costs if a person overconsumes alcohol and causes an incident. Liquor liability insurance may also be a part of a general liability policy or may be purchased as a standalone policy. It is important to note that there are certain exclusions; U.S. Risk Underwriters recommends that business owners discuss their specific needs and exposures with insurance agents to ensure that their assets are protected properly. Serving or selling liquor, or allowing it to be consumed on company premises, raises many liability concerns. With the right liability insurance, business owners can gain valuable protection.
About U.S. Risk
U.S. Risk Insurance Group, Inc. is a wholesale broker and specialty lines underwriting manager providing a wide range of specialty insurance products and services. Headquartered in Dallas, Texas and operating 16 domestic and international branches, U.S. Risk and its affiliates would like to help you access a world of new markets and products. For more information, contact us today at (800) 232-5830.