People love to celebrate and have fun in bars and restaurants. In addition, alcohol brings life to parties, celebrations, and gatherings. But it can also cause fights and accidents. Also, did you know you’re liable for any alcohol-related incidents your customers may have? Furthermore, parties and celebrations increase sales for business owners. In the same way, they also introduce new risks and liabilities. However, how can you run your business with all these risks and liabilities? But don’t worry. Also, you can protect your business from these by getting liquor liability insurance. In addition, you need a liquor liability policy if your business involves selling, serving, manufacturing, and distributing alcoholic beverages.
First, what is Dram Shop Law?
Most US states have dram shop laws. Dram shop laws hold establishments like bars, restaurants, and liquor stores liable for injuries, damages, and deaths caused by drunk driving accidents. Under the dram shop laws, business establishments that serve or sell alcohol to customers who caused bodily injury or property damages may be held liable for monetary damages to DUI victims or their families. Victims of DUI collisions in Colorado can sue business establishments for over-serving a drunk driver. Yet, these parties may be held liable if they sell alcohol to any of the following:
- Visibly intoxicated person
- Minors
Secondly, why Do You Need a Liquor Liability Insurance Coverage?
Every time you sell alcohol to your customers, you become liable for any accidents and damages that the drunk customer causes. A single liquor liability claim can cost you thousands of dollars. This may cause you financial problems. This policy limits a company’s liability risk. This covers the followings costs in the event of a lawsuit:
- Third-party property damage claims
- Third-party bodily injury claims
- Legal costs associated with lawsuits like court costs, lawyer fees, and settlements
- Assault and battery coverage
What Claims Liquor Liability Insurance Doesn’t Cover?
Liquor liability insurance doesn’t cover the following claims:
- Libel
- Slander
- Accidents and damages involving underage customers
- Damages to your business property
Does Your Business Need a Liquor Liability Policy?
Any business selling, manufacturing, and distributing alcoholic beverages needs liquor liability insurance. Some states require entrepreneurs to get a liability insurance policy for liquor license applications. Here’s the list of businesses that this covers:
- Restaurants
- Bars
- Taverns
- Hotels
- Nightclubs
- Casinos
- Bed and breakfasts
- Liquor stores
- Breweries
- Caterers
- Grocery stores
- Convenience stores
- Wineries
The Cost of Liquor Liability Insurance
Different factors affect the cost of liquor liability coverage. Liquor liability insurance cost varies according to:
Coverage limit
The amount of coverage limit is the primary basis of insurance premiums. The higher the coverage limit you get, the higher your premiums will be.
Claims history
Claims also affect liquor liability insurance policy costs. In addition, frequent claims can result in increased insurance premiums.
Business Industry
The level of risk in every business is different. Businesses with a higher risk of liabilities tend to have higher premiums. Bars and restaurants have higher risks as they often serve alcohol than wineries that hold occasional wine tasting.
Liquor sales
The liquor insurance premium is also based on the percentage of your alcohol sales. The higher your alcoholic beverage sales, the higher your premium will be.
State requirements
Some states require companies selling, manufacturing, and distributing alcohol to have a minimum liquor liability coverage limit.
How to Purchase Liquor Liability Policy
You can purchase a liquor liability insurance policy from an insurance company in different ways. Business owners can get this policy by:
- Purchasing a separate liquor liability policy
- Add it as an endorsement on your general liability insurance
- Include it in your Business Owner’s Policy (BOP)
Host Liquor Liability VS. Liquor Liability Insurance
Did you know that companies that do not sell, manufacture or distribute alcohol can still be liable for alcohol-related incidents their employees and guests get into? Also, companies that host social events can be liable for the injuries and damages your drunk employees or guests caused. Moreover, host liquor liability protects businesses that hold social events involving serving or furnishing. In addition, liquor liability insurance protects businesses that manufacture, sell, and distribute alcoholic beverages. Furthermore, business owners can get liquor liability policies as a part of the general liability policy.
What Insurance Do Small Businesses Need?
Every business, small or big, is at risk for various liabilities. Equip your business with enough insurance coverage to avoid sudden financial expenses. A sudden financial problem could cause a business closure. Appropriate business insurance protects your business from liabilities and sudden financial expenses. The type of business insurance your business needs depends on your business industry and operations. Here are some of the insurance coverage you can purchase to protect your business:
Commercial General Liability Insurance
This coverage protects business owners against third-party bodily injury or property damage claims. Moreover, this policy covers the medical expenses of customers injured on your business premises. As well as endorsements can be added according to your company’s liability exposure. Here are some examples of liability insurance:
- For businesses manufacturing and selling alcohol
- Product liability insurance is for businesses manufacturing and selling their products. If there are bodily injuries or property damages claims caused by your products, this will cover the costs of defending your business.
Commercial Property Insurance
This policy protects your business’s properties against damage and loss. In addition, it pays for the repair or replacement of damaged property under a covered loss. Furthermore, this insurance covers properties used for business operations. Also, it includes:
- Commercial building
- Furniture and fixtures
- Inventories
- Office equipment like computers and fax machines
- Exterior signage
- Commercial landscape and fences
- Important company documents
- Commercial Auto insurance
You must purchase commercial auto insurance if your business operations involve using vehicles. Personal auto insurance doesn’t cover vehicles used for business activities.
Workers Compensation Insurance
Nearly all US states require companies to carry employee workers’ compensation insurance. Meanwhile, all businesses must provide workers comp coverage in Colorado regardless of employees’ number and work status. Furthermore, failure to carry workers comp policy is punishable by the law.
Business Income Coverage
This policy will pay for your business’s lost income in case of sudden interruption due to a covered peril. Moreover, expenses like rentals and employee salaries don’t stop even if your business operation stops. That’s why it is essential to have a backup to help you with your expenses in case of business interruption.
Business Owners Policy
This policy provides comprehensive protection to small business owners. In addition, this policy provides multiple coverages such as:
- General liability coverage
- Commercial property coverage
- Business income coverage
Small business owners can significantly benefit from this policy, consisting of multiple insurance policies. Likewise, policyholders can also customize their BOP policy and add endorsements as needed. Moreover, business owners can add endorsements on top of their BOP policy. It includes:
- Liquor Liability Coverage
- Data Breach Coverage
- Professional Liability or E&O Insurance
- Commercial Auto Insurance
- Employment Practice Liability
How to Minimize Your Business Liquor Liability
As a business owner, you can manage the risks associated with your business operations in many ways. Here are some tips you can use to help you avoid liquor liability claims and additional financial expenses.
- Comply with your state liquor regulations.
- Create business policies and regulations regarding the serving of alcohol.
- Ensure employees provide customers with regulated-poured or measured alcoholic drinks. As well as this will prevent serving too much alcohol to customers.
- Encourage serving of food, light, or nonalcoholic beverages.
- Have a guideline limit on the number and types of alcoholic beverages served per customer.
- Follow an effective system to keep track of the number of served alcohols to each customer.
- Provide responsible alcoholic beverage training to employees.
- Require identification cards to identify customers’ ages. Besides, checking your customer’s identification can minimize the risks of serving alcohol to underage customers.
- Prohibit serving alcohol to an intoxicated person. As well as train employees to identify signs of alcohol intoxication.
- Hire professional security guards. In addition, security guards help manage bar or club capacity. Also, they are responsible for ensuring patrons entering the business establishment are within the legal drinking age.
- Arrange a designated taxi for customers under the influence of alcohol. In addition, arranging special transport for drunk customers prevents drunk driving accidents.
- Train employees on soothing customer arguments and when to contact the police. In addition, it lowers the risks of bodily injury and property damage claims.
- Also, purchase liquor liability insurance. It protects your business and finances in case of liquor liability lawsuits. Liquor liability insurance will save your business from hefty insurance claims if preventive measures don’t work.
Contact Us
Last, every business has risks involved. Furthermore, mitigating your risks is essential if you want your business to succeed. In addition, one effective way to mitigate your risks is to get adequate business insurance. Moreover, business insurance doesn’t only protect you from possible lawsuits. Also, it can save your business from the hefty financial expenses lawsuits bring. Finally, with the right insurance policy, alcoholic beverages can be profitable.
At AIS here in Denver, CO, we understand the risks business owners face. Secondly, we work with different insurance companies to find the right, best-value business insurance coverage for any business. Lastly, we provide customized business insurance to meet every business’s needs. So, come contact us NOW!